Goldman in talks to extend its CIT loan

City A.M. Reporter
LLOYD Blankfein, chairman of Goldman Sachs, is in talks with CITGroup which could see the investment bank&rsquo;s $3bn (&pound;1.88bn) loan to the stricken lender extended.<br /><br />In the latest of a series of lifeline deals designed to save ailing CIT, Goldman is considering changing the terms on an emergency loan it made in June 2008 to save the lender from collapse.<br /><br />Meanwhile, Goldman would be due a payment of about $1bn if CIT Group was to file for Chapter 11 bankruptcy protection.<br /><br />CIT would be required to hand over the giant sum as a &ldquo;make-whole payment&rdquo; under the agreement.<br /><br />Goldman sources yesterday stressed that the payment would not be a windfall, but that the $1bn simply represents the present value of the spread to be earned over the life of the facility.<br /><br />Beyond the $1bn payment from its rescue package, Goldman would also receive payment from credit insurance it holds if CIT were to go bankrupt.<br /><br />Goldman is likely to agree to let CIT delay payment on some of the amount.<br /><br />A Goldman executive said yesterday that the credit insurance was not a directional bet on CIT and was bought to protect against the possibility of a precipitous decline in the value of its collateral.<br /><br />Goldman&rsquo;s rescue of CITcame before the US government bought $2.33bn of CIT preferred shares in December in a bid to prop up the troubled lender.