Taxpayers Lose $2.3 Billion with CIT Bankruptcy

The TARP recipient bites the dust—and wipes out billions of taxpayer dollars in the process.

Photo used under a Creative Commons license by flickr user <a href="http://www.flickr.com/photos/16961193@N06/">Ernst Moeksis</a>

Facts matter: Sign up for the free Mother Jones Daily newsletter. Support our nonprofit reporting. Subscribe to our print magazine.


This story first appeared on the ProPublica website.

CIT filed for bankruptcy protection on Sunday, and part of its plan to heal itself is wiping out the taxpayers’ $2.33 billion stake in the company. 

CIT, which specializes in lending to small and midsize businesses, got bailout money last December, a vote of confidence from regulators and the Treasury that CIT could survive and use the money to boost lending. But by the summer, the company was flirting with bankruptcy.

The Treasury’s investment was made in the form of preferred shares, as it was in almost all of the 600 other banks it approved for taxpayer investment through its TARP program for “healthy” banks. Preferred and common shareholders will be wiped out, the company has said.

The Treasury does stand a chance to recoup something. But that recovery “will be minimal”  said a Treasury spokesperson.

CIT is not the only foundering TARP recipient. We reported a couple of weeks ago that three others were struggling to survive.

A little later in the week, we’ll post our monthly accounting for the bailouts to give you an overview of spending, how much has come back, and how much won’t.

THE END...

of our annual funding cycle is fast approaching, on June 30, and we have a considerable $230,000-plus gap in our online fundraising budget.

If you value the nonprofit journalism you get from Mother Jones, and you can, right now is an important time to help us keep charging hard with a much-needed and much-appreciated donation.

payment methods

THE END...

of our annual funding cycle is fast approaching, on June 30, and we have a considerable $230,000-plus gap in our online fundraising budget.

If you value the nonprofit journalism you get from Mother Jones, and you can, right now is an important time to help us keep charging hard with a much-needed and much-appreciated donation.

payment methods

We Recommend

Latest

Sign up for our free newsletter

Subscribe to the Mother Jones Daily to have our top stories delivered directly to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate