You remember Liz Peek, right? She’s the infamous “TARP Wife”, who wrote a piece for Portfolio about how much her life has changed since her husband’s company CIT (CIT) nearly collapsed and had to take TARP cash.
Well, even with help from Uncle Sam, CIT is on the brink of collapse anyway. So far it hasn’t persuaded the government to help it more, but it’s basic argument is that it’s systemically important and that it’s own failure would result in the failure of scores of businesses who rely on it for trade financing:
Bloomberg: CIT Group Inc., the century-old lender that hasn’t been able to persuade the government to back its debt sales, says its demise would put 760 manufacturing clients at risk of failure and “precipitate a crisis” for as many as 300,000 retailers.
A collapse would ripple across the “small and medium-sized businesses who rely on CIT to operate — to pay their vendors, ship goods to their customers and make their payroll,” the New York-based lender said in internal documents obtained by Bloomberg News that make the case for its importance to the U.S. economy. CIT spokesman Curt Ritter declined to comment on the documents.
We’ll take a pass on evaluating CIT’s claims of such systemic importance, but we’ll just note that the financial crisis isn’t over, clearly. You have multiple bank failures every single week, and now these guys are on the brink. If you’re in the most-protected club, you’re fine, but if the market senses that you don’t have any kind of implicit backing from the government, then you better watch your back.
Anyway, if Liz Peek thought it was rough being on TARP support, imagine how she’ll be seen if her husband’s company is responsible for the demise of 760 manufacturers and 300,000 retailers.
Business Insider Emails & Alerts
Site highlights each day to your inbox.