EconomicsUSA: Treasury: Geithner shafts public, fakes negotiatn wth weak-loan-loaded CIT, no bailout retrns to taxpayers in CIT bankruptcy

Yahoo! Finance reports on its TechTicker website the exposure of the federal Treasury Secretary's desertion of taxpayers' interests in negotiated earlier settlement with "one of the nation's largest lenders," CIT.

William Black, professor at the University of Missouri-Kansas City School of Law is dumbfounded. "We put ourselves on the hook in a completely inept way where we lose first. We lose entirely as the taxpayers."

Black, a former top federal banking regulator, blames Treasury Secretary Timothy Geithner for negotiating such a bad deal on behalf of the American public.

And so do I.

Please read the article linked above, and the Wikipedia article on what used to be Commercial Investment Trust (hence the pomo name CIT Group, "not to be confused with Citigroup) another large financial services company."

CIT Group, Inc. is a large American commercial and consumer finance company, founded in 1908. The company filed for Chapter 11 bankruptcy in 2009. The company is included in the Fortune 500 and is a leading participant in vendor financing, factoring, equipment and transportation financing, Small Business Administration loans, and asset-based lending. The company does business with more than 80% of the Fortune 1000, and lends to a million small and medium businesses.[2] It was a part of the S&P 500 Index, was replaced by Red Hat at the close of trading July 24, 2009.[3]

The company has its headquarters in New York City, and employs more than 7,300 people in locations throughout North America, Europe, Latin America, and Asia Pacific. The company's name is an abbreviation of an early corporate name, Commercial Investment Trust.

In 2008, CIT Group became a bank holding company in order to qualify for, and ultimately receive $2.3 billion in Troubled Asset Relief Program (TARP) funds.

Now, CIT in bankruptcy will repay special-status creditors at the rate of return of only 70% on each dollar CIT owes; the other creditors apparently will be written off, politely and litigiuously of course . The more privileged set of creditors should have included the United States taxpayers (to whom Geithener is supposedly devoting his expertize under the Constitution and the reformational principle of economics (optimal stewardship).

It's this transgression, occuring this deep into his ministry's time-line (as Secretary of the Treasury of the US Government for the US people and the US taxpayers who put out the dollars in the first place). Geithener's ministry had a shakey start, but thru those shakes I mostly held back from making any finalizing negative judgment. They say he's smart, I think he's very smart.

But on this one, he's smart and wrong and unprincipled not to seek status for the USA Treasury, acting on his authority as derived from taxpayers' earnings under government taxation, unprincipled in that he did not seek status as a special creditor (the Paulson-Geithener $2.3 million paid out in TARP funds, again underwritten by the taxpayers, a massive payout but did not insist on Treasury's/taxpayers' entitlement to a 70% return on their 100% lost TARP contributions. Our federal Treasury, under our esteemed Secretary of the Treasury Dr Richard Geithener shoud be 70% fatter on this account.

I do realize that had the US Treasury adequately carried out its office, responsiblity of optimizing stewardship of taxpayers' contributions ("office" in Dutch: ambt)) from the beginning of its transactions and negotiations with CIT, before its initial TARP outpay to CIT, the whole math that determined "70%" as the benchmark, m+t have worked out differently, to say, "65%".

Or: 75% of the $2.3 billion dollars USA = $ 191 Billion. Am I correct?

-- EconoMix