Today's Outrage: CIT Loan Marks End of Bailout Era

Today's Outrage is published weekdays at 9:30 a.m. EDT and is available as an RSS feed.

It's encouraging to see that the free markets still work and that corporate America didn't become so addicted to government handouts that it couldn't stand on its own.

That may be the lesson from CIT, which managed to broker a $3 billion loan from bondholders after getting rejected at the corporate welfare office.

I admit that I was baffled by the Obama Administration's decision to draw the line at CIT -- especially considering how important that particular lender is to the small business world.

It still seems arbitrary to me that the government would pour trillions of dollars into big banks like Citigroup ( C), Bank of America ( BAC) and Goldman Sachs ( GS) for fear the economy would crumble and then suddenly cut off a lender like CIT that helps finance the primary economic engine, which is small business.

Still, I am glad to see that the financial markets are stable enough to provide credit without a push from the big hand of Uncle Sam.

Now the question is whether the economy is stable enough to allow CIT to generate the cash flow needed to survive in the long run.

That requires consumers to get back into normal spending routines and support the million or so small- and mid-sized businesses that are backed by CIT loans. If those businesses don't make money, then neither does CIT.

Of course, there's more to it than that. The other lesson from CIT is how easy it is to screw up a business when you stray too far from your core competence.

You see, CIT decided some time back that loans to businesses weren't enough and so it got into the subprime mortgage game and student loans as well.

Ah, how greed can run amok. Sure, CIT would be suffering now regardless. But it might not be in such dire straits had it stayed true to its primary mission.

Maybe some tough love from Obama will help.

We'll see.

Glenn Hall is the editor of TheStreet.com. Previously, he served as deputy editor and chief innovation officer at The Orange County Register and as a news manager at Bloomberg News in Frankfurt, Amsterdam and Washington, D.C. As a reporter, he covered business and financial markets, worked in both print and television in the U.S. and Europe, and conducted in-depth investigative coverage at The Journal-Gazette in Fort Wayne, Ind. His work also has been published in a variety of newspapers including The Wall Street Journal, The New York Times and International Herald Tribune. Hall received a bachelor's degree in journalism and political science from The Ohio State University and a certificate in project and program management from Boston University.

More from Opinion

How Technology Will Unleash the Legal Marijuana Industry's Growth Potential

How Technology Will Unleash the Legal Marijuana Industry's Growth Potential

Attention 60 Minutes: Google Isn't the Only Big-Tech Monopoly

Attention 60 Minutes: Google Isn't the Only Big-Tech Monopoly

Apple Buys Tesla? Amazon Buys Sears? 3 Dream Mergers That Just Make Sense

Apple Buys Tesla? Amazon Buys Sears? 3 Dream Mergers That Just Make Sense

Amazon's Assault on Grocery Stores Will Have a Profound Impact on Many

Amazon's Assault on Grocery Stores Will Have a Profound Impact on Many

It's Dumb to Think There Aren't Already Monopolies in Big Tech

It's Dumb to Think There Aren't Already Monopolies in Big Tech