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Another Financial Institution Jumps On Bailout Gravy Train
Yesterday we told you about the trend of financial institutions jumping on the bailout "gravy train" by acquiring -- or transforming themselves into -- traditional banks, which are eligible for the government's $700 billion TARP program.
Well add one more big institution to the list. The federal government has given preliminary approval to a $2.33 billion injection of gravy into CIT Group less than 24 hours after the firm's application to become a bank holding company was approved.
The AP reports:
Commercial financial firm CIT Group Inc. said Tuesday it received preliminary approval to obtain $2.33 billion as part of the government's $700 billion bank investment program.The approval comes just hours after the government approved CIT's application to become a bank holding company. ...
CIT recently announced it was raising $300 million through a public stock offer and bolstering its capital through a debt exchange offer as it worked to win approval to become a bank holding company.
You can read the Fed's approval of CIT's switch to a bank holding company here (pdf).
Josh
Zachary
http://poemsonaffairsofstate.blogspot.com/
December 23, 2008 12:53 PM | Reply | Permalink
They were considered satisfactory for CRA in .... 2002. That seems kinda outdated here.
As a general sign of ignorance, I thought that TARP had some restriction having to do with March 2008, something about anyone getting help from TARP had to have been in place by then. Can anyone help clarify this for me?
In this case, an $81B company is raising a tiny amount of capital to justify getting a "small" (compared to $20B) amount of government support, per the document.
December 23, 2008 1:51 PM | Reply | Permalink
Rachel Maddow stated on her show last night she will form a bank and apply for TARP funds. She suggests we all do the same. The application is two pages, triple spaced. Basically fill in Your companies name, account number, where you want the money sent and have an authorized person sign.
Such a deal!
December 23, 2008 2:35 PM | Reply | Permalink
The strategy of buying a bank in distress, then having the government pumps millions into it, was perfected by Richard Ravitch many years ago. He and a group of investors bought the Bowery Savings Bank, a venerable NY institution, then convinced the US to "save" with a large cash infusion. Soon afterward, he sold it to for over $200 million, making a very tidy profit. The numbers to be given away to CIT will dwarf the Ravitch deal, but it always helps to be politically well-connected, doesn't it?
December 23, 2008 2:54 PM | Reply | Permalink
I cannot help but wonder...can I become a bank holding company too?
-AF
Andrew Sullivan Is A Fraud
December 23, 2008 5:59 PM | Reply | Permalink
And for getting this $2.33 Billion, the CEO gets a 1% commission ($23.3 Million)? Not a bonus, understand, but a commission.
It is past time for Congress to put a stop to this outright theft of taxpayer money.
.
December 23, 2008 6:44 PM | Reply | Permalink
How we can find out how Paulson's pay-to-play scheme works? Blago told the lady who wore a wire in 2003 that she had to use a certain contractor and investment house.
The White House didn't give Paulson & Goldman Sachs this gig without a payoff either.
Anyonbe besides me think that TARP's back office is being run out of GS?
Remember when Richard Perle called Goldman Sachs immediately after a pre-war meeting of the Defense Policy Board?
December 24, 2008 11:52 AM | Reply | Permalink