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Bachus: CIT Bankruptcy Highlights Folly Of Legislative Proposal To Make Federal Reserve The Systemic Risk Regulator

WASHINGTON, November 1, 2009 -

Statement of Congressman Spencer Bachus, the top Republican on the Financial Services Committee, on reports that CIT has filed for Chapter 11 bankruptcy protection:

"Today's news that CIT has filed for bankruptcy protection, and that taxpayers' $2.33 billion TARP investment in the company is likely to be completely wiped out, highlights the folly of a legislative proposal that makes the Federal Reserve the unchallenged arbiter of systemic risk, capital adequacy, and financial stability.  It was the Fed's decision on December 22, 2008 to grant CIT's application to become a bank holding company that allowed the company to access TARP funds the very next day.  To its credit, the FDIC subsequently refused to allow CIT to participate in the Term Liquidity Guarantee Program, a decision which probably spared taxpayers billions more in losses."

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