New York, July 20 (DPA) Key creditors have agreed to put up $3 billion in financing for CIT group, a top lender for small US businesses that last week tottered on the brink of bankruptcy, the Wall Street Journal reported Sunday.
The company wrung an agreement from creditors that will mean CIT can avoid bankruptcy and restructure outside of bankruptcy court, the Journal reported in a flash online.
A bankruptcy would have sent shudders down the chain of small businesses that rely on CIT, for example, retailers who are trying to get ready for Christmas sales.
CIT, which provides loans to about 1 million small and medium-sized businesses, was involved in round-the-clock talks to secure help. US President Barack Obama’s administration has refused to step in to rescue the firm.
Economists and politicians are divided over just how worrisome the bankruptcy of CIT would be for the US economy. It would be the largest bank to collapse since Washington Mutual last autumn, and some fear it could disrupt the country’s tentative recovery from a deep recession.
Yet CIT is not nearly as critical to the financial system as Lehman Brothers, the collapse of which nearly brought Wall Street to its knees in September. CIT offers loans mostly to smaller retailers and manufacturers and does not have the kind of international reach that Lehman did.
CIT has already received $2.3 billion in emergency government loans. The Obama administration has been divided over whether to offer more help, according to US media.
