CIT bankruptcy would mean a near-total loss of taxpayer bailout loans

So with some historic irony, one year and two weeks after Lehman Bros. bit the dust, another debt-burdened, credit-reliant, potentially “too big to fail” institution is looking to either stick its bondholders with a raw deal or enter sudden bankruptcy. We won’t pretend to know exactly how this one will end, but the market has certainly voiced its opinion:

Heh, and of course, Goldman Sachs has a horse in this race. They stand to make about a billion bucks if CIT goes into bankruptcy -- the fruits of a smartly designed loan agreement. Hank Paulson, despite his GS pedigree, didn’t make such a deal when he put $2.3 billion in TARP funds on the line… a CIT bankruptcy would mean a near-total loss of taxpayer bailout loans.


CIT is one of the biggest lending sources for small- and medium-size business in America… what happens to this recovery when this well runs dry?