CIT recently announced that is has ended negotiations with the Obama administration over receiving bailout money to prevent possible bankruptcy. Bank officials have been told that they no longer will receive help from the United States. The bank has been in business for over one hundred years and many small and medium–sized businesses are at risk for bankruptcy if they do not receive the necessary funds to keep their doors open.
Risk of Failure
There are questions as to whether the FDIC may experience liquidity problems if CIT is granted help and then is not able to meet their financial obligations. When banks fail and the FDIC pays money to investors having savings deposits in the bank, the FDIC insures the depositors for up to $250,000. As it stands now, over fifty-eight percent of the loans being held at CIT are in default.