Cit Group Inc

The garment industry is tied in knots over reports that CIT Group Inc. could file for bankruptcy. Scores of Los Angeles businesses in the apparel industry rely on CIT for upfront financing, which provides them with cash until retailers pay their bills. Now that the New York commercial lender is on the brink of bankruptcy, local business owners are wondering how they'll get by. Many are scampering for alternatives to keep business moving. It isn't that easy.

CIT Group Inc., the largest independent U.S. commercial-finance company, placed three executives of its student-loan business on administrative leave amid a probe into conflicts of interest. Mike Shaut, chief executive of Student Loan Xpress, Fabrizio Balestri, the unit's president, and Vice Chairman Robert deRose were put on leave while the company reviews its lending practices, New York-based CIT said.

The deteriorating health of CIT Group Inc., a major lender to small businesses, is shaping up as a gut check for the Obama administration, which may be forced to decide whether to let the company fail. Most analysts agree that the failure of CIT would have relatively modest consequences for the financial system. But the New York company has grabbed the administration's attention because of its focus on small-business lending, an area of outsized political importance.

Just as the retail industry is starting to find its footing after the upheaval of the last holiday season, a new storm is brewing. CIT Group Inc., the giant finance company, disclosed this week that it was talking to federal regulators about steps to keep it afloat. The New York company's financial troubles could weigh heavily on retailers this holiday season.

CIT Group Inc., the struggling lender denied more federal aid last week, may be close to securing needed funding to avoid bankruptcy, a source close to the matter said. A deal could be struck as early as today, said the source, who spoke on condition of anonymity because the talks were confidential. The company's board met Sunday night to discuss its options, the source said.