CIT Group Fights for Survival

The Wall Street Journal leads its coverage this morning with news that CIT Group (CIT), a venerable if low-key financial institution, is on the brink of collapse and is scrambling to survive. CIT executives have been liaising with regulators and members of Congress because it fears small and medium business customers—its core clientele—may cause a run on the bank following news reports that CIT has "hired a prominent law firm to prepare for a possible bankruptcy filing after so far failing to get additional government assistance," the WSJ writes. CIT lends to nearly a million small- and medium-size businesses, so it "is an important test case for the Obama administration [as it] gives indications of the government's willingness to get involved with financial institutions that aren't deemed as too big to fail, but that play a significant role in the economy," the paper notes.

Even as CIT struggles, Goldman Sachs is bouncing right back. The bank, which only recently paid back its government bailout money, is set to report "blowout profits from trading" tomorrow, the New York Times reports. Wall Street is abuzz with speculation that Goldman (GS) will report profits of more than $2 billion in the March-June period, leaving the bank’s rivals befuddled as to how Goldman, "long the envy of Wall Street, could have rebounded so drastically only months after the nation’s financial industry was shaken to its foundations." Cue new hand-wringing about a bonus culture: Goldman may yet set aside enough money to pay a total of $18 billion in compensation, notes the NYT. It wonders how that will sit with lawmakers and taxpayers who provided the bank with a "multibillion dollar cushion" just months ago. “They exist, and others don’t, and taxpayers made it possible,” one industry insider remarks caustically.

Staying with the banking beat: It appears the U.S. government and Swiss financial powerhouse UBS have "stepped back from the brink of a damaging court battle" over the bank’s refusal to reveal the names of thousands of its offshore customers to the Internal Revenue Service, the Financial Times writes. Yesterday, both sides requested a three-week delay to the hearing, due to start this morning in Miami, to allow time for an “alternative” resolution to U.S. government demands for the names of 52,000 U.S. taxpayers holding offshore accounts. The joint filing came just after the Department of Justice heaped further pressure on UBS by "saying in a separate court filing that it would consider imposing monetary sanctions on the bank if the court ordered UBS to turn over names under an IRS summons and it failed to do so," the FT writes.

The business news out of Japan today is no small beer. The WSJ and NYT both report that Kirin Holdings Co. and Suntory Holdings Ltd. are in merger talks. The combined company could create a food-and-drinks giant with "global ambitions on par with U.S.-based Kraft Foods and Pepsico in terms of sales, and ahead of Anheuser-Busch InBev and Coca-Cola."

Finally, could there be hope for the future of long-form communication? The FT reports on a perhaps insightful social media report compiled by a 15-year-old Morgan Stanley (MS) intern working in the firm's London office. “Teenagers do not use Twitter,” intern Matthew Robson wrote, having been asked by media analysts to profile the media habits of his friends and peers. "Updating the micro-blogging service from mobile phones costs valuable credit and 'they realise that no one is viewing their profile, so their tweets are pointless,' " the FT quotes him as writing. Not that traditional media should take heart, either. Robson wrote that his friends "find it hard to make time for regular television, and would rather listen to advert-free music on websites such as Last.fm than tune into traditional radio. Even online, teens find advertising 'extremely annoying and pointless.' "