INSTANT VIEW: CIT bailout talks collapse

NEW YORK (Reuters) - CIT Group Inc, a major lender to small- and mid-sized U.S. businesses, on Wednesday said talks with the U.S. government to bail out the company have ended, which could make a bankruptcy likely.

"Discussions with government agencies have ceased," the New York-based company said in a statement. "There is no appreciable likelihood of additional government support being provided over the near term."

The following are comments on CIT:

COMMENTS

MIKE KNEBEL, PORTFOLIO MANAGER SPECIALIZING IN FIXED INCOME AT FERGUSON WELLMAN CAPITAL MANAGEMENT, IN PORTLAND, ORE, WHICH MANAGES $2.2 BLN (UNTIL RECENTLY A HOLDER OF CIT BONDS)

"I would imagine it's going to lead them to some sort of restructuring through bankruptcy. If the Feds aren't going to supply CIT with access to affordable credit, it doesn't look like the market will either.

"At least in the eyes of the Fed and the eyes of the Treasury we've turned the corner such that the systemic kinds of risks facing the economy may be well past.

"Certainly, when you look at the recent earnings and other parts of the banking sector, it tends to bear that out. They're certainly past the worst of it. That may be the good news in this kind of thing.

"The damage would seem to be focused more on the retail area and particularly the garment and clothing manufacturing segment of the retail industry, and that could certainly cause some serious fallout for them. I'm not sure whether there's a snowball effect there or not."

BRET BARKER, PORTFOLIO MANAGER WITH METROPOLITAN WEST ASSET MANAGEMENT IN LOS ANGELES

"In theory or normal times, a finance company like this goes down and other lenders step in to fill the gap -- not sure that happens this time as the so-called shadow banking system is gone.

"Treasuries might rally a bit but hard for bonds to rally if equities keep rallying and right now equities are bulled up as risky assets on fire."

DOUG KASS, HEDGE FUND MANAGER AT SEABREEZE PARTNERS MANAGEMENT IN PALM BEACH, FLORIDA

"This has a huge multiplier effect. It's a big negative for the market. But I would say that if this occurred a week ago, the S&P futures would be down 1 1/2 to 2 percent.

"You are talking about posing systemic risk, this is a company with over $50 billion of receivables out to small businesses. And not only is it questionable whether these loans will be withdrawn but going forward how are small businesses going to access the capital markets. It is a pretty big negative."

CAMPBELL HARVEY, PROFESSOR OF FINANCE, DUKE UNIVERSITY: