What happens to CIT?

Geithner on CIT:

July 13 (Bloomberg) -- Treasury Secretary Timothy Geithner said the U.S. government has the authority and the ability to address the crisis at CIT Group Inc.

“I’m actually pretty confident in that context we have the authority and the ability to make sensible choices,” he said in response to a question a press conference in London. “We have a significant interest generally in trying to make sure the financial system gets through this, adjusts where it needs to adjust and emerges stronger.”

What does this mean? Time to rehash some old news first. Let's look at Bear Stearns.

Who had the big counterparty exposure to Bear? Wasn't it JPM? So who "bought" Bear with $29 billion of help from the taxpayer?

And who dictated the first price of $2? Wasn't that Hank Paulson's moral hazard clause? So Hank can tell the price Bear can sell at, but Bernanke won't tell BAC what price to buy Merrill Lynch at?

Remember, when the stock price of Bear wouldn't go down? Everyone that owned Bear's bonds, wanted to hedge them, by buying Bear and voting for the deal, to be made whole on their paper. Even JPM got busy, buying a 11.5 million share block at $12.24. JPM off course, didn't want to be on the hook for Bear's liabilities, if shareholders would vote down the deal, so they ended up owning 49% of the stock even before the vote.

Why isn't there then, a concern about CIT? Why would Geithner sweat CIT?

Geithner's buddies aren't exposed, and Goldman Sachs already said they don't have any exposure to CIT.

Like Meredith Whitney noted, the bare facts today are different.

Because the unsecured creditors on CIT are already subordinate to the bank debt, thanks to the TARP shenanigans!