Monday, July 20, 2009


CIT is a large financial institution that lends to small and middle market businesses. By today's definition however, CIT's $75 billion of assets makes it not a large financial institution. And apparently way too small to be too big to fail. And finally, CIT must not have a big portfolio of car loans like GMAC. So, the Government has left it to CIT's existing creditors to assist in giving CIT more time to right the ship. Gee, this approach is so last century.

I guess the Government has made its point because the press is pointing to a multi-billion dollar loan being done with CIT's major bondholders to keep it out of bankruptcy. The next couple of days should provide more details as to how such a deal, if completed, will allow CIT to successfully restructure.

According to this article in last week's WSJ, the company has some work to do. CIT made some management changes around 2001 that resulting in Vice-Chairman Joe Pollicino and other experience credit people leaving the firm. The new management ultimately led CIT down the subprime mortgage and student loan roads. And we all know where those roads led.

We should expect that management changes amongst strategy changes to be coming down another road very soon. Maybe the bondholders will call Joe....well, maybe not.

A number of years ago I used to attend a CIT golf outing every year at Fenway Golf Club. Fenway is a great track originally designed by 1920's noted architect, A. W. Tillinghast and recently worked on by a well respected architect, Gil Hanse. But I digress. One year one of the people checking in golfers for the outing asked if I was related to Joe Pollicino the Vice-Chairman. I, of course, replied, "Yes, he is my uncle." For a few years I received the royal treatment at the outings. One year however, Joe came up to me and said I had to stop saying he was my uncle. To which I replied, "Ok unc."

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