In a brief statement made yesterday, New York-based bank CIT Group (CIT) announced that discussions with the Treasury Department regarding bailout funding had ended and that the likelihood of additional government support being provided over the near term was remote. Now it looks like CIT may file for Chapter 11 bankruptcy.
A Treasury Department official said that the talks ended after it became apparent that CIT’s position had eroded too much, and it could not raise private capital to stay solvent, according to Reuters. The Treasury Department also said there were limits to its ability to help troubled companies. “Even during periods of financial stress, we believe that there is a very high threshold for exceptional government assistance to individual companies,” it said.
CIT would join Loehman Brothers Holdings Inc and Washington Mutual Inc among large financial companies to collapse since the credit crisis gained traction last September if it files bankruptcy.
Last night, CIT’s representatives were trying to line up at least $2 billion in rescue financing from existing debt-holders, the Wall Street Journal reported, citing people familiar with the matter.