Thursday, July 16, 2009

Better Hope those Treasury Dudes are Right

Bloomberg has some potential famous last words as CIT awaits its fate from its bondholders:
The U.S. spurning of CIT Group Inc.’s aid request suggests officials are betting they’ve fixed the financial system enough to withstand the bankruptcy of a mid-sized lender. “I hate to say this, but it was probably expendable,” said Dennis Santiago, chief executive officer of Institutional Risk Analytics, a Torrance, California, research firm that studies systemic risk. “It may have just missed the boat” on federal rescues, Santiago said. [Empahsis ours]
Doesn't mean people, ahem, and voters won't be pissed:
There will be “a lot of disruption and anger among voters, particularly among people who rely on firms such as CIT for funding,” said Sean Egan, head of Egan-Jones Ratings Co. in Haverford, Pennsylvania, which rates CIT below investment grade. “A major provider of capital in the middle market is likely to be out of business in the near future,” and investors will be concerned, at least in the “short run” about CIT, Egan said. [Emphasis ours]
See you on the other side.

Treasury Bets U.S. Financial System Can Weather CIT Collapse [Bloomberg] Sphere: Related Content

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