ohn Paulson, who made billions by betting against subprime mortgages in 2007, is floating a plan to merge struggling commercial
lender CIT Group (CIT: 1.8187, 0.1687, 10.22%) with IndyMac Federal Bank, according to a published report.
Citing people familiar with the plan, the New York Post reported on Tuesday that creditors including Paulson have proposed
this merger as a way to help fix CIT, which nearly collapsed earlier this year.
Paulson
and his hedge-fund firm, Paulson & Co., were part of a group that
bought IndyMac from the Federal Deposit Insurance Corp. earlier this
year after the bank collapsed. Paulson is also a debtholder of CIT
Group, which received a $3 billion lifeline in July.
While this potential merger is one of several options being considered to fix CIT, it has not been formally discussed between
CIT and IndyMac, the Post reported.
Shares of CIT climbed to $1.90 in the premarkets after closing at $1.67 on Monday. The 100-year-old lender’s stock is down
more than 70% from a year ago.
