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Now that CIT is on the mend without a bailout and the Treasury/Obama put their foot down that the bailout craze is over...where are the Mea Culpas from the

"We have to Bail Out CIT or Else 700,000 Small Businesses will fail!!!!


Another respectful and fruitful debate on an important DKos topic with no doughnuts thrown...thanks for your participation!!!!

Yes it was painful and expensive for CIT and their shareholders, but hey, their risk-taking CEO and the CIT BOD took those unnecessary risks with a 100+ year old profitable company and almost bankrupted it.  So why should we have bailed them out.  In fact, part of the calculus was that CIT had other options and that the Federal Government bailout should be a last resort option...not a first one.

This also sent an important message to banks and financial institutions, get your houses in order and keep them that way, because there is no more bailout money for anyone and in fact, we the taxpayers are in collections mode pay up as quickly as possible.

The other message is you screw up it will cost you dearly and may cost you your job.  You can go gravel to your creditors and beg them to take $0.60 on the dollar and take loans at 3% above LIBOR to cover your ass and it will take 2 years for your earnings to recover.  But that is the price of making bad decisions.

So I am looking for some Mea Culpas here for the "We Haveto" crowd...because we "Did not Haveto" and thus we should not have.

We can debate and have debated the original bailouts as to whether they were necessary, I say they were many well meaning and smart people say they were not necessary or other alternatives would have been better.  But we did is done and now we should move on and end the bailout culture before it becomes a culture.

Originally posted to dvogel001 on Wed Aug 05, 2009 at 10:11 AM PDT.


I believed/believe CIT should have been

66%18 votes
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Comment Preferences

  •  Tip Jar (6+ / 0-)

    Obama - Change I still believe in

    by dvogel001 on Wed Aug 05, 2009 at 10:11:10 AM PDT

    •  I have to add, also, that I have (1+ / 0-)
      Recommended by:

      yet to really understand, from a cogently written article by Krugman or even an Austrian economist, why no bailouts would not have been salutary, i.e. why the surviving banks/ financial intermediaries could not have taken up the slack.

      I guess it has to do with the fact that at least 50%ish of the financial sector was too much to lose in a quarter.

      On teh other hand, it seems like the USA could have been the banker of last resort..

      From Neocon to sane- thanks to Obama- and Kos.

      by satrap on Wed Aug 05, 2009 at 10:22:56 AM PDT

      [ Parent ]

      •  I think the thought was that if (3+ / 0-)
        Recommended by:
        Catte Nappe, tomjones, satrap

        we lost half the financial sector, the other half would collapse because of the inter-relations.  Add to that the fact that the collapse of AIG would have caused the real-world economy to grind to a halt (because of all of the insuring and bonding relationships) and we were seriously looking at the option of eating out of trash cans for the next 10 or 20 years.

        Other than that, the bailouts were probably worthless.

        "You can never sink so low in life that you can't be a bad example for somebody." - My Dad

        by briefer on Wed Aug 05, 2009 at 10:27:02 AM PDT

        [ Parent ]

    •  This diary's a lame diversion from today's news.. (0+ / 0-)

      ...see my much lengthier comment, farther below.

      The reporting in this diary--which is a non-story and more like a corporate press release--isn't even accurate...CIT's still going to go bankrupt....meanwhile, today's real economic news is quite troubling.

      "I always thought if you worked hard enough and tried hard enough, things would work out. I was wrong." --Katharine Graham

      by bobswern on Wed Aug 05, 2009 at 10:52:50 AM PDT

      [ Parent ]

      •  Yup this is the sign of... (1+ / 0-)
        Recommended by:

        a company on the verge of bankruptcy...

        Back up to $1.50 from a low of $0.41...yes just on the verge...reality based please....

        Obama - Change I still believe in

        by dvogel001 on Wed Aug 05, 2009 at 10:58:18 AM PDT

        [ Parent ]

      •  And the commenter... (1+ / 0-)
        Recommended by:

        goes back to his scheduled Doom and Gloom forecast.../snark

        Obama - Change I still believe in

        by dvogel001 on Wed Aug 05, 2009 at 10:58:48 AM PDT

        [ Parent ]

      •  bobswern do you ever have positive news to report (2+ / 0-)
        Recommended by:
        askew, dvogel001


        •  Hey don't pick on my friend... (1+ / 0-)
          Recommended by:

          he has very important D&G news to report.../snark

          Obama - Change I still believe in

          by dvogel001 on Wed Aug 05, 2009 at 11:07:02 AM PDT

          [ Parent ]

          •  D&G = Dolce and Gabbana? lol (1+ / 0-)
            Recommended by:

            no, not picking on bobswern-- i am asking a serious question that i would like a answer to.

            Bob, if you are reading this, Do you have any positive economic news to report?

            •  ROTFL...that was good...n/t (1+ / 0-)
              Recommended by:

              Obama - Change I still believe in

              by dvogel001 on Wed Aug 05, 2009 at 11:18:42 AM PDT

              [ Parent ]

            •  In fairness... (1+ / 0-)
              Recommended by:

              I did read part of a diary from him this week that complimented the Obama administration...I had to read it 3 times to make sure I did not need glasses...

              Obama - Change I still believe in

              by dvogel001 on Wed Aug 05, 2009 at 11:19:33 AM PDT

              [ Parent ]

              •  really? (0+ / 0-)

                Bob had something positive to say about the Obama admin and the economy.

                I would love to read his diary to you have a link?

                •  Here... (1+ / 0-)
                  Recommended by:

                  **COMPLETELY O-T**...

                  Not wanting to leave you walking away from this diary on a "doom and gloom" note, I'm going to go completely off-topic and tell you about a really outstanding piece of breaking news that has just started to run on the wires as I was writing this: "Obama to Chair UN Nuclear Non-Proliferation Meeting."

                  Obama to Chair UN Nuclear Non-Proliferation Meeting
                  Agence France Presse

                  US President Barack Obama will chair a high-level meeting of the UN Security Council on nuclear non-proliferation and nuclear disarmament next month, the US ambassador to the UN said Tuesday.

                  Ambassador Susan Rice said in a statement that Obama would preside over the special meeting on September 24, a day after he is due to address the UN General Assembly session.

                  "The Security Council has an essential role in preventing the spread and use of nuclear weapons and is also the world's principal multilateral instrument for global security cooperation," the statement said.

                  "The session will be focused on nuclear nonproliferation and nuclear disarmament broadly and not on any specific countries. Over the next several weeks, we will work closely with members of the Security Council to prepare for this important meeting," it added.


                  It was at the end of his I know it is hard to get down that far without changing the channel.../peace

                  Obama - Change I still believe in

                  by dvogel001 on Wed Aug 05, 2009 at 11:34:48 AM PDT

                  [ Parent ]

            •  I'm positive... (0+ / 0-)

              ...there aren't that many things positive to say about the current state of our economy....other than, eventually, things will get better...after they get worse. And, they will get worse first.

              So, this is a reality-based blog, and there isn't much that's positive to report about the economy, at least without straying from reality...

              "I always thought if you worked hard enough and tried hard enough, things would work out. I was wrong." --Katharine Graham

              by bobswern on Wed Aug 05, 2009 at 09:45:24 PM PDT

              [ Parent ]

              •  There are almost no economists who agree... (0+ / 0-)

                with you left...GDP will rise in 3rd and 4th quarters this year and that will slow job losses and stop a lot of the bad stuff you predict...

                Obama - Change I still believe in

                by dvogel001 on Thu Aug 06, 2009 at 05:19:41 AM PDT

                [ Parent ]

      •  At the end of the day... (1+ / 0-)
        Recommended by:

        I am very fair to you...I rec your diaries (2 in the last 7 days) when I agree, do not comment or give one comment when it is fine but do not vehemently disagree...and respectfully and snarkedly disagree with your POV when I disagree vehemntly with you...

        Obama - Change I still believe in

        by dvogel001 on Wed Aug 05, 2009 at 11:49:11 AM PDT

        [ Parent ]

    •  I'll cop to it. (2+ / 0-)
      Recommended by:
      dvogel001, Catte Nappe

      I thought the bailouts were necessary. I forgot the Bush admins tendency to screw everything up, and this certainly hasn't turned out the way I'd envisioned. Banks are taking worse risks, the middle of the economy is still collapsing, and Obama's team hasn't really shown strong leadership, yet.

      I'm neither a prophet or time traveler. I try to weigh evidence in the policies I support--and this time I got it wrong.

      Don't you wish you ever heard a politician say things like that?

  •  Tips for ending bailouts of financial... (4+ / 0-)
    Recommended by:
    tomjones, soms, Hamlets Father, satrap

    institutions and for more mea culpas by Kossacks...including me...

    Obama - Change I still believe in

    by dvogel001 on Wed Aug 05, 2009 at 10:12:07 AM PDT

  •  The only people complaining about the failure (4+ / 0-)
    Recommended by:
    askew, dvogel001, tomjones, realityworld

    to bail out CIT where the perpetual, unprincipled leftwing Teabaggers who bash the Obama administration regardless of what it does.

    "[R]ather high-minded, if not a bit self-referential"--The Washington Post.

    by Geekesque on Wed Aug 05, 2009 at 10:14:44 AM PDT

  •  If we could only be reading (1+ / 0-)
    Recommended by:

    your diary on the epitaph of GoldmanSachs, I would feel better...

    From Neocon to sane- thanks to Obama- and Kos.

    by satrap on Wed Aug 05, 2009 at 10:15:01 AM PDT

  •  so the bailout spree is over? (1+ / 0-)
    Recommended by:

    Are the major capital houses going to have to repaint themselves green to continue recieving their subsidies? Maybe they can come out with a catchy name for their giveaway, like Cash for Clunkers?

    Of course we will have Fascism in America, but we will call it Democracy. - Senator Huey Long

    by Marcion on Wed Aug 05, 2009 at 10:17:25 AM PDT

  •  Your purpose with this diary... (3+ / 0-)
    Recommended by:
    Euroliberal, RaulVB, siduri

    ...seems a mite obnoxious and childish.  A "nyaah, nyaah, nyaah, now apologize to me" tantrum.  Or am I reading this wrong?

    Also, it's a little early to think we know how anything the administration is doing in this recession is gonna turn out.

    •  It is two-fold... (0+ / 0-)

      One that we should end the bailouts comming from Washington DC and I support the Obama Adminstration making an example of a high profile well connected request from CIT...

      two is that we should all be willing to admit when our heartfelt positions turn out to be wrong in comments and diaries we write.

      But Nyaaa-Nyaaa...not part of my agenda...

      Obama - Change I still believe in

      by dvogel001 on Wed Aug 05, 2009 at 10:21:07 AM PDT

      [ Parent ]

    •  No kidding (n/t) (1+ / 0-)
      Recommended by:
    •  artschmart -- with all due respect (0+ / 0-)

      what kills me about some on this site is they do not want to be responsible for spreading misinformation or for their accusatory diaries.

      If people are bold enough to write a diary or comment that has been proven wrong- then they deserve to be either ridiculed, ostracized or asked to apologize period. We do this to every other source of information. Do we not do this with arg polls, fox news, and newspaper articles?

      If people have the freedom to express their views, in diaries,  and speak their minds, in comments, then people have the right to ask for an apologize if the information was proven wrong .

      •  Respectfully,... (1+ / 0-)
        Recommended by:

        ...the diarist has not "proven wrong" those who argued for a CIT bailout (and by the way, I was not one of those, though I understood the argument).

        What if some of those 700k businesses do find their credit access diminished after a weakened CIT is asked to stand up on its own?  What if some are ruined and close their doors, shedding workers to the unemployment rolls?  That is something we will not see play out overnight, but over months or a couple of years.  The diarist wants an apology when he has not been proven correct.

        The kossacks who represent the corporatist wing of the Democratic Party at this site are no better prognosticators than the "Eek, it's the Greatest Depression" nay-sayers, and this diarist's triumphalism is not only obnoxious but also gravely premature.

        •  With all due respect... (0+ / 0-)

          what is the evidence that any banks that received government bailout money used it to increase or maintain lending with anybody...

          There is no evidence that credit will be cut (any more than it already has been by CIT due to their mismanagement) with or without a bailout...

          So what if some of the small businesses find their credit access diminished...we should use the SBA to help them directly instead of bailing out the wall street executives, stockholders and bondholders of CIT...

          Obama - Change I still believe in

          by dvogel001 on Wed Aug 05, 2009 at 11:30:26 AM PDT

          [ Parent ]

        •  thank you for your respectful response (0+ / 0-)

          My comment was in response to your comment which was :

          ..seems a mite obnoxious and childish.  A "nyaah, nyaah, nyaah, now apologize to me" tantrum.  Or am I reading this wrong?

          Also, it's a little early to think we know how anything the administration is doing in this recession is gonna turn out.

          Your comment did not say anything about CIT but rather  about the diarist asking for a mea culpa.

          My comment was a general blanket statement regarding a mea cupla and the need for the community to asked for them.

          My comment still stands. There is nothing wrong with a diary that asked for a mea culpa.

          •  And my 2nd comment was in response to yours,... (1+ / 0-)
            Recommended by:

            ...wherein you urged kossacks to pony up with the apologies when they are "proven wrong."  My reply was that no one has proven anybody wrong, nor could they so quickly.  But I gather from the thread above that you're not really interested in such nuance or balance.  No need to respond.

            •  Let me be clear... (1+ / 0-)
              Recommended by:

              the Mea Culpa is that no bailout of CIT was necessary to save the 700,000 small businesses...I think that has been proven in many ways...but we can agree to disagree...tipped for civility...

              Obama - Change I still believe in

              by dvogel001 on Wed Aug 05, 2009 at 01:08:13 PM PDT

              [ Parent ]

  •  Well I see my "friends" are showing up... (0+ / 0-)

    to vote but don't like admitting they were wrong...if 700,000 small businesses were unable to get financing...I would have written a Mea Culpa...

    Obama - Change I still believe in

    by dvogel001 on Wed Aug 05, 2009 at 10:18:34 AM PDT

  •  Finally.... (0+ / 0-)

    1 person admits (privately) to changing his/her mind...bravo

    Obama - Change I still believe in

    by dvogel001 on Wed Aug 05, 2009 at 10:49:23 AM PDT

  •  Diverting the audience w/propaganda, I see... (5+ / 0-)

    ...this post is about a non-story.

    I'm not going to waste my time playing this game, today. Too much real-world work, and don't have a lot of time to blog. So, consider this an official "hit and run."

    This post is little more than a lame farce...CIT is still expected to declare bankruptcy.

    But, the reason it's a joke of a post is because today's real economic news is brutal...and the last thing I'm going to do is pander to the concept of the rightwing meme that "bailouts are under the bridge," when Wall Street--and particularly Goldman Sachs--continues to engage, unabated, in stealing Main Street's future...with today's news highlighting that moreso than ever: "Goldman Sachs $100 Million Trading Days Reach Record."

    Goldman Sachs $100 Million Trading Days Reach Record
    By Christine Harper

    Aug. 5 (Bloomberg) -- Goldman Sachs Group Inc. made more than $100 million in trading revenue on a record 46 separate days during the second quarter, or 71 percent of the time, breaking the previous high of 34 days in the prior three months.

    Trading losses occurred on two days during the months of April, May and June, down from eight in the first quarter, the New York-based bank said today in a filing with the U.S. Securities and Exchange Commission. The company made at least $50 million on 58 of the 65 trading days during the quarter, or 89 percent of the time.

    Goldman Sachs, which was the biggest U.S. securities firm before converting to a bank last year, posted the biggest profit in its history during the second quarter as revenue from trading and equity underwriting reached all-time highs. The company, which has returned $10 billion to the U.S. Treasury and paid $1.42 billion in dividends and to cancel warrants, also made its largest market bets during the period.

    "It’s very counterintuitive to think that they’d be able to generate this much profit and this much revenue in the middle of an ongoing recession," said William Cohan, a former banker at JPMorgan Chase & Co. and Lazard Ltd. and author of "House of Cards" about the collapse of Bear Stearns Cos. "But the fact that so many of their competitors are out of business or severely wounded has put them in a very strong position."

    So, let's see how this relates to the CIT story...oh, it is...Goldman made a fortune in derivatives betting on CIT's demise...maybe that's why our government wouldn't bail 'em out? Just sayin...and who's Goldman going after next? Another totally unnecessary service provider to Main Street's financial well-being...the most important student lending entity in the country is all.

    Yeah, let's screw over those kids, too. We go their parent's businesses credit lines on Main Street; now let's make their kids permanent members of the indentured servant's class by denying them a college's all right here...yeah, let's just put these scores of billions of dollars that Goldman still has behind us...

    (I don't think so. Like your bogus diary, THIS IS A FREAKIN' TRAVESTY!)

    Wall St. Makes Quick Work Of Main St. Via CIT; Devastation of Student Lender Sallie Mae Is Goldman's Next Target...

    "Goldman Correlation Desk Makes Mint On CIT CDS, Sallie Mae Up Next"

    Goldman Correlation Desk Makes Mint On CIT CDS, Sallie Mae Up Next
    Submitted by Tyler Durden on 08/01/2009 14:32 -0500

    One of Wall Street's biggest whipping boys since the post-Lehman days, culminating with the insanity in credit markets in early March, have undoubtedly been correlation desks. These trading outfits, which hit their heyday in 2004-2005, when CDS spreads were nice and tight, and negative convexity would at most bring a 20-30bps widening, would repackage securitization tranches whereby usually they kept the senior and equity wrap around a mezzanine piece, which was in turn sold to investors. Buyers of mezz tranches, whose junior and senior layers would become impaired after a 15% and 30% cumulative losses, respecitvely, saw what the definition of a world of pain is first hand recently, and effectively shut down the correlation business at many major banks. But not all.

    As Debtwire reports, several correlations desks made a killing over the recent CDS blow up: most notably Natixis and the omnipresent Goldman Sachs. According to Debtwire's Nicoletta Kotsianas:

    "Correlation trading desks at a few firms, including Natixis and Goldman Sachs, have been buying up CIT protection on the cheap since January to hedge risk in the instruments they structure and trade...CIT stood out to some traders, both because of its exposure to the credit crunch and its ubiquitous placement in the bespokes, said two correlation traders. Just six months ago, jump to default exposure to the name averaged roughly €50MM for many correlation desks, estimated two of the trader sources... One correlation trader who runs a mid-sized bespoke book said that he bought $85MM in short dated protection at an average price of 12 pts up in January and throughout the spring. Five-year protection on the name was quoted at 34 on 9 July but ballooned to the high 50s by 20 July when it became clear the government would not bail out the asset-based lender. Much of that price movement originated from other correlation desks rushing to hedge their jump risk."

    So whose CDS will Goldman's correlated tentacles blow up next? According to Debtwire, it is Sallie Mae's turn:

    "Sallie Mae is the next name in correlation traders' crosshairs, said two correlation traders, an analyst at a boutique brokerage and a sellside desk analyst. Five-year protection on Sallie Mae trades at 20 pts upfront, reflecting relatively low risk of default in post-credit crunch terms. Though not as widely held in bespokes as CIT, nor as distressed, Sallie Mae caught attention in recent weeks as correlation desks braced for the company to be downgraded to junk, all the sources said. Standard & Poor's last week placed the ratings on credit watch following a vote by the House Of Representatives Education and Labor Committee to pass a bill that would eliminate the origination of federal student loans by private lenders after July 2010... Offers to sell protection from dealers grew scarce this week and several dealers have faded offers, in a sign that not all desks are covered for Sallie Mae jump risk, aid three traders. Some bids did get picked up this week but the market is now 18/20 upfront on the contracts as opposed to 691 bps on July 19, according to a broker and data from Markit."

    And who wants to bet which way Goldman's notoriously non-rumor spreading correlation desk is axed. Look to the student lender for some major fireworks over the next few weeks.

    And, a couple more things...

    That Flash Trading's moving forward...and anyone that wants to call Zero Hedge a rightwinger blog should have their head examined. There's been a major feature calling Progressive economist Joe Stiglitz a "hero" running at the top of the blog for three days; and Tyler just won a very distinguished "1st Amendment Award" for nailing Goldman over the past six months. People are calling Zero Hedge, "...and indie Bloomberg with an attitude..." or something to that effect...The folks over there are really, truly kicking ass for Main Street. I don't agree with everything they say, but I respect the crap out of them for standing up for us!

    "SEC to Ban Flash Trades of U.S. Stocks, Schumer Says"

    SEC to Ban Flash Trades of U.S. Stocks, Schumer Says
    By Edgar Ortega and Jesse Westbrook

    Aug. 4 (Bloomberg) -- The U.S. Securities and Exchange Commission will seek to ban flash trades that give some brokerages an advance look at orders, Senator Charles Schumer said, citing a conversation with SEC Chairman Mary Schapiro.

    Schapiro assured Schumer in a phone call yesterday that the agency plans to ban the practice, according to a statement from his office. In a separate release, Schapiro said she has asked her staff to draft rules that "quickly eliminate the inequity" that flash orders cause.

    "It’s preferencing one group over another, and that’s not the way markets should work," said Michael Panzner, author of "The New Laws of the Stock Market Jungle" who once traded for George Soros’s hedge fund. "It certainly on its face seems unfair and up until now was against the spirit, now perhaps against the actual rules, of fair play."

    Next time you try to divert our attention with drivel on a major news day, as far as the economy's concerned, make it a little less transparent, okay?

    P.S.: And, this is just one of many other horrendous stories relating to what's happening on Main Street, since 95% of our government's resources have been diverted elsewhere...but, you're telling everyone here to just forget about it. I DON'T THINK SO!   see following...

    Service Industries in U.S. Contract at Faster Pace"

    Service Industries in U.S. Contract at Faster Pace
    By Courtney Schlisserman

    Aug. 5 (Bloomberg) -- U.S. service industries unexpectedly contracted at a faster pace in July as concern over rising unemployment gripped consumers.

    The Institute for Supply Management’s index of non- manufacturing businesses, which make up almost 90 percent of the economy, fell to 46.4 from 47 in June, according to the Tempe, Arizona-based group. Fifty is the dividing line between expansion and contraction.

    The report indicates that most of the economy has yet to benefit from government programs, such as the cash-for-clunkers plan, aimed at reviving manufacturing. The highest jobless rate in a quarter-century, stagnating wages, falling home values and mounting bankruptcies mean consumer spending will be slow to recover.

    "The consumer is still facing a weak labor market," said Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez Inc., a New York forecasting firm. "There are still plenty of problems out there. To declare everything is fine is premature at this stage."

    Economists forecast the index would rise to 48, according to the median of 77 projections in a Bloomberg News survey. Estimates ranged from 44 to 49.3.

    Other reports today showed the economy lost more jobs last month. Companies cut an estimated 371,000 jobs in July, more than economists had forecast, according to figures from ADP Employer Services.

    Market Reaction

    Stocks dropped after the reports and Treasury securities rose, recovering from earlier losses. The Standard & Poor’s 500 index fell 0.9 percent to 996.28 at 1042 a.m. in New York. The yield on the benchmark 10-year note was 3.66 percent compared with 3.69 percent late yesterday.

    The ISM non-manufacturing industries employment index fell to 41.5 from 43.4 the prior month, and its gauge of new orders decreased to 48.1 from 48.6. The measure of new export orders slumped to 47.5 from 54.5.

    The Labor Department’s July jobs report is due Aug. 7. The U.S. has lost 6.5 million jobs since the recession began in December 2007, the biggest decrease of any economic slump since the Great Depression.

    "I always thought if you worked hard enough and tried hard enough, things would work out. I was wrong." --Katharine Graham

    by bobswern on Wed Aug 05, 2009 at 10:50:15 AM PDT

  •  I would have voted for: Arrested, Assets Seized nt (0+ / 0-)

    "...a printing press is worth 10,000 rifles..." Ho Chi Minh

    by Radical def on Wed Aug 05, 2009 at 11:38:17 AM PDT

  •  Bailed out/Bailed out (0+ / 0-)

    The question is who is the "them"?

    So why should we have bailed them out.

    If the "them" are the bad managers who did the same as the other "Masters of the Universe" Geckos of Wall Street, then, no, they should not be "bailed out" but rather exposed and the conduct documented and included in the new MBA Harvard and other business school casebook texts as a warning to Gecko Wannabees.

    If the "them" are the government supervising entities and managers/staff who are now pleading before Congress not to dismantle their agencies and end their jobs, or transfer their duties to people who will enforce the public interest, then no bailout for them, as they may have done what the Bush Administration wanted by letting the Geckos run wild, but they did not represent the public/investors or do what their agencies were supposed to do in monitoring CIT or the rating agencies or Wall Street Geckos.

    If, the "them" are  the rating agencies, and particularly their management, who were paid huge sums of money to evaluate the risk and advise the public, then no.

    If, however, the "them" includes the thousands of individual investors who had CIT bonds and other investments in portfolios where they had been for years, as reasonable investments, based on reliance on these government entities and the rating agencies, then, yes, the government, on behalf of the citizens of the US should "bail them out" and then use the necessity of spending money as a  "bailout" as motivation to crack heads at the government entities who failed the citizens and the rating agencies that abused the trust placed in them and also expose the corrupt and/or  incompetent management of CIT.  

    •  Two questions... (0+ / 0-)

      how do you bail out the individual bond and stock investors without bailing out the senior management and institutional investors/mutual fund managers who should have known better and don't deserve it...???

      And is there any personal responsibility for individual investors who did not read all financial statements and understand the highly leveraged and risky model that CIT embarked on 2 years ago under the current CEO...???

      Obama - Change I still believe in

      by dvogel001 on Wed Aug 05, 2009 at 01:16:01 PM PDT

      [ Parent ]

      •  reply---with difficulty as part of policing (0+ / 0-)

        as to 1:  It is obviously difficult to prop up the investment in a way that supports the price for affected investors without helping senior management.  They need to be investigated and punished  by government agency action if they did not make appropriate disclosure or by their boards with pressure from large holders of the investments like public employee funds, unions, institutions, etc.  

        Discipline of fund managers presumably will take place when the decline in investors in those mismanaged funds withdraw and close accounts that are mismanaged. There are many small investors who will not be returning to mutual funds and I have some clients of my small rural law firm who have made clear to me that they will not keep what is left of their portfolios in such "managed funds" in the future.

        1.  I do not believe that one can realistically expect small investors to

        read all financial statements and understand the highly leveraged and risky model that CIT embarked on 2 years ago under the current CEO...???

        They should be able to rely on their fund managers and brokers to do that and also review the statements of the rating agencies and governmnet entities who are supposed to be doing some kind of oversight.  

        If only investors able to

        read all financial statements and understand the highly leveraged and risky model that CIT embarked on 2 years ago under the current CEO...???

        are to be buying bonds like CIT's then the investor class will shrink to almost nothing.

        •  One of the things... (0+ / 0-)

          that I agree with Cramer on...if you do not understand the business and how they make money don't invest with part of a balanced mutual fund sure...but individual investors should not be investing if they do not understand the risks...

          And that includes going beyond...hey my broker said it was good...or in CIT's case hey they have been around for 99 years so they must be a good investment...

          Bonds always have some risk of loss of principle...I lost money on a municipal bond 25 years ago (got most of it back from the insurance company)...but it is investing...this is not putting money in a FDIC garaunteed CD...I mean they lost money for 6 straight quarters...that should have been a red flag right there (sell, sell, sell)...

          Here is 2005 risks disclosed...


          MAY BE LIMITED.




          OUR BUSINESS.

          Then the acquired the student loan business to the tune of $4.3 Billion...which was more than twice the value of all other acquisitions put together...
          Student loans 4,300 1st quarter 2005 Specialty Finance – Consumer

          Fom there they went from nothing in student loans to it being the largest part of their portfolio (18.4%) in less than 3 is a business in 2004 they knew nothing about...

          All this was disclosed in black and white in the financial statements and annual reports...if investors cannot be bothered and held responsible for at least reading the key metrics and risk factors of a business then they have no business investing in individual stocks..

          A rating from an agency is just a rating...we need some personal responsibility here on the investor side too...otherwise why is business spending billions of dollars putting out detailed disclosures if as you say...

          I do not believe that one can realistically expect small investors to read all financial statements

          If they did...they would have realized in 2007 that CIT was a trainwreck waiting to happen and their darling 100 year old company had been taken over by misguided management....

          Obama - Change I still believe in

          by dvogel001 on Wed Aug 05, 2009 at 03:37:00 PM PDT

          [ Parent ]

          •  Very accurate, however--- (0+ / 0-)

            My reference to CIT is from the standpoint of a widow's portfolio being handled by Edward Jones Trust and they had CIT bonds in this "conservative" portfolio.  So everything you say about reviewing the material from CIT should have been done by the Jones Trust department.  Unfortunately this is not the only issue that causes me to never ever want to use them, but they were selected by the widow's late husband and family and road the portfolio down.

            I am quite sure that many folks have had similar experiences and will stick to FDIC accounts in the future and not be lured again into the friendly and impressive broker's office with their life savings.

            There will be a significant impact on the market I think as less of this money will be invested and certainly the future job opportunities for these "broker on every corner" firms like Jones and Davidson will and should be limited!

            Thanks for your post and this exchange.

            •  Again no reason to bailout CIT... (0+ / 0-)

              to save that poor widow's bonds...EJT perhaps is liable..but to bail out CIT for this is killing an ant with an atom bomb...

              Obama - Change I still believe in

              by dvogel001 on Thu Aug 06, 2009 at 05:21:39 AM PDT

              [ Parent ]

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