<div>CIT Group, the US bank that lends to a million small- and medium-sized businesses, was on the brink of collapse last night after President Obama&rsquo;s administration refused to come up with an emergency bailout.<br /><br />Shares of the 101-year old firm slid as much as 80 per cent to 31 cents amid fears that CIT would follow Lehman Brothers and be allowed to collapse.<br /><br />Chief executive Jeffrey Peek was last night pleading for $2bn (&pound;1.2bn) of capital from bondholders as a first stage in a rescue plan.<br /><br />He was locked in talks with 10 to 15 investors each with around $500m of exposure including Allianz unit Pacific Investment Management.<br /><br />Peek is said to have been shocked by&nbsp;the government&rsquo;s decision to step away from a rescue.<br /><br />The bondholders face a choice between cutting their losses and letting the firm fail, or ploughing in further capital to a company that could still face a serious risk of collapse. Analysts were saying last night the firm needs as much as $6bn to survive as a going concern.<br /><br />The lender already received $2.33bn of government assistance under the US Troubled Asset Relief Programme (TARP) in December, but the government has decided to cut its losses.<br /><br />Ratings agency Standard &amp; Poor&rsquo;s (S&amp;P) last night heightened the collapse fears by lowering its rating on the firm&rsquo;s bonds by several grades to &ldquo;CC&rdquo;, making them junk bonds.<br /><br />This puts further pressure on the bondholders, as the rating cuts sent the securities plunging in value.<br /><br />In an accompanying note S&amp;P suggested failure is now likely: &ldquo;The compressed timeline makes it very difficult for CIT to pursue other liquidity initiatives successfully, such as secured borrowings, asset sales, or debt restructuring.&rdquo;<br /><br />Jamie Dimon, the JPMorgan Chase chief executive who was last night toasting record revenues at his bank, said that while his firm is exposed to CIT the effects of a collapse would be immaterial.<br /><br />A US Treasury statement said there is &ldquo;a very high threshold for exceptional government assistance to individual companies&rdquo;.<br /><br />The government broke off&nbsp;talks on Wednesday.&nbsp;If the bank goes down, it would be the fourth largest bankruptcy in the US by assets.</div>