that's the businesses that create jobs. >> cit is a great company but this is not about cit. this is about the tens of thousands of small business borrowers that can't be banked anywhere sxels it's about liquidity to provide credit for those borrowers. so i think there's a systemic issue here. we've expressed that opinion to the administration that look at the systemic risk to those tens of thousands of borrowers. and i think some liquidity is needed here and i think that the government ought to provide it. >> maria, i differ. maria, let's not forget the 8,000 community banks on main street, usa who are the primary lenders to small businesses in america. i know this is -- this institution was made a bank holding company over the weekend a few months ago and i don't mean any ill will on them but let's concentrate on the 8,000 community banks and the fdic banking crowd who are lending to small business in america. >> why did they become a bank holding company if they weren't going to have access to the program? >> well, because i think they wanted access to the program.. >> the

>> cit go. our viewers wrote in, since it's small business, small businesses are mostly republican and they don't care. i'm going to go with that since i don't need facts in this day and age. >> they're on the spot every time with the latest -- >> exactly. i know. that's why i -- you know who my next article will be for. >> "rolling stone"? >> absolutely. i think that might have something to do with it so i'm going to write about it. >> no fact check? >> no facts. no facts to check. >> opinion check. >>> when we come back this morning, we have a lot more on "squawk." the mood of the markets on this thursday. we'll get reaction to the jpmorgan numbers, which were better than expected. also, the news of this possible cit bankruptcy tomorrow. >>> talk to the head of investment strategy for barclays and our pal, jason trener. stick around. >>> this summer you can't escape the heat. "squawk box" is live in the hamptons and it's all business with special guests including billionaire investor ron baron

manufacturers to the corner deli hundreds of thousands of small businesses depend on financing from cit group. but the nation's leading small business lender is fighting for survival and a bankruptcy filing could tear through the economy. >> jeff: a trillion dollars and counting. what stood at just $286 billion at this time last year has ballooned. the federal budget deficit now tops a trillion dollars thanks to bank and auto bailouts. >> susie: speaking of bailouts, we meet an auto parts firm not waiting for a helping hand from uncle sam. johnson controls is going back to basics from the past, to build a business for the future. >> jeff: then, the future of the markets, now that the economic recovery's not so certain. our guest, market strategist joe battipaglia of stifel nicolaus. >> susie: i'm susie gharib. >> jeff: and i'm jeff yastine. paul kangas is off tonight. this is "nightly business report" for monday, july 13. "nightly business report" is made possible by: this program was made possible by contributions to your pbs station from viewers like you. thank you. >> susie: good eve

if cit goes down? >> they did take t.a.r.p. money, didn't they? >> mm-hmm, they did. >> 2.3 billion in t.a.r.p. money. >> thank you, larry, i love that. >> he knows every one's tally for t.a.r.p. >> that would be certainly something that might be at risk, we become a creditor it is preferred, not quite sure how it would be dealt with if there were, in fact, a bankruptcy. no doubt, trish, there would be lost value for the taxpayer there. the question is really whether the government wants to try to prop this thing up yet again because it does not appear that cit was going to access the private capital it would desperately seem to need. >> an argument? >> geithner is on his way to sell bonds to saudi arabia. he spoke about cit in london. did he say anything? you know, the short run we could put them out of business and into bankruptcy, i suppose, but in the short run, as "the wall street journal" reports this morning, got 700 million companies, $4 billion in debt and over the weekend, the administration

didn't extend to cit group. now i have been as big a critic of cit's management as anyone else out there. even going so far as to put jeffrey pete, his awful value destroying ceo on the wall of shame. but i have to tell you -- and i'm thrilled sector lent the money, so it didn't have to file bankruptcy this weekend, but i've got to admit to being totally confused about why the government decided that cit had to die when so many other banks, many just as bad, if not worse, have been saved. what did this lender do that the others didn't? why did cit need to be punished more than the others? all right, pete is a terrible ceo, but he wasn't any worse than c. dowd ritter. he's above this guy, in anything. and ken lewis. is he worse? i don't know. it's not like they did any nefarious activities, no black holder actives here. in fact, i've long praised them for having a level of transparency that no other financial offered, including, by the way, much business that was actually very solid and worth a great deal of mone

but the federal posit insurance mmission is concned about deterioration of cit's assets. the agency's been sitting onhe company's apication for help a a temporary liquidity program. s&p analyst matthealbrecht ys cit's problem is that washington does noconsider it too g to fail. >> i think tt's a pretty good indicator from t government that, that they're ctainly not convinced that cits an important pler. i think, and tt's really what i think cit's applicatn to that program think it really pends on that. you know, can they convincthe gornment that they're an important cog in t economy, especially from a small d medium sized biness standpoint >> reporr: secretary timothy gehner has the authority to handle the c.i.t. cris. but won't y what, if anything, the government might do toelp. scott rvey, "nightly business report", new york. >> jeff: here's a riking developmen the deral deficit has topped $1 trillion for the fit time ever. d we are only nine months in the federal fisc year. darren gersh has some perspective on ts fiscal mileston >> reporter: $1.1 trlion is enough to gi

didn't extend to cit group.s big a critic of cit's management as anyone else out there. even going so far as to put jeffrey pete, his awful value destroying ceo on the wall of shame. but i have to tell you -- and i'm thrilled that private sector lent cit the money. i have to admit to being totally confused about why it had to die when so many other banks, many just as bad if not worse hrk to save. what did this lenner do that the others didn't yfl did cit need to be punished more than the others? all right. he's a terrible ceo but he wasn't any worse than ritter. come on. i've long praised them for having a level of transparency that no other financial offer, including by the way, much business that was actually very solid. when it comes to disclosure, cit has been a model of good behavior. plus, cit's clients, lots of small and medium-size businesses are some of the main creators of jobs in this country so letting it die could have done real damage to the economy. and in repeating our ability to create new jobs

breaking news on cit.lks with jpmorgan, short-term financing could be several billion and we will debate whether the troubled lender should be allowed to fail or should be bailed out. >> some of the loss of a drug reportedly taken by michael jackson just pulled from the market, we will see if there is impact on the stock involved. >> bombings rocking jakarta. we will have an interview with the ceo of one of the impacts that. and the economy is having on business. >> all that was ahead and we're working the cit story you call treasury to find out whether or not that may influence if they try to step in. >> let me recap the bidding. we heard earlier in the week they were back off the talks that had fallen through for overwhelming assistance. they did not rule out the government coming in if there were signs of capital being raised in addition to the financing. that's why there is a reason for caution. what seems to be talked about here is financing. that's one piece of the puzzle and the other is capital bei

er you mentioned cit. apparently the government has decided that cit is not too big to fail. what sort of systemic risk do you see from the fallout of this? as you mentioned, the financial crisis is not over when you talk about cit potentially filing for bankruptcy. >> well, scott, no specific comments on this one institution, but, you know, if you look at the latest estimates, we're looking at approximately $4 trillion of bad assets will be written down and thus far, the financial institutions have written off, at most, half of that. so there's plenty more to come. and cit is indicate ir of what it means in the financial system and in financial markets ahead, and dhaes obviously going to continue to impair both the earnings capacity and the intermediation of the function of fm markets in terms of driving the global me. so i just think this is another one of they unfortunate, but painfully predicted mine fields on the road. >> has anything on the data and earnings front this week, has any of that cause youed you to amend any of your predictions for the recovery time frame in

coming up, cit group deemed too small to bail out. but is the administration underestimating its impact on the economy? we'll discuss. but gosh, the administration sounds very capitalist here. i've got to give them kudos.. >> but first, banking on the big banks for big profit. two top analysts tell us which stocks could boost your portfolio. that's next right here on "the call." we'll be right back. >>> welcome back to "the call" i'm mary thompson at the cnbc conference call desk. the conference call i'm listen in on right now is citi's reporting profits. once you exclude the sale to smith barney, it lost $2.4 billion. the company's ceo, vikram pandit on the call saying that the rate of growth in consumer losses may be moderating. keep in mind, this, of course, is an important story not only for citi, but some of its rivals like bank of america, jpmorgan that have exposure here in the u.s. he says as losses moderate it will have positive implications for future reserve bills at citi, meaning most likely they won't have to reserve as m

but they want to see more from cit. and this 23 exemption thing has been out there for the last couple days, at least, as part of discussions with the government. they haven't rejected it, but rejected the overall -- >> it was one of a number of factors things that they were seeking. 23a and potentially some capital from the private investors. i mean, they have been trying to -- all of its been in the mix. now they're just saying give us the 23a and separately talking to these private investors. >> if that's what they're saying, i don't think that's what's going to happen. because i don't think they're going to get the 23a. that's my read of the government. >> at this time tomorrow -- >> still more likely there is a chapter 11 filing, again, based on my reporting at this point. it's very fluid. >> don't they represent less than 1% of total lending to when it comes to manufacturing and retailing in this country? i mean, the ultimate question is, how much systemic risk would there be here and could that be why the governm

that cit disputes it says it is a little bit heavy. the company hopes as a result of the financing deal the government will now look more favorably on its request to transfer assets to the u talk bank, the so-called 23 a exempti exemption. unclear what is holding up the release could come any minute a deal like this not down done until it's done. some worriness on the part of invest terse wasn't made official until the opening today. lawrence? >> 10 percentage points above libor? >> so that is in the new york times, some are worried 10 1/2 percent. you have other sources? >> journal has it bloomberg has it, a big number. let's dig in on this, steve, you are going to stay with us. so the question is will bond holder financing stave off bankruptcy for cit in the long-term or is it just a stopgap measure to buy time? let's ask politico financial consultant and also scott peltz, restructuring consultant at rsm mcglassry and steve liesman is going to be with us. scott, let me go to you. what does this mean? is it doable and is this for real

when peek was made ceo on july 21st, cit was at $37.60.that was just its beginning on the walk down the green mile. now it's $1.64 and the government is about to insert the respirator despite the my belief that the dnr sign should be hanging on the door. but that's not all. what really infuriates me are all the financings that this company has done to stay afloat which i think is attributable to peek's real strength, selling debt in common stock to the unsuspecting, hoodwinking them. they did a $600 million equity offering in october of 2007. priced 24 million equity units at $25. hey, but wait a second. it can convert to common stock if the common reaches $42. these units. it never happened. it was a total money loser. and it came back to the party in april 21st of 2008. the company raised money selling shares for $11. it was a steal. buy one, get one. they should have paid attention to the old adage. fool me once, shame on you. fool me twice, shame on me. and he couldn't resist, he december 17, 2008, raised $300 million and even that off

if cit goes bankrupt you ha a lot of retailers that will face financial chaenges. you'll have a loof small business facing challenges. and, you know, some peop have argued you know cit goes under,hey go bankrupt they'll be larr banks that will come in to fill the void. and i thinthat could be paially true. but cit has been arounfor a hundd years and traditionally larger banks have gone aft larger fish. >> reporter:it is the north americ leader in factoring and small business adminisation loans. it is e sole or main provider of revolving lin of credit to hundredsf manufacturers and hundre of thousands of retailerwho need between 10 and 50 million dollars to n their business but with the ression many of the borrowers have been t hard and cit has seen manyf its loans go b. since becoming a bank holdin company last december, c has receiv funds through the tarp program. but the fedel deposit insurae commission is ncerned about deterioration cit's assets. the agency's been sittinon the company'application for help via a temporary liquidity program. s&p analyst mahew albr

also being trying to ultimately move a number of assets from cit to the cit bank. we heard from cit in a press release that there did not appear to be a likelihood of additional federal support being provided over the long-term. and as i reported late last night, it does appear likely there will be a bankruptcy filing for the company as soon as friday. this is a very fluid situation. cit trying, of course, to do what it can to perhaps try and find either a buyer or some way to access that private capital that has been so elusive until it recently finds itself in this division. the stock trading, what, about 1.60. bonds will be the key. they are expected to suffer today. certainly the credit default swaps, as well. we'll be following this situation throughout the morning. the company has about a $75 billion balance sheet, so that would make it certainly a very large bankruptcy if that, in fact, does occur. a huge lender with small and medium sized businesses. ultimately, here it appears the regulators have made a choice that cit is on its own. despite the fact that

we have that resolution, no government money for cit. they say management directors, advisors evaluating alternatives, looks like bankruptcy. >> this is a little tricky.. i am 100% for bankruptcy because they're not too big to fail. but but but are we suggesting there's no government backstop even in the short run and glide them into bankruptcy and then sell it out? no government money in short run? >> the fdic -- interesting, the fdic have government backed loans but we're hearing they've been hesitant to make that kind of loan because they don't want to set a precedent giving these loans out to companies they don't deem to be healthy, the loans are meant for healthy companies. >> no fed discount in the short window. there is a run on the bank part of cit, they can't raise any funding. >> exactly. >> i don't know, this is a little bit of wet blanket. i will process that. if you get any new information, thanks so much for your report. >> i will. >> we will turn back to the profits rally. our gurus standing by. several segments with new g

cit grew up to fill that void.e company borrows money on wall street and gives it out to small businesses. and it plays a critical role in the lives of about one million companies. >> lehrer: one million companies. >> a million companies have relationships. >> lehrer: what kind of companies? >> these are everything from, you know, manufacturers of clothing in los angeles to pretty much every dunkin' doughnuts franchisee to the suppliers who put products in bed, bath & beyond stores to people who buy dell computers. it goes, you know, sort of all through the economy. >> lehrer: and cit supplies ongoing credit to these companies shall right? >> it does. >> lehrer: all right, now if cit goes bankrupt or goes under or disappear -- disappears what happened? >> there are two ings in that are going to happen. the first that companies that are able to get money from om where else will shift their relationships. while those that can't may be forced to go out of business or to contract or to find, you know, some other means

is cit close to a second chance?ency financing so it can keep the credit flowing to small business america? we'll have the details at the top of the hour. >> i'm jacqui jeras. the temperatures have been flip-flopped across the country. too hot or too cold. we're going to see some big changes with those temps coming up in your forecast. >> never can make everybody happy, can you, jacqui. >>> also with home values way down in detroit, some see the real estate market there as an investment of a lifetime. others say it could be a huge risk. if we don't act, medical bills will wipe out their savings. if we don't act, she'll be denied coverage because of a pre-existing condition. and he won't get the chemotherapy he needs. if we don't act, health care costs will rise 70%. and he'll have to cut benefits for his employees. but we can act. the president and congress have a plan to lower your costs and stop denials for pre-existing conditions. it's time to act. you have questions. who can give you the financial advice you need

and ten cit eventualy collects payment frothe retailer. network breaks wn, what u are going toave is a lot of pn in the retail business. because a lot of compaes are in pretty frage condition right n. and even temporary disruption inheir cash flow could be very serus problem f them. >> how did cit t into such trouble? >> you know, the story is pretty faliar by now. it is a company that lived on the credit marke. it basically reli on the llingness of investors to provide mey that could provide its cuomers. and about two years ago investors stopped bing willing to provi money. what startedwith concern about sub prime minist mortgages spread quickly to pretty much every other kind of investme. and for twoyears now ci really hn't been able get additionaloney from investors. it's ben burning its own fat and it runnig out. >> lehrer: is there a milln or more companies or businesses out tre depending on cit, what's the falack position of cit falls what d these folk does? >> there is ing to be a scramble. you ca think of sort of t availability of

there is no long-term solution for cit. having a finance company in this world especially with their credit rating destroyed, they have no access to funding.g. they need to be bought but, unfortunately, it's not the right time to sell. >> do you put any credence whatsoever on a report in "the new york post" today that jp morgan would be interesting in buying the factoring unit of cit? >> yes, i do. the factoring unit is probably the crown jewel of the franchise. it has over 50% market share in retail factoring. it's a good, slow business, probably the business that puts the u.s. economy most at risk. they do a lot of retail business and a lot of suppliers depend on cit for financing for their day-to-day cash flow needs. i wouldn't be surprised at all to see the factoring business be the first to be sold from cit. >> just quickly, chris, there is a trade to be put on cit betting either they will sell their crown jewel or would sell themselves or get some sort of help in the near term. >> unfortunately i don't like the equity

let me show you where cit comes in. thing i'll do is return all this money to where it belongs. here's what really happens. cit is in the middle. the supplier sends the shirt to the retailer. that shirt sits on the shelf until it gets sold and that retailer may take more than a month to pay the supplier. how does the supplier keep on making shirts? well, cit loans the supplier money and that allows the supplier to make shirt number two and send it to the retailer. that shirt could sit on the shelf, the company may not pay. cit again for a fee -- kind of like a cash advance, pays the supplier and the supplier ships shirt number thee and so on and so forth. whoa! let's get that under control. so what happens is the business cycle continues. now, with cit about to -- or at least having major, major problems, it's off the scene and this relationship becomes very tricky. some of these suppliers simply won't have the money to be able to deal with the money that they need to continue to supply companies. so cit calls itself th

and on the cit, fdic has been dragging it's feet.. guarantees to general electric and yet cit is left hanging out there. i think you see real inconsistency with the government. the federal reserve has dropped the ball. fdic has dropped the ball on that one. in terms of the stimulus package, i would love to hear from both of you on how can we have this new stimulus package, perhaps, massive increases in spending, we can have massive increases in entitlement spending, how is the economy going to survive the massive increases in taxes or borrowing? where does this leave the economy in the next few years? >> the economy can't survive this.. already, if you -- it would take us 60% increase in income taxes just to balance the budget over the ten-year budget window the president has given us. he has proposed a budget that creates more debt in the next ten years than in the previous 220, tripling the national debt in just ten years. you cannot bail out, borrow and spend your way into prosperity. japan tried it in their lost decade. it did not

so what's happening to cit? >> the thing these happening to cit, this weekend they're going toock everyone in e room and say -- well the bond holders, the debt lders at cit andhe company itself. the government haspparently washedheir hands, we'll e if they come in and help orot. they're going to try to se the coany. cit is an iortant bit of politil theatre for washington. yes suggest say b of a but we drew the line at cit. they're not as systemically as important to e to the economy. if you go dn to sevth avenue here in manhaan in thegarment district where lots of peopl have smallbusinesses sell and trade, selling an trading othes, those people rely on cit. they useo if factor their inventory theyet money now for inventory coming in lar. there will be pockets of ecosystems o industries that ffer quite mightil >> charlie: why >> retailers, rniture mafacturers, people like that. >> the other side ough is cit has en in trouble for quite a while. and ey've beenutting back on their n lending very heavily. they've bee

if we bail out cit, who is next in line? every time we do it, we find out that it's not limited to the systematically important banks, not limited to the big guys. now it's everybody step in line and get your bailout.. >> isn't it failure a part of our system? if you're going to have an efficient-free market system, isn't failure part of the system? >> i completely agree that failure does have to be par of the system, and the only issue i'm raising is the message this sends to small businesses when we have been there over and over again with an open hand to the tune of hundreds of billions of dollars for the big guys, and when somebody is helping the little guys needs some help, money that seems negligible compared to what everybody else has gotten, then the message may need to be that we're there to help you too. >> but john, isn't this a situation in which a lot of these small businesses can still get loans from other financial institutions? isn't this part of the argument against helping them here, because it's not like f

and companies across america - cit group says if it fails, almost 800 manufacturers and 300-thousand retailers would be at risk... the concern is that thousands of small businesses could lose their credit lines - and would not be able to continue daily operations... including paying employees. this environment continues to be a challenge for businesses... especially when credit has virtually dried up. "the biggest challenge to small business is how are they going to have that entreprenuerial spirit without capital funding.. if it dries up all business entities out there trying to revitalize the economy would struggle with that venture. " cit has received 2.3 billion dollars in taxpayer money under the troubled asset relief fund... it also faces a payment on 1 billion dollars worth of bonds next month... some believe that even if cit group is not too big to fail - they say the small business sector certainly is - and that its survival will depend on how the obama administration handles this situation. critical juncture for adminsitration - whether back small business - they have not g

they're considering a equity swap and cit may raise up to $3 billion in financing.epend on cit getting government approval to transfer some assets to its commercial bank in utah. christine. >>> keeping an eye on those deadly bomb blasts in indonesia's capital, we are watching the story closely. bombs went off almost simultaneously in jakarta's business district, killing as many as nine people and injuring as many as 50. a suicide bomber may have been involved.. among those killed include timothy mckay, ceo of the indonesia unit of holcim. indonesia's president has called the bombings an act of terror. they say the bombings were a response to his re-election to a second term. secondly, the manchester soccer team has canceled the squaw car ta leg of their tour. the rupiah is trading down at the moment, at 10,140. it was lower by 1%, but now it's recovering just a little bit. stocks meanwhile are recovering just a little bit. right now, the jakarta composite is trading down 0.6%. 2,106. >>> shares in ba have been trading in the london market t after it unveiled plans o

cit is the 20th largest bank when measured by assets.ut when you measure lending and leasing to the business community, it's actually the fifth largest bank. my sources say a decision from washington is imminently. we will wait to watch when in fact this stock opens for trading again. but it is halted pending news. i suspect we could get a resolution to cit's issues by the close of business today. we will see about that. if not certainly tomorrow. we've got 35 minutes before the closing bell sounds on wall street. it has turned into a busy day here. up 246 on the industrial average. back above 8600. nasdaq at 1859. and we've got the latest inside the rally coming up. we'll look at the sectors behind this upswing, break down all the key market drivers for you. first take a look at the bond market, where interest rate stands right here. you're watching "the closing bell" with 30 minutes before the close on wall street. not a lot of activity. you read the news. and yet, some people need to sell and other people want to buy. this is a moment

>> cit headline, a very important one. cit lifeline, one that we will continue to delve into.nomics reporter steve liesman back at hq with the latest. hey, steve. >> thanks. as you said, cnbc is on the cit's board of directors last night. it hopes will stave off bankruptcy for the small business lender at least in the short term. this is financially, not capital yet. official announcements expected this morning on the loan. carries a 2 1/2-year term. they say seven of the company's top ten bondholders providing the loan. a portion of the proceeds should be able almost immediately and then over time. they also earned cit has outstanding se

the cit and other organizations.or banks that can get through their capital problems, these community banks and regional banks have some capital, get through their legacy problems and get on with the business and focus of making loans.s. they'll be some significant profits. i think with john's bank, bank united, if they can get through that, you know, he knows how to bank, knows how to build customer base and serve customers and those things are going to matter again. and i think -- >> although -- >> i think they can prosper. >> how much more difficult is it going to become now that the fdic, washington is weighing in and deciding what the rules will be for private equity rules will be. you kicked that off with bank united. >> there's been great dialogue over the last couple of days. we're in the middle of a comment period where sheila bair is asking for comments about that very subject. i believe, although people are panicking about this and people are worried about what the rules -- new rules are going to look like

, steve has more. >> mark, we know what's the deal with cit.we just don't know where's the deal. they are waiting for an official release for lenders of that $3 billion financing package. cit's board approved the deal last night. the release was supposed to be out there morning. they say it's now in the hands of lawyers. the deal is still hoped to be announced today. they approved the financing package last night. it hopes the funds will stave off bankruptcy for a small business lender, at least in the short term. the loan coming from top ten bondholders, carries a 2 1/2-year term, and some proceeds will be available almost immediately. cnbc also learned cit is planning a cash tender offer for outstanding senior notes in august as part of a broader recapitalization plan. unclear at the moment is whether it will be enough for it to survive and what role, if any, the government will play. stress test found a need for $4 billion in capital but a cit source says that the company's ceo thinks that's too much. more than what it needs. so the company

. >> what about what we saw this week as far as cit group? cit, not to be confused with citigroup. cit, a major lend tore small and mid-cap businesses in america, teetering here, could go chapter 11. it's obviously in financial trouble. the government is not going to rescue cit. what does that mean to the economy? is that a big blow to small and mid-cap business or are there other companies that would pick up the slack in terms of lending to some of those companies that trulneed it? >> well, we can't be sure about that. of course, this is the other side of the thing. i do think that if everything goes okay, we will gradually move into a long expansion. but there are plenty of things to worry about. i think one of the problems still is the availability of creditors to small businesses, to consumers, anybody who doesn't have sort of a hhh rated credit rating i think is going to have some problems here. that will slow the recovery. it's a real battle between normal cyclical forces pushing us back into expansion and things like cit which will restrict credit somewhat. the question is c

ñ cit borg has approved that financing package from bond holders. two parts.what we don't have and we have been waiting for all day is some kind of formal statement from the company. still done see any formal statement. but you see the effect, stock up dramatically. the important thing, is that having any kind ever ripple effect? take a look at airlines. there was clearly some relief that some kind of deal, no matter what you would call it, to help cit is out. that's helping perception of credit quality and that's helping airlines as well moving nicely to the up side. finally your big story here tomorrow is going to be caterpillar. what's going to happen here? remember, two thirds of their sales are outside the united states. so we are waiting for comments on how the china stimulus package is going to help them or hurt them, how brazil is doing, and also how agricultural sales in the united states are helping them out. this is going to be one big argument, maria, on either side for the bulls and the bears. if we can get positive comments from caterpillar at th

who has a lot of the credit from cit, it's probably not a great environment to go out and get another line of credit. who really is vulnerable? >> if you're talking about the customer standpoint, they are the largest factor, the retail community would be hurt from that standpoint. obviously there would be bondholders and, you know, as tim had mentioned the government did give him 2.3 billion of t.a.r.p. money. >> and lastly, handicap the trading opportunity if there is one here. tim geithner today was making comments about the ability to step back in and backs off cit if needed. is there an opportunity in that -- do you think the government would ultimately step in, and if so, could we then see a sharp rally on that news? >> well, you know, there is that possibility and it's really difficult to handicap precisely what the government's going to do. our concern is we outlined about three months ago, we down-sgraded the shares, it's really difficult to understand how the common stockholders's going to make a lot of money because the earnings powers has been depleted and what they're goin

would mean systemic risk. >> well, i think cit is a large player in a couple of finance businesses. their customer base would see some pressure. but not in the way we typically think of. >> who can step in to make the loans to the small and mid-sized businesses if cit collapses? >> in terms of the general corporate finance, it could be any bank. there are some specialty businesses like trade finance where someone else would have to step in and take over that role. >> hey, it's tim, how much of this, though, is political, the fdic not stepping in, geithner making comments, we can do what we want when we want. we have the ability to do this now, we don't need special rules. this seems a little strange. obviously they threw these guys t.a.r.p. money, in position to give them a hand, smes are very important to the story and politically i think it would be a significant thing not to bail them out. >> well, tim, i think it's even more so than that because there are a couple of players ge and deere capital that actually got tlpg guarantees in october without becoming bank holding companies

. >>> shares of cit group are halted for news pending. cnbc reports the situation at the troubled lender will probably be resolved in the next 24 hours. >>> based on a court filing today, bernie madoff's outside attorney, david freeling, is expected to plead guilty to criminal charges. that's cnbc.com news now. i'm julia boorstin. "fast money" with melissa lee starts right now. >>> from the nasdaq market site in new york city's times square, this is "fast money." i'm melissa lee, these are the "fast money" traders. stocks surging the most in months as earnings from intel signaled global demand is, in fact, turning. how can you ride the rally? we've got the winning ways to play. let's go to the word on the street. you were mentioning in the "halftime report" that you were watching key levels on the s&p 500, we closed up into and change. >> we closed through them. if you look at 910, 930 was the range. we busted through it. that was a very positive close. i think that's because guys have significant performance anxieties. guy were underweig

and a plan to keep cit afloat. claire, good morning. >> good morning to you. >>> asian stocks did kick off the week with more gains. hong kong shares jumped 3.7%. south korea's kospi rose more than 2.5%. japanese markets were closed for a holiday. >>> some of the biggest names in technology report earnings this week. investors will be closely watching to get a clearer picture of how the economic recovery is going. texas instruments and the number two chip maker advanced microdevices are on deck today. the dow jones industrial average starts the day up 32 points. the nasdaq added 2 points. >>> on the economic front, the index of leading economic indicators designed to predict the economy six to nine months down the road is due out later this morning. >>> commercial lender cit's board has given the green light to an 11th hour deal with major bond holders for a $3 billion rescue loan to keep the company out of bankruptcy. "the new york times" reports the emergency financing is intended to give the 100-year-old company

so what's happeng to cit? >> the thing these happening to cit, this weekend there going to lock everyone in the room and say -- well the nd holders, the dt holders at c and the company itself. the governmentas apparently waed their hands, we'll see if they come in and help or not. they're going to try to savehe company. cit is a important bit of potical theatre for washington. yes suggest say b of a but we drewhe line at cit. they're not as systemically as important to th to the economy. if you go dow to seven avenue here in manhatt in the rment district where lots of people have small sinesses sell and trade, selling and trading clhes, those people rely on t. they use t if factor their inventory so they g money now for inventory coming in late thereill be pockets of ecosystems of industrieshat suer quite mightily. >> charlie: why. >> retailers, fuiture manucturers, people like that. >> thether side thgh is cit has be in trouble for quite while. and th've been cting back on their newending very heavily. they'v

the group includes pimco and other cit holders.ted to provide the financing with the two and a half year terms. keeping the country as a chapter 11 bankruptcy. >> the finance ministers insisting the gdp has stabilized in the second quarter. the sharpest annual decline since 1968, according to the federal statistics office. >> foreign investment capital cit is buying citic. the size of the investment is around $200 billion hong kong dollars. a formal announcement is likely to be made as as soon as as this week. citic is opened by citic international holdings. are better than expected earnings bring about a sustainable rally? stay tuned. >> reports that porsche may have accepted a buyout offer from its rival volkswagen. welcome to progressive.com. you must be looking for motorcycle insurance. you're good. thanks. so is our bike insurance. all the coverage you need at a great price. hold on, cowboy. cool. i'm not done -- for less than a dollar a month, you also get 24/7 roadside assistance. right on. yeah, vroom-vroom! sounds like you

cit wasn't big enough to get help.etail federation says that was a mistake. >> what we're saying is that cit is too important to fail. it literally finances the life blood of the retail economy. >> reporter: cit specializes in a type of of lending called factoring. keeping businesses afloat so they can stay operational while they wait for the money to roll in. >> if cit is not there, that 80% to 90% up front cash in order to produce more goods to sell to another retailer isn't available. and consequently, it's likely the supplier will go out of business. >> maybe from the big picture they are too small to deal with, but from the bottom end, this is where small business dwells. >> reporter: he says he doesn't know why the government bailed on cit's bailout, but fears that decision may mean lights out for small businesses across the country. >> at a time when they're having an awful lot of trouble, small businesses are getting hit from their own declining demand for their products and their vendors are in trouble and it'

cit deals with small business. that may not mean we will lose jobs, but it might in some cases or no? >> there two separate issues and the first is like locking for the silver lining. this is a non-story. we are not tear together out and the system is crashing. that really shows the return to normalcy there other players in the market. that is a separate question. if they are the primary player in the small business market and won't be allowed to fail because of that, we have a competition problem. that will need to be addressed for later. this is the non-news. part of the assessment is the crucial or strategic they play for a small enterprise. they play in the market and could drill a hole relatively quickly. >> could you weigh in on that, who will make the decision. someone in washington is making the decision too. >> i wish i could offer you more and it's interesting that they deliver the program. treasury administers the t.a.r.p. under which they borrow borrowed. is there a division between the way treasury see

again, we're going to get the news within the next 12 hours from cit. it's really been a vicious cycle, melissa, because the company has had downgrades and that has increased the risk. some people feel it's in the middle of a disagreement between geithner and sheila bair. we've heard it before, sheila bair thinks there's too much risk on the table to provide the funding for cit. geithner says we've got to help this company because it is lending to all the small and midcap companies, right at the sweet spot when the obama administration is saying small and midcap companies really need the help, because they are the job creators. >> all right, maria, thank you so much for that update. once again, the headline here is that we could be hearing what the resolution is for cit in the next 12 hours. so, by 6:00 a.m. tomorrow morning. >>> take a look at that chart in the after-hours market, cit not moving too much, although it has moved higher on this anticipation. but the interesting thing here is it didn't get access initially to the treasury -- to that fed le

we think cit will be able to move on. the other thing to keep in mind, is is sort of a change in attitude from washington. first time we haven't seen one the big physical companies bailed out and that is maybe a sign of things to come. >> used to make huge news when ben bernanke would address congress. he is going to do that tomorrow. >> that is what people will be listening to in terms of the economy this week, steve, because we don't have a whole lot of reports. that is probably the biggest thing, ben bernanke's report on the state of the economy. and health care still on the top of everybody's mind including those on wall street. >> we'll leave it there. we'll have more details coming up. >>> all up next, a u.s. soldier captured. a lea that the government says is propaganda. >>> we mark the 40th anniversary of the moon landing. these wax figures of buzz aldrin and neil armstrong are from madam tussaud's decked out in authentic gear and hanging out in our studio. >>> how much fuel did the apollo 11 crew have left when t

let's talk cit. yesterday around this time a little later i told you about cit's efforts to raise as much as $3 billion in secured financing from private investors so to speak. private equity. fixed income investors. hedge funds. that continues today. that was going to the hope is of course that you combine that with getting these approvals to move assets from finance company to the cit bank and stabilize the company's liquidity situation and then you embark on debt for equity swaps and put it into a position to survive which those moves might allow. that was yesterday's news. that continues to be today's news at this point for cit. the stock of which i might add is up sharply percentage wise.e. when you trade up to 59 cents it's not exactly the greatest thing in the world but then again you see it right there up 14 cents. let's call it already coming down. it's a significant move. haven't got a check as yet on the bonds. we'll be following the story all day today. what can i tell you right now? i ta

cit, of course, they fund receivables.nancialing to sm and mid-size businesses around the country. the problem is the value of the collateral they have, assets they're funding for other people, for example, is going down. and they have yet to be able to access the private market in a significant way to fund those assets. so they can lend against them. that's the problem. simple as that. at this point, the key is the fdic has not come to their aid. is not willing to say, we will back any debt issuance that you do. they're still talking to the fdic. we got a press release late last night from cit saying we're still applying to this fdic program. they only became a part recently and did so in part to access some of these fdic programs. we may be seeing the government say, you know what? we're not that worried about you if you fail. that being said, failure may be some time off. here's what we heard from the treasury secretary speaking in london to reporters very shortly ago. the u.s. government has the authority and the abili