by James Buchanan

In yet another staggering financial blow, CIT Group has announced that it’s filing for bankruptcy. Rumors of CIT Group’s collapse have been circulating for months. Over the last two months, the liberal media has inundated us with propaganda about a recovery. The worst of the “recession” was supposedly over. Some pundits were claiming that the US was in a “jobless recovery” which brings up the question “How can you have a recovery without an increase in jobs?”

A recent news article reports “CIT Group Inc., one of the nation’s leading funders of small and medium-sized businesses, filed for the fifth largest bankruptcy by assets in U.S. history Sunday as part of a reorganization plan that has the support of an overwhelming majority of debtholders. In a statement, the company said it is asking the U.S. Bankruptcy Court for the Southern District of New York for a quick approval of the prepackaged plan. CIT said none of its operating subsidiaries would be affected by the filing, allowing them to continue operations. ‘The decision to proceed with our plan of reorganization will allow CIT to continue to provide funding to our small business and middle market customers, two sectors that remain vitally important to the U.S. economy,’ said CIT (CIT, Fortune 500) chairman Jeffrey M. Peek. In the bankruptcy filing, CIT said it had $71 billion in assets and $64.9 billion in liabilities. While the required percentage of debtholders approved the prepackaged bankruptcy procedure, the company said it did not receive the required support from bondholders for a $5.9 billion debt exchange offer that would have prevented the Chapter 11 filing.”

You can bet that every possible effort was made to avoid a bankruptcy given the continued weak consumer confidence and the Obama regime’s obsession with doing anything to stop the continuing stream of bad news. Efforts to stave off disaster failed, and Monday could prove an especially grim day for Wall Street.

There have been sixteen bank failures over the last two weeks as the number of banks failing for 2009 surged well past 100. 115 banks have failed in 2009 and hundreds more are on the edge of bankruptcy. Some banks are so close to bankruptcy that they’ve stopped doing foreclosures.

Conditions are so bad for many banks that some of them are refusing to re-take possession of homes to avoid paying property taxes and –perhaps– to keep another big financial loss off their books. Every foreclosed home could mean hundreds of thousands of dollars in losses to the bank on each failed loan. Multiply this by dozens or hundreds of foreclosures and that could be enough to push another bank over the edge.

One article notes “Rodney Lass figured his days as a homeowner were over when he was hit with a foreclosure judgment more than a year ago. He stopped rehabbing his two-story Bay View home and moved on. But what Lass didn’t realize until recently is that the house remains in his name today. He’s still responsible for the taxes, upkeep of the property and the mortgage, leaving Lass perplexed. ‘Why would I pay for something that I don’t own anymore?’ Lass said. The foreclosure, however, failed to go through after the California-based lender decided it didn’t want the gutted house. Lass said he found out for certain that he still owned it from the Journal Sentinel. Today, the house at 703 E. Lincoln Ave. sits condemned, holes in its roof, a blight on the working-class neighborhood. The home represents a growing phenomenon known as walkaways – properties for which lenders sue for foreclosure but never take the title. For years, lenders complained about debtors who left the keys on the kitchen table and skipped town, leaving it to the bank to file for foreclosure and eventually take title by buying it at a sheriff’s sale. The latest twist: Now it’s the lenders who are doing the walking, often without telling the borrowers, who may believe erroneously they have already lost title.”

Obama has only been president for ten months, and we’ve lost two major car companies, over 100 bank failures, millions more unemployed and now CIT Group has gone bankrupt. Things have gotten so bad that banks are refusing to complete foreclosures so they can dodge the property taxes and keep another financial loss off their books.