Remember C.I.T. Group?
That was the company that Treasury Secretary Timothy Geithner orchestrated a $2.3 billion bailout for without requiring debtor-in-possession financing protection. Of course, after that federal bailout, CIT promptly filed for reorganization under chapter 11.
Well, as this WSJ editorial explains, there is a reasonably happy ending to the CIT saga — ìNot only did CIT’s filing not cause the end of the world for its counterparties or customers, but the company quickly emerged from bankruptcy and has embarked on an aggressive turnaround.î
Allocating risk of loss properly is really not rocket science.
My father, a merchant who sold home appliances and furnishings, used CIT for inventory floor-plan financing back in the 1960s and early 1970s. They were a sound company then.