Is CIT too big to fail?

CIT Group Inc. (CIT) leaked an internal report to Bloomberg indicating that 760 manufacturing firms may be at risk if the FDIC doesn't back its debt and the lender is allowed to fail. But so far the FDIC is taking the position that CIT is not a systemic risk. The internal report from CIT also states that its demise would precipitate a crisis for as many as 300,000 retailers. Obviously, CIT is trying to build support for an FDIC bailout.

CIT says in its report that its collapse would impact "small and medium-sized businesses who rely on CIT to operate -- to pay their vendors, ship their goods to their customers and make payroll." If CIT files for bankruptcy and cuts off small and medium-sized businesses, these businesses likely would have no place to turn to because commercial lending markets are still frozen.