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Thread: CIT loss won't be last for taxpayers

  1. #1
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    NEW YORK (Fortune) -- CIT Group is the first big bailout loss for taxpayers, but it won't be the last.



    CIT (CIT, Fortune 500) filed for Chapter 11 bankruptcy protection Sunday. The New York-based small business lender said all its common and preferred shares will be canceled, which will wipe out the $2.3 billion Troubled Asset Relief Program investment the Treasury Department made last December.



    Though the government is also highly unlikely to recoup all the money it plowed into AIG, Citigroup, Fannie Mae and General Motors, CIT is the first bailout to go to zero -- in just 11 months, no less.



    "Preferred stock is a very risky security," said Linus Wilson, a finance professor at the University of Louisiana at Lafayette. "CIT Group is the first large lesson for taxpayers of its risks."



    Unfortunately, it's not likely to be the only lesson.



    Typically in bankruptcies, bondholders and creditors are the first in line to get paid back. Owners of a company's stock, even investors in preferred shares that pay special dividends, are usually left holding the bag.



    The full story

    http://money.cnn.com/2009/11/02/news...ney_topstories

  2. #2
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    It was a pre-packaged bankruptcy and CIT has already indicated that they'll be out of bankruptcy by the end of this year.

  3. #3
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    [quote name='Bourne' date='03 November 2009 - 12:47 AM' timestamp='1257227221' post='50946']

    It was a pre-packaged bankruptcy and CIT has already indicated that they'll be out of bankruptcy by the end of this year.

    [/quote]





    What are you saying? You think that shareholders/Tarp funds, etc..... will all get their money? Because that is not whats being reported.

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    [quote name='Bourne' date='02 November 2009 - 09:47 PM' timestamp='1257227221' post='50946']

    It was a pre-packaged bankruptcy and CIT has already indicated that they'll be out of bankruptcy by the end of this year.

    [/quote]



    Don't you get it, Obama gave then 2.3 billion in exchange for stock and now that stock is worthless. Obama negotiated the worst deal in history. Now the tax payers have lost 2.3 billion thanks to Obama.

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