Debt-for-equity swap of the week

From an article on a large-ish American bank, CIT Group (not Citigroup!) going bankrupt and being rescued in the Times:

The deal will see the unsecured bondholders cut the company’s debts by 30 per cent and in return receive shares in CIT.

Preferred shareholders, including the US Treasury, which received preference shares in return for the Tarp bailout money, will be repaid only if there is money left over after paying the bondholders; ordinary shareholders will be automatically wiped out.

The headline to the article screams "CIT bankruptcy filing will cost US taxpayers another £2.3bn" which it will, of course but there was no need for that to happen; if the administration hadn't been so stupid as to invest money in the bank in the first place, this bankruptcy/rescue would just have happened sooner.

It's also nice to see that Government Sachs are pocketing a £285 million "termination fee". They'll need that for paying this year's bonuses.

Emailed by Anti Citzen One.