Short-term government bailout looking more likely for CIT

Looks like the government may be deciding CIT is too big to fail. Reports all over the Internet indicate talks with CIT (CIT) for a possible government bailout have intensified. Analysts have concluded that a bankruptcy won't solve the commercial leasing and financing company's long-term problems. The most likely solution is a short-term government loan while CIT and the government look for a deep-pocketed investor to buy the company. Sounds like a replay of the Washington Mutual scenario.

CIT's stock plummeted 12 percent to close at $1.35 on Monday. Standard & Poor's downgraded CIT late Monday and warned that the company may try to restructure its debt, possibly through bankruptcy or through a "distressed" exchange offer. S&P told bondholders in a statement, "CIT has more than $1 billion of unsecured notes maturing in both third- and fourth-quarter 2009 - payments that could become increasingly difficult to make if borrower draws increase significantly and CIT does not win regulatory approval of its strategic initiatives."