Everyone’s basically rooting for small-business lender CIT to fail, after outgoing CEO Jeffrey Peek oversaw a loss of 90 percent of their assets during the subprime-mortgage crisis. Everyone, that is, except for shareholder activist Carl Icahn. Last week, bondholders had made a plan to restructure $31 billion in debt, an effort that the Journal deemed “destined to fail,” which put the company “teetering on the edge” of bankruptcy. But this week, Icahn has offered a $6 billion credit line — a move that would save small shareholders from having to swallow the current restructuring plan (which would give more ownership to the government and would reward large bondholders first). Stocks in the company bounced up fourteen cents after news of Icahn’s offer broke.
Of course, critics argue that another big loan isn’t going to really do much. But at least shareholders feel like they have options now — these are people who just three months ago were planning to keep the CEO who ran them into the ground, because, hey, who else would want the job?