Carney On CIT Group: 'Let Thriving Companies Thrive And Failing Companies Fail'

"Time to lower the flag on Bailout Nation and raise the flag for good old American Capitalism."

John Carney on CNBC from this morning discussing the potential bailout for small-business lender, CIT Group (not Citigroup).  Kudlow and Carney are the winners in an IKO. 

My commentary.  Moral hazard tends to multiply.  At this stage of the bailout cycle, the risk to the economy are greater from moral hazard than they are from the failure of CIT.  American business leaders and especially financial CEOs need to re-learn the lessons of failure and success.  We are rewarding the worst-managed companies while placing their better-managed competitors at a disadvantage.  Take a look at Ford vs. GM and Chrysler.

This is ludicrous and smacks of politics.  If Obama were not so concerned with popularity and re-election, he would accept the temporary dislocation from a CIT failure and teach the market a lesson.  Yet, at this hour, the stock is halted pending an announcement from Treasury on a bailout. 

Geithner.  Listen to Sheila Bair.  She wants no part of CIT, their brokered-deposit madness and their loan portfolio.  Time to draw a line in the sand.  CIT Group is not systematically important.  Let their competitors enjoy the spoils of business victory.  When will it fracking end?!!

Watch.

Comments

[Sell Short]

when does the bailout ever end??

[DailyBail]

Well Obama said no to CIT...great move.

http://dailybail.com/home/obama-says-no-bailout-cit-gets-denied.html

[spideydouble]

I have my doubts. Bush said no Lehman bailout and then had the Fed give them $138 billion in a backdoor deal through JPM as a conduit anyway. You read that correctly: $138 BILLION. I don't believe a word any of these Goldman marionettes say these days.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aX7mhYCHmVf8&refer=home

Sept. 16 (Bloomberg) -- JPMorgan Chase & Co. gave $138 billion this week in Federal Reserve-backed advances to the broker dealer unit of Lehman Brothers Holdings Inc. to settle Lehman trades and keep financial markets stable amid the biggest bankruptcy in history, according to a court filing.

I won't even go into the "too big to fail" Halliburton and KBR. Halliburton defrauded Americans out of billions and kept the money anyway even after being caught red-handed. KBR would very well be in bankruptcy if it wasn't for everyone's favorite wet nurse.

http://www.salon.com/opinion/feature/2009/06/03/chatterjee/

[scott]

it is easy to say "let em die" when it isn't you in the arena.

[DailyBail]

no...it's easy to say let them die because they failed...

[DailyBail]

and they should have been allowed to fail...let the other small time lenders take up the slack...CIT has been irresponsible and deserves failure...