CIT veers from market winner to brink of collapse

It is extraordinary how fast investors can lose money in the market on bets gone wrong.

During yesterday's trading CIT Group (CIT) shares moved up by nearly 40 percent, buoyed by an article in The New York Post saying investor John Paulson might put the financial company together with IndyMac, which would have solved many of CIT's financial problems. The stock closed at $2.20.

After the market closed, almost everything changed. A reporter at The Wall Street Journal found out that CIT was in real trouble and that its ownership might be turned over to bondholders. If the deal is not consummated quickly, the firm might have to file for Chapter 11. The paper reports, "If CIT does file, it would be the fifth-largest bankruptcy filing, by assets, in U.S. history." CIT shares dropped to $1 in the after-market.