Regulators lift cease and desist order on CIT Bank
Banking regulators lifted a cease and desist order against CIT Bank, a subsidiary of CIT this week, allowing the banking platform to refocus on providing funding to small and middle-market businesses. The Utah Department of Financial Institutions and the Federal Deposit Insurance Corp. issued the cease and desist orders against CIT Bank in July 2009, forbidding the lender from paying dividends and from extending credit to its parent company or any affiliate of the bank. It also was prevented from engaging in "any covered transaction" with its parent company. The premise behind those orders was to prevent the bank from buoying its troubled corporate parent, CIT. In late 2009, CIT voluntary submitted a prepackaged bankruptcy plan for CIT Group and CIT Group Funding Co. in the U.S. Bankruptcy Court for the Southern District of New York. John Thain, CEO and chairman of CIT, said "We are pleased with this decision, which serves as another example of the progress we have made in CIT’s restructuring efforts. CIT remains focused on supporting the small business and middle market sectors that are vital to job growth and the recovery of the U.S. economy." The termination of the cease and desist order does not immediately impact CIT's ratings, Standard & Poor's Ratings Services said Thursday. "We believe the removal of the cease-and-desist order will help CIT's efforts to conduct more of its commercial businesses through CIT Bank and diversify the bank's brokered deposit base," S&P said. "In fourth-quarter 2010, more than 50% of CIT's U.S.-funded volume was originated by CIT Bank, including new corporate finance loans and leases. CIT continues to benefit from its reorganization through higher capital, reduced credit costs, and limited near-term maturities." In late December, CIT had $4.5 billion in deposits and $7.1 billion in assets. Write to Kerri Panchuk.