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"Our goal is to transform how the world sees poor people—not as Wall Street to the Rescue. (Yes, it’s true.)
It’s a Small Business World after all. CIT, lender to 2,000 supply firms and 300,000 retailers, restaurants, and small-to medium business was thrown a lifeline by Wall Street private equity firms.
Six of CIT's largest bondholders, Centerbridge Partners, Silver Point Capital, Baupost Group, Oaktree Capital, Pacific Investment Management Co., and Capital Research & Management bailed out the ailing small biz lender CIT with a guarantee of $3 billion in emergency loans.
These are some of Wall Street’s top private equity firms. None of these funds were on the long list of government subsidies. The firms are committing “hundreds of millions of dollars each,” of private capital. Centerbridge and Silverpoint are small hedge fund / private equity firms both founded and managed by former Goldman Sachs partners.
According to the Wall Street Journal, “For years, CIT funded its activities largely by selling bonds -- only to find itself in trouble when credit markets froze up a year or so ago.” CIT was given an emergency cash infusion of $2.33 billion through the U.S. TARP program. While the government has given ongoing infusion to every bank in the country and every major investment bank and securities firm on Wall Street, including $138 billion to Bank of America/Merrill Lynch/ Countrywide and $300 billion to unregulated-derivatives-happy Citibank, it refused to invest further in one of America’s primary small to medium business lifelines.
There appears to be an exceptional blatant double standard to the government’s bailout policy. A CIT bankruptcy would eliminate already scarce credit and pummel the middle market manufacturing and retailing sectors with even more force than they already have been. Mid-level businesses are truly hanging by a thread after nearly a year without access to credit and the consuming public pull-back.
It seems that these Wall Street money firms have stepped up to the plate and supplied an important sector of our economy with urgently needed cash flow. In the process they have averted more massive jobs losses, countless middle market bankruptcies, and possibly the domino affect of depression-like conditions.
For now, thank you Wall Street non-TARP funds for helping American business avoid another roll-out of disaster. It’s good to see American money invested in America’s heartland again.
For the moment at least, we can all breathe a sigh of relief.
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