Jeff Peek came to CIT (CIT) - Get Report in 2003 to shake up a sleepy lender.

A Princeton University graduate and regular on New York's social circuit, Peek climbed the ranks at Merrill Lynch, eventually running its asset management business before getting pushed out in a power struggle with (now-former) CEO Stan O'Neal.

He then moved to a high-level job at

Credit Suisse

(CS) - Get Report

. When he joined CIT -- now on the brink of bankruptcy -- it was with the notion that he would shortly succeed CEO Albert Gamper and did so the following year. He added the chairmanship of the board of directors to his duties at the start of 2005.

And his ambitions were not small.

Jeffrey M. Peek

"I stand before you today convinced CIT has the right stuff to be a leader, not just another lender," he told investors and analysts in November 2005. Peek was unavailable for comment on this story, according to a CIT spokesman.

With headquarters in Livingston, N.J., CIT was an unglamorous lender to small and midsized companies. Peek moved the company's base of operations to a brand-new, 300,000 square-foot, glass-encased office tower on Fifth Avenue, near Bryant Park.

The Wall Street Journal

reported on Thursday that regulators were not going to bail out CIT, causing its shares to plummet nearly 75%. CIT needs about $5.6 billion to avoid a bankruptcy filing, according to a report Thursday by bond research firm



His main strategy was to generate lots of fee-based revenue, as opposed to the boring old practice of simply lending for a few pennies more than it was borrowing, according to Sameer Gokhale, analyst at Keefe, Bruyette & Woods.

Having run the asset management units at Merrill Lynch and Credit Suisse, Peek knew how attractive a business managing money could be, with low costs and a recurring stream of revenue based on charging a percentage for assets under management.

Peek created a health care financing business that CIT spun out as

Care Investment Trust

( CRE), a real estate investment trust, in 2007.

It had similar plans for an aircraft financing unit that it never managed to take public.

"He had some interesting, innovative ideas, but a lot of those were dependent upon efficient financing of the capital markets, especially the fixed-income markets, and when those markets broke down, the ability to capitalize on those opportunities vanished," Gokhale says.

Part of CIT's problem is political, rather than strategic, as CIT apparently could not convince regulators at the FDIC that is was important enough to merit a second bailout, even though it succeeded in getting more $2.33 billion from the government last year under the Troubled Asset Relief Program.

But it is instructive that



another middle market lender, has fared far better than CIT. That is because


had the foresight to see the coming crisis in the capital markets, and bought a bank, which gave it access to a more stable form of funding--retail deposits. It has also managed to renegotiate with its lenders to stave off immediate concerns about its access to capital.

CapitalSource may not be out of the woods. Its stock was down nearly 8% on Thursday, possibly on fears that it could fall victim to the same type of funding crisis that has befallen CIT. But it is hard to argue with its 500% share-price performance over the last four months, even if that in part reflects the how far it had fallen -- to a low of 90 cents.

Even if CIT fails, it may be some time before Peek's performance as CEO can be fully assessed.