CIT Bankruptcy Blow to Stockholders

Small business financing giant CIT Group Inc. filed for Chapter 11 bankruptcy Sunday.

While not unexpected, the bankruptcy may further shake investor confidence Monday after a tough run last week.

The markets closed down slightly for October ending a seven-month bull run.

The CIT bankruptcy is troubling because it is the largest lender to medium and small businesses.

With the holiday season coming and companies needing solid financing, the CIT trouble could spread.

Trouble has already found the taxpayer. CIT received several billion in U.S. funds last year in an effort to stay afloat.

The government took preferred stock for its investment.

However, the CIT bankruptcy, like most filings, renders stock in the company worthless. Bankruptcy treats bondholders better, but they won't get all of their money back.

Bankruptcy is never good for stockholders, however that's part of the risk of being a part owner.

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