We have by now saved nearly every broken misbehaving big bank and one really sick insurance company -- Citigroup, Bank of America, Merrill Lynch and Bear Stearns, as well as, oh yes, AIG -- and we did so with nary a blink. And we so readily and fulsomely re-inflated Goldman Sachs, which wasn't even broken, that it just gave out a record amount of bonuses ($11.4 billion (!!) for only six months' results), with notably nary a thought on its part of giving us back the $12 billion that the Treasury slipped them through the back door by way of AIG.
In fact, the only big institution that so far has been allowed to fail so was Lehman Brothers, whose great sin pretty obviously was that it dared to compete with the great Goldman Sachs -- and we now know just how mad that made Goldman's former CEO-cum-Treasury Secretary Hank Paulson.
But today, when some real blinking is absolutely in order, the Treasury Department has completely shut its eyes and is about to make the biggest bone-head move of all. It is about to let CIT fail by not intervening, when frankly right now no institution is more central to the real economy and thus warrants being saved.
CIT has 1 million customers, of which 95% or 950,000(!!) are small and medium size businesses, both manufacturing and retail alike. For nine consecutive years CIT has been the nation's number one SBA lender. And in retail and trade finance alone, CIT has a greater than 60% market share.
To quote an old friend, Leo Gerard, who is president of the United Steelworkers, if the Treasury lets CIT fail, it will be "a bloody mess and a disgrace, as while the economic collapse continues for working families and manufacturing and small businesses, these pigs at the trough keep playing the same game, lining their pockets even more while ignoring those who are working hard to actually create real wealth for the nation."
If CIT disappears, or if it is merged into some big bank in a way that it effectively disappears, the disruption and outright damage to its 950,000 small and medium size business customers will be massive, almost all of which are already wheezing from the economic crisis brought on by the very banks and investment banks that are now back earning massive profits using the exact same discredited trading practices that brought the world's economy to its knees.
We haven't at all reformed Wall Street, we've just resurrected it. Then when it comes to saving the one institution that really needs to exist, we can't find the political will to do so because, well, CIT obviously has no "angel" as the others did.
On Friday, I testified in the Senate to Senator Sherrod Brown's subcommittee in support of our quickly embracing and adopting an all-of-government national manufacturing and industrial policy, because he and I, and others, don't believe we can economically recover without one. But it's pretty clear that we also need such a policy purely for balance, since right now, the only actual national policy we seem to have is the "financial industry resuscitation and preservation policy" (although they would never call it that).
And for a perfect example of the consequences of our not having a national industrial policy, just consider the shabby treatment and respect the Treasury is now showing CIT.
Almost no bank of any size has been blameless in its conduct and lending practices over the last several years, CIT included, and if any of its past mistakes still need to be addressed, then address them. But given CIT's central importance to the heart of the American small- and medium- sized business community, there is every case to be made for a government-led rescue, in order to advance the economic recovery program, balance and resuscitate our real economy and fulfill the important goals of the Commerce Department and the SBA.
Incidentally, why aren't these two agencies and a lot more members of Congress screaming about this inequitable treatment?
We simply can't let CIT fail this week. And after just letting Goldman Sachs, Morgan Stanley, JP Morgan Chase, BofA and Citibank all knock the cover off of the earnings ball, because of the past special treatment they each received, it won't be lost on the middle class and on the electorate in 2010 if we do.
Leo Hindery Jr. is chair of the Smart Globalization Initiative at the New America Foundation and an investor in media companies. He is the former CEO of AT&T Broadband and its predecessors, Tele-Communications, Inc. and Liberty Media.