Why Too Big To Fail Must Die
Because it ensures that clowns like the ones at CIT waste time and money sucking up to politicians rather than running their businesses.
On June 17, Jeffrey Peek, chief executive officer of CIT Group Inc., spoke at a conference in the nation's capital where the keynote speakers were Federal Reserve chief Ben Bernanke and Federal Deposit Insurance Corp. Chairman Sheila Bair. His real mission there, Mr. Peek told others, was to raise his profile among Washington's movers and shakers.
This week his politicking foundered, as the U.S. spurned pleas for financial aid from CIT, one of the nation's largest lenders to small and midsize businesses.
Late Friday, CIT was negotiating with creditors over a potential private-sector rescue. Without it, the company could file for bankruptcy protection as early as Monday morning, say people familiar with the matter. It would be the fifth-largest bankruptcy in U.S. history.
Eventually, there had to come a time in the economic crisis when the financial system would stabilize enough, and regulators would grow weary enough, that Washington would begin saying "no" to major assistance for big financial firms. That time seems to have arrived. And Mr. Peek and CIT missed the shift of the winds.
CIT had been trying for months to improve its connections in Washington. It spent close to $90,000 last year on lobbying, and $60,000 in the first quarter of 2009. It brought onto its board of directors former Congressman Christopher Shays, a Connecticut Republican.