CIT is teetering on the verge of bankruptcy. Feds have deemed the company as not ‘too big to fail’ and as a result with no federal help forthcoming, the company has run out of options.
CIT may not be too big to fail in numbers, but it is a critical part of the small business economy in the country. We all know that small businesses generate a very significant part of the total employment and with a CIT bankruptcy, it is feared that as much as 300,000 small businesses may be forced into bankruptcy as a consequence. This is staggering and could slow down the nascent recovery that we are currentlcy witnessing in the economy.
In other news, as the administration puts final touches to the new health care plan and how to pay for it, it is feared that many wealthy individuals and maybe not-so-wealthy small businesses in New York can look forward to as much as 60% top income tax bracket. Additionally, forcing businesses with > $400K in payroll to offer health insurance to the employees (or face a penalty) will also make the cost of doing business very expensive. Maybe some companies below this threshold will decide not to grow!
How much socking can the small business take and keep delivering? If small business is the life blood of the American economy, maybe a little more attention needs to be paid to it.
Shailesh Kumar is an Entrepreneur, investor and blogger. He writes about value investing at Value Stock Guide. Learn about the stock market and discover the techniques proven to work best for long term investors for finding appropriate stocks to buy in their portfolio to get superior risk adjusted returns.