NRF wants to C-IT bailed out

WASHINGTON Yet another financial institution is in danger of collapsing, and the National Retail Federation has called for a federal bail-out, claiming failure of the major lender could have severe consequences for the retail industry and the nation’s economy.

NRF sent a letter to Treasury Secretary Timothy Geithner and Federal Deposit Insurance Corporation Chairwoman Sheila Bair urging them to consider providing assistance for CIT Group.

“If the criterion for whether a financial institution should receive government assistance is whether it is ‘too large to fail,’ CIT is most certainly too important to the retail industry to be allowed to fail, and the retail industry is too important to the economy to be placed under additional stress,” NRF president and CEO Tracy Mullin said. “A failure of CIT would impact thousands of retailers and, consequently, the consumer spending that makes up two-thirds of our nation’s economy. That cannot be allowed to happen at a time when retailers are already struggling to survive the national recession.”

Mullin went on to explain that CIT acts as a factor for retail suppliers, providing short-term financing needed to produce the goods retailers offer. He added that without factors, suppliers could be forced to shut their doors or retailers would be required to pay up front and draw down on their own credit lines at a time when credit remains difficult to obtain.

The National Retail Federation will have to work hard to prove that bailing out CIT will be a good thing for the nation's economy. Many Americans are still displeased about the bail-outs of other institutions and seeing their tax dollars go toward helping CIT may not sit well with them.