The Obama administration has rejected pleas from the retail industry for assistance to CIT Group, a major source of financing for retailers, but the lender’s bondholders came to its rescue.
Trade groups ranging from the National Retail Federation to the American Apparel and Footwear Association had pleaded with the Treasury Department to keep CIT from collapsing. After the government declined to bail out the lender, CIT’s bondholders loaned the company $3 billion.
Officials with these groups breathed a sigh of relief when the bondholders and CIT worked out a deal, but several expressed disappointment with the government’s failure to help a major small-business lender. The government’s inaction is “a reason to be concerned for the future of the nation’s small firms,” the International Franchise Association said.
CIT once was a major Small Business Administration lender, but it sharply reduced its SBA lending this year, as have several other large lenders.