Treasury Loses Out in CIT Bankruptcy

"Taxpayers are unlikely to see any significant recovery of their $2.33 billion investment in CIT Group. It was a bad investment on the day it was made, and the (Troubled Asset Relief Program) TARP investment will probably look like an even worse one on Monday," said Linus Wilson, a professor at the University of Louisiana and vocal critic of the bailout, on Friday when reports that the filing was likely for Sunday first appeared.

In its press release on Sunday announcing its board's decision to move ahead with the filing, CIT said it expects to reduce its total debt by about $10 billion under the plan while significantly lowering its liquidity needs over the next three years.

CIT is one of 726 companies that still owe money under the TARP program, according to ProPublica . Those companies include Citigroup (C), Wells Fargo (WFC), Bank of America (BAC) and AIG (AIG).

Among the 42 companies that have paid back TARP investments from the Treasury are Goldman Sachs (GS) and JPMorgan Chase (JPM).

--Written by Dan Freed in New York.

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