by The Investment U Research Team

Even as Goldman Sachs (NYSE: GS) reported the best quarterly profit in it’s 140-year history, and JPMorgan Chase & Co (NYSE: JPM) announced that it’s profit climbed 36 percent to $2.7 billion, the news coming from another former financial stalwart is strikingly different.

CIT Group (NYSE: CIT) is rumored to be close to bankruptcy talks and its shares took a dive this morning as the United States government said it wouldn’t rescue it a second time.

That’s pretty clear language that “firms not vital to the inner workings of the financial system” would not be saved like many larger banks have been. It’s harsh and it’s ugly, and it’s called capitalism.

But it’s unclear what the total national economic impact will be from these smaller collapses.

CIT did a large amount of business with small and medium sized commercial loans, so it will be interesting to see what kind of impact this will have on the already tenuous commercial real estate sector.

Shares have plummeted over 78% today as the likelihood for a bankruptcy becomes greater – It would be the biggest since Lehman Brothers went under.

But is it a forgone conclusion right now, like a ball pushed too far over the cliff? Once rumors of Lehman’s bankruptcy were out, customers rushed to pull out money an move business across the street. This had the immediate effect of hastening the fall, becoming a self-fulfilling prophecy.

Is the same momentum at work here? Has the market already made its decision? We’ll know soon enough.

View original at: Investment Advice and Investment Research with a Contrarian Point of View

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