CIT – the wells run dry

Wall Street has flooded Main Street with cash in the ’90s and ’00s . Now the tide is turning for yet another “non-bank” bank
clipped from

CIT Group Inc. said Thursday that its normal sources of funding have dried up because of the credit crisis, forcing the New York company to draw down its entire $7.3 billion line of backup credit. That could mean trouble for commercial borrowers, since CIT will shrink its lending operations and sell assets in order to conserve cash.

While it isn’t a bank, CIT is a major lender that specializes in providing financing to companies of all sizes that often can’t get all the capital they want from traditional banks. With customers in more than 30 industries and 50 countries, CIT had managed assets of $83.2 billion as of Dec. 31, about the same size as KeyCorp, a regional bank in Cleveland.

Since CIT can’t fund its operations with bank deposits, it typically relies on a combination of financing including short-term borrowing known as commercial paper as well as asset backed markets and the corporate bond market.

But those funding sources have been frozen by the credit crunch. A d

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