CIT Doesn't Get the GE Treatment - TheStreet

(Update includes comments by analyst Sameer Gokhale.)

CIT Group

(CIT) - Get Report

and

General Electric's

(GE) - Get Report

finance unit have a lot in common, but there's one critical difference between them: their status with U.S. government.

The FDIC guarantees well more than $100 billion worth of GE's debt under the Temporary Liquidity Guarantee Program. As a story by the

Washington Post

and ProPublica points out, it made a special exception to this emergency rule to include GE in this program, following lobbying by GE. CIT said in a press release Sunday it is still has a chance of gaining access to the program, though a

Bloomberg News

report cited sources within the FDIC saying the commission is unwilling to grant access to CIT. An FDIC spokesman declined comment.

According to the Washington Post/ProPublica story, GE's higher rating was an important factor in the FDIC's decision to allow it to access TLGP while freezing out CIT. If that is true, it makes little sense. The

ratings agencies

have come under heavy criticism for not scrutinizing financial companies and their debt securities enough, and their rating on

GE

is highly questionable.

A better reason for allowing GE into the program is the too big to fail argument. GE Capital, the company's finance unit, is one of the largest lenders in the world. CIT, while important, is not critical to the global economy.

One other reason for the differences in treatment between CIT and GE could be philosophical differences between Federal Deposit Insurance Corp. Chairwoman Sheila Bair, and her more finance industry-friendly counterpart, Treasury Secretary Tim Geithner. Treasury approved CIT's application for bank holding company status in December and gave it $2.33 billion through the Troubled Asset Relief Program.

Once that happened, access to TLGP seemed like a mere formality, says Sameer Gokhale, an analyst at Keefe, Bruyette & Woods. But Bair reportedly has clashed frequently with her fellow regulators and senior management at banks like

Citigroup

(C) - Get Report

, and may have resisted extending this aid to CIT.