Bonus time. Goldman Sachs will receive $1 billion if the troubled commercial lender CIT files for bankruptcy protection, the Financial Times reports. U.S. taxpayers, meanwhile, would lose $2.3 billion if the lender files for Chapter 11. Goldman extended a financial rescue package to CIT in 2008, just a few months before the U.S. Treasury bought over $2 billion in CIT shares to prevent it from going under during the height of the crisis. Goldman is entitled to demand the full billion under their agreement, but would probably agree to a delay in the payment, sources say. CIT is working to stave off bankruptcy through a debt exchange offer that would wipe out its equity holders. Goldman also holds credit insurance that would be paid off in the event CIT goes under. “The credit default swaps Goldman Sachs purchased to prudently manage the risk associated with the CIT financing are not a directional ‘bet’ on CIT, but were bought to protect against the possibility of a precipitous decline in the value of the collateral,” Goldman said.
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