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Ex-Merrill Lynch CEO Thain faces CIT, own challenge

John Thain is getting a second chance.

Now that CIT Group Inc. has hired the former Merrill Lynch & Co. boss as its chairman and chief executive, he gets the chance to return the lender to its former stature, and repair his own image at the same time.

CIT was crippled after it almost collapsed during the financial crisis. Thain, 54, brokered Merrill's sale to Bank of America Corp. as the credit crisis peaked in the fall of 2008, but was forced to resign after the deal closed last year because of controversy over employee bonus payments and mounting losses.

He took a $10-million bonus after Merrill's buyout and drew criticism for spending $1.2 million to redecorate his office.

CIT, which lends to more than 3,000 businesses including supermarkets and department stores, went through bankruptcy reorganization late last year after it failed to restructure billions of dollars in debt. Thain is taking over a company whose business shrank dramatically as customers fled.

He'll have to find a way to bring in new customers, and find new funding sources because short-term lending known as commercial paper essentially disappeared during the credit crisis.

Many analysts say Thain's experience makes him an ideal candidate to rebuild CIT's business. He did get Merrill shareholders the best possible price for their stock in the Bank of America deal.

"He's taking on an extremely challenging situation," said Steve Hagenbuckle, who runs the private equity fund TerraCap Partners.

"If he survives and rights the ship, then I think his legacy has been written. It's a perfect storm to come out a hero or come out a failure." - AP

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