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CIT gets preliminary OK for $2.33 billion TARP funds


    NEW YORK (Reuters) - CIT Group , a commercial finance firm, won preliminary approval to receive $2.33 billion under the government's $700 billion financial bailout program, sending its shares up almost 14 percent in premarket trading.

    The announcement by CIT on Tuesday came a day after the Federal Reserve approved the company's bid to become a bank holding company in order to qualify for funds under the U.S. Treasury's Troubled Asset Relief Program.

    Several commercial finance companies, hit by the financial crisis, have followed the same strategy, including GMAC and American Express Co .

    Bank holding company status also would allow CIT to borrow funds directly from the Fed's discount window.

    "We continue to believe that CIT's conversion to a bank holding company should substantially enhance the company's financing platform over the longer term," Moshe Orenbuch, an analyst at Credit Suisse, said in a research note.

    The CIT approval followed the New York-based finance company's debt-for-equity swap last week, which was expected to raise $1.5 billion.

    CIT said it had extended the expiration date of its offer to exchange certain of its outstanding notes until Tuesday at 5 p.m..

    (Reporting by Juan Lagorio, editing by Lisa Von Ahn and John Wallace)