Debt-stricken U.S. lender CIT has filed for bankruptcy. The global financial crisis left the company unable to fund itself, pushing the dollar and Asian financial stocks lower.
The bankruptcy of the century-old firm… that lends to small and medium-sized businesses including Dunkin' Donuts… was widely expected.
The announcement is a stinging blow to the U.S. government, which invested $2.33 billion in CIT in December, and likely faces a loss.
Under the filing, CIT plans to cut total debt by $10 billion, while its creditors will end up owning the company.
The firm hoped its status as a small business lender would win it more political support, but in July the FDIC refused to guarantee its debt issuance.
The CIT news cut risk appetite in Asia, helping to send the dollar to a 2-week low against the yen as well as hitting high-yielding currencies.
Banks in Japan and across the region declined, with analysts citing the CIT filing as further negative news for the market.
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