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Report: FDIC Unwilling to Back CIT Debt

By Anonymous

From Bloomberg: FDIC Said to be Unwilling to Back CIT Debt on Risk (ht Bob_in_MA)

The [FDIC] is unwilling to give CIT Group Inc. access to its Temporary Liquidity Guarantee Program because the commercial lender?s credit quality is deteriorating [unidentified sources say] ... The FDIC, which has backed $274 billion in bond sales under the TLGP since Nov. 25, is concerned that guaranteeing CIT debt would put taxpayer money at risk ...

CIT ... became a bank in December to qualify for a government bailout and received $2.33 billion in funds from the U.S. Treasury. ... Without access to TLGP, CIT may default as soon as April, when a $2.1 billion credit line matures, according to Fitch Ratings.

The federal agency is in discussions with CIT about how the lender can strengthen its financial position to get approval, such as by raising capital, said one of the people. ...

CIT has about $75 billion in assets.

Full post as published by Calculated Risk on July 09, 2009 (boomark / email).