According to SpendMatters, one big reason the government burned through $2.3 billion in TARP funds for CIT even though it was buckling under debt was to try to avoid ruining everybody’s Christmas this year.
Jason Busch at SpendMatters writes,
…had CIT originally filed for bankruptcy earlier this year — around the time the US government bailed them out — it could have had a disastrous effect on the retail supply chain for the holiday season. But fortunately, the original delay — which we can thank the Feds for — allowed “both buyers and suppliers in the retail sector to get their shipments in and get paid,” Kurt notes, in time for the holiday season.
That doesn’t make the bankruptcy “good,” since there could still be problems for stores. The Associated Press points out that this means retailers are going to have problems in early 2010 trying to get inventory, noting that “about 60 percent of the apparel industry depends on CIT for financing,” and that retailers “still need a reliable source of lending to prevent shipping disruptions and to restock after the holidays.” But it does mean that retailers were able to prepare for the shopping season without having to worry about how to get merchandise on the shelves.
“What Will CIT’s Bankruptcy Mean for the Retail Supply Chain? (Part 2)” [SpendMatters]
“Retail faces uncertainty as CIT enters bankruptcy” [Associated Press]
(Photo: Paul Keleher)