CIT Group calls for TARP; N.C. treasurer Moore lashes Wells Fargo; Citigroup in deal rumors

By Aaron Hochman-Zimmerman

New York, Nov. 13 - Equities roared back from what was shaping up to be another difficult loss as the Dow Jones Industrial Average looked like it might slip over the cliff at 8,000.

Deal-land still looked desolate as most companies were too busy saving themselves to worry about who is around them, an analyst said.

Still, CIT Group Inc. did a nice job of self-preservation on Thursday. By filing to become a bank holding company, CIT took a major step toward finding funding under the Troubled Asset Relief Program.

Market watchers anticipated CIT's tactics, but investors raked in the benefit as the stock launched up by more than 26%.

Investors were not as impressed by fellow financial Citigroup Inc., which was discussed as a possible buyer of American Express Co.

Elsewhere, North Carolina state treasurer Richard Moore continued his attempts to break up a deal already in progress between Wells Fargo & Co. and North Carolina's favorite son, Wachovia Corp.

Meanwhile, the Dow pulled itself out of a deep trough to end higher by 552.59, or 6.67%, at 8,835.25, while the Nasdaq Composite Index added 97.49, or 6.50%, to finish at 1,596.70.

The S&P 500 rallied back by 58.99, or 6.92%, to close at 911.29.

CIT banking on TARP funds

In search of TARP liquidity to save itself, commercial financier CIT applied to the Federal Reserve Board to become a bank holding company.

Pleading his case to the Fed, CIT chairman and chief executive officer Jeffrey Peak called his firm "the bridge between Wall Street and Main Street."

"CIT remains one of the few significant sources of liquidity for small- and mid-sized businesses who are struggling to survive in today's challenging environment," he said in a statement.

"As a bank holding company CIT would be well-positioned to ensure the continued flow of liquidity directly to main street businesses and entrepreneurs," he said.

"I think they have a reasonable shot at getting access to the TARP program," Sandler O'Neill analyst Mike Taiano said.

"[TARP funds] does give them some staying power," he said, but "I don't know that TARP funding is going to save everybody."

"How much is going to be enough?" he asked about the Treasury Department bailout.

"It does give them negotiating leverage ... it gives them options," he said, if CIT decides it wants to sell all or pieces of itself.

Some banks may be interested in some of CIT's commercial lending divisions, but in general "there's probably a limited number of buyers at this stage," he said.

Many investors expected the move to become a holding company, but the stock soared up by $0.88, or 26.19%, in the late afternoon rally to close at $4.24.

All-American Citi

Investors' ears were perked by reports that American Express may be bought by Citi, although many remained skeptical, a trader said.

Even in the afternoon rally, the stock price of neither firm mirrored the spike in interest.

Citi, long assumed to be in search of a suitable target, had its shot for Wachovia blocked by an 11th-hour bid from Wells Fargo.

A Citi offer for American Express would come at a difficult time for American Express.

On Oct. 30, the credit card lender announced it would cut 7,000 jobs, or 10% of its total workforce.

Even if the marriage of convenience is blessed and consummated, "I don't think it helps Citi," a trader said.

"There are some institutions interested in AmEx," Sandler O'Neill's Taiano said, but "who has the capital?"

"Who is not being distracted by something else?" he asked.

Shares of American Express added $0.73, or 3.64%, to end the day at $20.78.

Shares of Citi slipped by $0.19, or 1.97%, to close the session at $9.45.

Wells offers too little for Moore

North Carolina treasurer Moore continued to throw wrenches in Wells Fargo's wagon spokes.

Moore believes that if Wachovia were freed from Wells Fargo and given access to liquidity injections under the government's TARP, the stock could far surpass its current value.

"I can't find anyone who doesn't think Wachovia is not a $20.00-plus stock if it had the opportunity to be exposed to the TARP and work itself out," Moore said, calling the deal "highway robbery."

Moore will bring to bear 3.2 million shares held under the North Carolina pension fund to vote against the merger.

He is also supporting a lawsuit that would prevent the transfer of preferred shares to Wells Fargo that represents 40% of the voting shares.

"A boob!" a trader said about Moore. "Wells Fargo saved their ass!"

Shares of Wachovia jumped by $0.47, or 9.09%, to $5.64.

Shares of Wells Fargo tacked on $1.79, or 6.56%, to finish at $29.09.

Mentioned in this article:

American Express Co. NYSE: AXP

CIT Group Inc. NYSE: CIT

Citigroup Inc. NYSE: C

Wachovia Corp. NYSE: WB

Wells Fargo & Co. NYSE: WFC

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