Thain As A CEO Of CIT Group Inc
NEW YORK -After a brief stay in bankruptcy protection last year, John Thain, Former Merrill is taking over as a chairman and CEO of CIT Group, the nation’s largest lender to small and mid-sized business. John Thain is replacing acting interim CEO Peter J. Tobin. Tobin took over CIT on Jan 15 when CIT was searching for a stable substitute for Jeffrey Peek.
The decision to sell Merrill appeared to be a lifesaving move for the company at the height of the financial crisis by Thain as a chairman and CEO of Merrill Lynch. He faced a lot of criticism after this deal as he spent more then $1 million to redecorate his office at Merrill and he paid out $3.6 billions in bonuses to Merrill employees, despite its massive losses.
After the deal was completed, he resigned as head of global wealth management and repaid the bank for the renovations. Thain defended himself from the acquisitions by clarifying that Merrill was transparent with Bank of America about company situation. As a result, civil charges has been filed against the Bank Of American, former Chief Financial officer Joe Price and former CEO Ken Lewis because they mislead the investors about the Merrill.
CIT Group which is more then hundred year old company got bankrupt after failing to raise cash to pay off outstanding debt and not to forget, they can lends to more then 3000 businesses including department stores and supermarkets. As more people were struggling to repay the loans during the recession and as a result, company was struck hard by increasing loan losses.
As its important stakeholders had already accepted a reorganization plan, in just 6 months, CIT moved through bankruptcy because the total debt was cut down to $10.5 billion. CIT Group started lending again in the same month and in 2010, they commit to fund $500 in a Obama’s government-guaranteed loans to small business customers. According to the website of CIT Group, they are third largest in airline financing globally and third largest railcar leasing firm besides its lending activities.