CIT, Crocs: Small Enough To Fail?

The Wall Street Journal leads, and the New York Times tops its business section, with news that that business lender CIT Group (CIT) will probably not receive the federal aid it's seeking. "There is no appreciable likelihood," the company, which provides funding for thousands of small and midsize business, announced on Wednesday. A Federal Reserve stress test performed this week found that CIT could need $4 billion to cover losses. The Times notes that if the government does not proceed with a bailout and the firm collapses, CIT will be the largest American bank to fall since Lehman Bros. Still, most analysts agree that while its failure could be devastating to the businesses it supports directly, it probably won't threaten the broader financial system.

The Washington Post leads its business section this morning with news of another company on the verge of collapse: Crocs (CROX), the maker of brightly colored foam clogs, may be on the way out. According to the paper: "Last year the company lost $185.1 million, slashed roughly 2,000 jobs and scrambled to find money to pay down millions in debt. Now it's stuck with a surplus of shoes, and its auditors have wondered if it can stay afloat. It has until the end of September to pay off its debt." The company expanded at the height of the real estate market—just to be met with a national economic contraction and dwindling interest in its quirky product.

According to the New York Times, corporate information about Twitter was exposed after a hacker broke into an employee's e-mail account about a month ago. "The breach raised red flags for individuals as well as businesses about the passwords used to secure information they store on the Web," the paper notes. Many sites that contain sensitive information usually just ask for a user name and password to enter. These sites are growing more susceptible to hacks, especially because people use the same simple passwords on multiple sites to avoid losing track of them. The Twitter hacker broke into an administrative employee's e-mail as well as the e-mail account of the wife of Evan Williams, Twitter's chief executive.

According to a WSJ piece, Wal-Mart (WMT) has "undergone a stunning metamorphosis" over the past four years "from whipping boy of the political left to corporate leviathan now welcomed with open arms by a Democratic White House." In the past, Democrats have piled on the anti-Wal-Mart rhetoric—denouncing its labor practices, slim health benefits, and general business dealings. Now, the tables have turned: In a move that broke away from most retailers, Wal-Mart recently decided to support employer-mandated health insurance, a cornerstone of Obama's health care plan. "Some see these recent efforts as a calculated attempt to get ahead of government actions that are inevitable and a way for Wal-Mart to craft them in its favor," the paper says.

Yesterday's forecast from the Federal Reserve raised "fresh doubts" about the possibility of a full-fledged recovery any time soon, says the Washington Post. The projections of the 17 top Fed leaders said that "the unemployment rate may surpass 10 percent by year's end and warned that the economy may not return to full health for at least five years." The report suggests a term that's been bouncing around of late: "a jobless recovery"—one in which the economy begins growing once again, but hard times won't necessarily end for American workers.

According to the Wall Street Journal, Bank of America (BAC) is operating under a "secret regulatory sanction" that includes a mandate to overhaul its board. The order was imposed in early May, according to the paper's sources, and as a result, Bank of America faces a series of deadlines from U.S. regulators, some at the end of July and others in August. The "so-called memorandum of understanding" is intended to give the bank the opportunity to resolve issues without the distraction of outside attention. According to the article, Citigroup (C) has been operating under a similar federal order since last year.

And finally, a judge in New Jersey has dismissed a $5 billion defamation lawsuit filed by Donald Trump against an author "whose book placed Mr. Trump's personal wealth far below his public estimates," reports the New York Times. Trump sued Timothy O'Brien, the author of Trump Nation: The Art of Being the Donald, because he estimated Trump's wealth at $150 million to $250 million. O'Brien, who is also an editor at the New York Times, cited three confidential sources. Though he lost, Trump has vowed to keep pushing the claim, the paper says, "insisting that his wealth was more than $5 billion when the book was released in 2005 and is more than $6 billion now."