CIT Takes Hit Linked to Home Lending Exit

CIT Group Inc., New York, took a pretax charge of $765 million to second-quarter earnings relating to a fair-value adjustment on $10.6 billion of receivables transferred to assets-held-for-sale stemming from a decision to exit its home lending business.The charge led the company to post a loss of $134.5 million ($0.70 per share) for the quarter, compared with profits of $236.0 million ($1.16 per share) a year earlier. "All CIT's businesses must meet rigorous return standards," said Jeffrey M. Peek, chairman and chief executive. "As a result, we decided to exit home lending and construction, enabling us to redeploy resources to higher-returning businesses. While we believe exiting home lending is the right decision, it significantly impacted our current results." Fitch Ratings said it supported the move, even though it caused a loss for the quarter, because it "may prove beneficial in the long run." Fitch said it is to likely revisit CIT's Positive Rating Outlook if market conditions preclude the timely sale of the home lending business or cause further portfolio writedowns.