cit 07/01/08Script

FINAL TRANSCRIPT

CIT - CIT Home Lending Business Conference Call
Event Date/Time: Jul. 01. 2008 / 9:00AM ET

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FINAL TRANSCRIPT
Jul. 01. 2008 / 9:00AM, CIT - CIT Home Lending Business Conference Call

CORPORATE PARTICIPANTS
Ken Brause
CIT Group Inc. - EVP, Director IR
Jeff Peek
CIT Group Inc. - Chairman, CEO
Joe Leone
CIT Group Inc. - Vice Chairman, CFO

CONFERENCE CALL PARTICIPANTS
Matt Burnell
Wachovia - Analyst
Sameer Gokhale
KBW - Analyst
Chris Brendler
Stifel Nicolaus - Analyst
Bruce Harting
Lehman Brothers - Analyst
Ryan O'Connell
Citigroup - Analyst

PRESENTATION
Operator
Good morning, ladies and gentlemen. Thank you for joining CIT's Home Lending sale conference call. My name is Lauren and
I will be your operator this morning.

Participating in today's call from the Company are Jeff Peek, Chairman and Chief Executive Officer; Joe Leone, Vice Chairman
and Chief Financial Officer; and Ken Brause, Executive Vice President of Investor Relations.

At this time all participants are in listen-only mode. There will be a question-and-answer session later in this call. (OPERATOR
INSTRUCTIONS) As a reminder this conference call is being recorded for replay purposes.

I would now like to turn the call over to Mr. Ken Brause, Executive Vice President of Investor Relations. Please proceed, sir.

Ken Brause - CIT Group Inc. - EVP, Director IR
Thank you, Lauren, and good morning, everyone. Welcome to the CIT conference call to discuss the Home Lending sale we
announced this morning. Just a few items before we get started today.

Following our formal remarks we will have a brief 20-minute Q&A session. In an effort to be efficient and make sure we get to
as many questions as possible, we ask you to limit yourself to one question. Since we are currently in the quarter-end quiet
period and plan to host our regular earnings conference call on Thursday, July 17, to discuss our second-quarter financial results
and updates on other strategic matters, we will be limiting today's discussions to the Home Lending actions we announced
this morning and will not answer questions on other topics.

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Elements of this call are forward-looking in nature and relate only to the time and date of this call. We disclaim any duty to
update these statements based on new information, future events, or otherwise. For information about risk factors relating to
the business, please refer to our SEC reports.

Any references to certain non-GAAP financial measures are meant to provide meaningful insight and are reconciled with GAAP
in the financial tables accompanying our press releases. For more information on CIT, please visit the Investor Relations section
of our website at www.CIT.com.

With that, it is my pleasure to hand the call over to Jeff Peek, our Chairman and CEO.

Jeff Peek - CIT Group Inc. - Chairman, CEO
Thanks, Ken, and good morning everybody. I want to welcome you and thank you for joining us on such short notice this
morning. I think as you all know, over the past several quarters the senior management of CIT and our Board have been focused
on ways to improve our performance in the current challenging environment. Much of this effort has been directed toward
reducing the overhang of our mortgage exposure.

This morning we are pleased to deliver a very significant transaction for CIT and one that I firmly believe is very positive for the
Company, the sale of our Home Lending business. Now I am joined by our Vice Chairman and CFO, Joe Leone, who will walk
you through the details of the transaction. We have about 30 minutes for this call, so we will make our comments brief to allow
about 20 minute to answer your questions.

Looking back, it was just about one year ago that we made the decision to exit the Home Lending business. It has been a long
and eventful year for this business and the U.S. housing market broadly, with unprecedented levels of housing price depreciation,
consumer behavior, and expected losses.

When we raised our $1.6 billion of capital in April, we said that one of the benefits of that transaction was to give us the ability
to deal with the Home Lending business in a more aggressive manner -- and it certainly has. The transactions we announced
today will take us completely out of the business. Completely out of the business. All of the mortgage loans, real estate owned,
securitizations, and servicing are transferring while leaving CIT in a strong liquidity and capital position.

Now, over the past few months we have had many unsolicited inbound inquiries of interest for our mortgage portfolios. Several
parties emerged as serious buyers with whom we engaged in more detailed discussions, which led to a competitive market-based
process.

The two firms to whom we are selling the business each proposed a fair price and transaction terms, and clearly have both
expertise and interest in the asset class. One buyer, Lone Star Funds, is purchasing the majority of the Home Lending portfolio
and our servicing operations. The other, Vanderbilt Mortgage and Finance, is buying our manufactured housing portfolio.

The sale is at a significant discount to the unpaid principal balance of these assets. But we think that the price is fair, given the
performance of the portfolio, the overall housing market, and the range of possible outcomes we modeled for the portfolio
going forward.

Before Joe reviews the transactions in detail, let me share my views on the benefit of these actions for CIT. First, we accelerate
the disposition of a liquidating portfolio, allowing CIT to focus on its profitable core commercial finance franchises -- corporate
finance, trade finance, transportation finance, and vendor finance.

Our tangible equity to managed assets ratio, our primary capital metric, will be over 9%, above our target even after recognizing
the loss on this sale. In addition this transaction improves our liquidity position, with nearly $2 billion of cash proceeds over the


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next few weeks, further enhancing our financial flexibility. Finally it mitigates the risk around this business and resolves a key
area of concern for many of our stakeholders, including both investors and the rating agencies.

In summary, the CIT Board, senior management, and I all agree that the action we are taking today is clearly in the best interests
of all CIT stakeholders -- stockholders, bondholders, customers, and employees. While one never likes to recognize a loss on
the sale of a business, we are certainly pleased that we were able to execute a deal of this magnitude and nature in the current
challenging environment.

Now let me ask Joe to review the specifics on the transaction.

Joe Leone - CIT Group Inc. - Vice Chairman, CFO
Thank you, Jeff. Good morning, everyone. Thanks for joining us for an early call. We thought it was important to get this news
out early in the morning and get to you before the market opened. What I would like to do is cover some of the financial details
of the transaction, along with the impact or the change it will have in our financial reporting.

I would like to reiterate Jeff's point about the strategic importance of the transaction for our investors, our clients, our customers,
our employees. I think about it this way. It has been a long year since we decided that the Home Lending business was not for
us. As Jeff went through some of the history, we thought we could sell it, and then the market seized. And then we thought we
would hold it, and now we saw an opportunity to get out.

It fits in with our strategy. What I mean by that, exiting it fits in with our strategy. It has taken a lot of time to manage this portfolio
by the part of the senior management team, and it has been distracting.

As we have talked about over the years with many of you, we wanted to try to box, ring fence, somehow dimension this risk.
As we -- as the market did struggle with that, because it has deteriorated quarter by quarter; and this transaction does just that.
It not only boxes it, but it moves it out from CIT, and we are able to focus on our commercial finance direction and strategy.

It helps liquidity. We will receive approximately gross $1.8 billion proceeds. We will have most of that money within the next
seven days, and we have some of that money as of yesterday.

It will improve our balance sheet I think. Our liquidity will be better. We are derisking a very risky asset class from our balance
sheet. We will talk about capital, but I think our capital levels are still adequate.

I think it will help us in our borrowing capacity. As you know, the rating agencies have had this topic on their screens, and I think
it will help us in that regard as well.

So in total we will receive about $1.8 billion in cash from the two transactions Jeff described. The buyer of the mortgage portfolio
is assuming somewhere in the $4.4 billion of secured debt; that is the securitization we did in October of 2007.

As Jeff said, we are selling everything. We are selling all our Home Lending assets, all our manufactured housing assets, our
servicing operations, and the trimmings that go along with it.

If you look at percentages, we will receive about $0.63 to $0.64 on a dollar for the remaining UPB. As we analyzed that as
management team, business team, with our advisors, that was within the range of what we thought was acceptable to the
Company relative to other options, which included liquidating the portfolio over time.


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We will record a loss in the quarter. It is about $2.5 billion. Obviously it is early; we closed the deal yesterday. But we think that
is the approximate number. That consists of operating losses we would have had for the quarter as charge-offs were taken and
reserves were built.

As we said the level of losses was going to continue high during 2008. And an approximate $2-point-billion loss on the sale,
which takes into account writing off other related assets like accrued interest and takes into account deal costs. Those are the
pre-tax numbers.

In terms of the tax benefits, we recorded about a 20% tax benefit on the combined Home Lending loss, resulting in an after-tax
loss of about $2 billion for the segment. We did limit the tax benefit we recorded under GAAP, as we continue and are required
to analyze our ability to utilize the loss carryforwards over time. So what we did in this loss estimate is calculated what we
thought was appropriate at this time; but as and when we generate sufficient income prospectively, we will be able to book
those additional future tax benefits that we did not book at this time on this loss.

That is a little bit on the transaction. We feel very good about having executed it at quarter end. I want to thank my colleagues
at CIT for all their work and very hard work over the last several days, particularly the weekend.

On the accounting, on the accounting, given our change in intent -- meaning we're not holding this for investment any longer,
obviously -- and the fact that we signed sale agreements yesterday, the accounting treatment for the Home Lending will be to
move it into discontinued operations at June 30. Home Lending results current for the quarter and historic will now be shown
separate from continuing operations and below the line, so to speak.

So Q2 you can expect income from continuing operations, which will be principally our commercial operations plus corporate
items and overhead; and a loss from discontinued operations in the quarter, which is Home Lending and manufactured housing.
EPS will be based on fully diluted shares.

We will conform prior periods to this presentation. Some details, so you can get a headstart on the analysis -- we will talk more
about this on the July call. Home Lending was a separate segment, so you start off with transparency right there. Having said
that, discontinued operations accounting has some peculiarities which I will give you one or two.

First -- and they make sense. Any indirect corporate expenses we have been allocating to Home Lending will not be accounted
for in the discontinued operations, under the accounting theory they don't go away with the sale. Management has to manage
them away. That is about $7 million to $8 million a quarter that was allocated to Home Lending, and that will shift at least in
the current period to corporate and other.

Having said that, since the revenue base is gone, we need to get rid of the expense base related to that, and we are working
hard there.

We will also carry some interest expense on unsecured debt that was funding the assets sold. Clearly we did not get par. So we
did get cash that will be used to reduce interest expense and debt over time; but since our proceeds were less than book, we
will see some pressure from that in our margins as we deploy debt over time and repay debt over time.

Jeff already mentioned the impact this transaction will have on our funding plan. Our liquidity -- we have been working hard
on liquidity over the last six months, as you know, and we have made great progress that we have announced serially over the
last 60 days. Our 2008 plan, which we have highlighted in our last Q and which we highlighted at several investor conferences,
did not contemplate executing on the Home Lending sale. So this gives a boost to current liquidity that we were not counting
on.

In terms of use of proceeds, we're working on that. This gives us an additional cushion around maturing debt in '08 and '09, and
gives us an ability to continue having our franchise businesses stay in business and service their customers.


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In terms of capital adequacy, we will have north of 9% tangible equity to managed assets at the end of the second quarter. That
is pro forma and our best guess as we see June 30th ending. That includes $11 billion or so of government guaranteed student
loans in the denominator. Without that, we would be well over 10%.

So we think our capital position remains relatively strong. What I am anxious and team and the Company is anxious to do is to
manage the capital ratio stronger through the normal way of doing that -- earnings retention and asset management.

When we look at the loss that we will book, there is a $7 reduction to tangible book value per share. So we are in the $14 area
in terms of tangible book value per share. Again I reiterate, importantly, we expect to be profitable going forward without these
losses, back in capital generation mode in the second half, and building back our book value.

Finally, yesterday we had conversations -- Glenn Votek, our Treasurer, had conversations with each of the rating agencies on
the transaction. Jeff and I had previewed this transaction -- or strategy I guess I should say -- with the rating agencies over the
last several weeks. You'll need to hear from them. I would characterize the conversations as favorable, as we eliminated risk
from the balance sheet and uncertainty from go-forward performance.

Now the key is to continue to execute on our plans. We still have more to do, and we want to return to a more normal funding
profile. That is what we are after. That is the solve-for. And we want to build upon our strong commercial finance franchise.

So in summary I'm very pleased we were able to execute this transaction. Despite its having a loss that we needed to take
through our P&L and utilize some of our capital, I think it eliminates a cloud that we have had since June of '07. It has been
difficult to operate the Company with this 10% or 15% of our assets taking a much more disproportionate amount of management
time and investor attention.

With that we would like to turn it back to the operator and take your Home Lending related questions.

QUESTIONS AND ANSWERS
Operator
(OPERATOR INSTRUCTIONS) Matt Burnell, Wachovia.

Matt Burnell - Wachovia - Analyst
Good morning, Jeff. Good morning, Joe. Thanks very much for the call. Just a quick question, since you have answered most of
the questions I had. Joe, what could change the $2.5 billion pre-tax loss assumption that you put in the press release today?

I think we've done a pretty good job of estimating costs related to the deal, looking at the balance sheet to make sure there is
no other Home Lending related assets that we need to account for -- and related liabilities, for that matter. We had a pretty
good lock obviously on the debt and the UPB; and the cash is certain.

I think the thing that has some variability to it, Matt, because it involves forward-looking assumptions, is the amount of tax
benefit we book. I think we've done a thoughtful job over the last week or two projecting out our taxable income and deferred
tax liability turnaround. So I think we have got a number that is pretty close to the mark; but that could move a bit.


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Matt Burnell - Wachovia - Analyst
Okay. I have got a couple other questions, but I will take those off-line. Thank you.

Operator
Sameer Gokhale, KBW.

Sameer Gokhale - KBW - Analyst
Good morning. I just wanted to clarify. As far as removing the risk off your balance sheet, just to make absolutely sure, is there
any sort of financing that you are providing to Lone Star in relation to this transaction?

Or should I read it as you are over and completely done with this mortgage business forever? I mean, there is no residual risk
of any sort here, is there?

We are not providing any financing to Lone Star, and there is no real residual risk that's coming out of this transaction. As I said
in my remarks, this is lock, stock, and barrel. We're out of the business.

Okay. Then just a quick one. Any thoughts on the railcar business? Any revisiting of the idea of selling that business, given this
transaction?

Sameer, as we said we are limiting our questions today just to Home Lending. We will address that on the July 17 call.

Okay, thank you.

Operator
Chris Brendler, Stifel Nicolaus.

Chris Brendler - Stifel Nicolaus - Analyst
Good morning. Congratulations. Can you talk at all about the bidding process? Were there multiple bidders here? Were you --
the price is obviously distressed, but a big positive in this kind of environment. Any color on how that went?


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Sure. We had as we said we -- over the last 60 days probably there seemed to be a marked change in the market for this asset
class, in that we got repeated inquiries.

As you know it was in assets held for investment, so we were prevented from marketing it widely; but people certainly knew
we had it. We probably had more than a dozen inquiries. Some people were very serious, met with us. We were able to -- with
the help of our advisors -- take that array of interest into a competitive process and had really a number of first-round bidders.
And then we went to a second round, and Lone Star was quite good on ability to deal with price and transaction terms.

Okay. One quick follow-up. How comfortable -- you mentioned after your April capital raise that it took -- you wanted to get it
done in size so you could take that risk off the table and also deal with the mortgage portfolio if the opportunity arises. Certainly
that has been done today.

How comfortable are you with that low 9% number? With the mortgage portfolio off the books, I don't think you need to be at
10%. But just give me a little comfort that you don't think currently that you need to raise additional capital.

We don't think currently that we need to raise additional capital, Chris, in that our target over the last six months has been 8.5%
tangible equity to managed assets; we are over 9%now. If you back the $11 billion, $12 billion of FELP loans out of the
denominator, we are well over 10%, which we think is pretty strong capital for our four commercial finance businesses that we
have had for a long, long time.

So we have some sense of how they operate through various parts of the cycle and what the capital requirements ought to be.
So we feel pretty good.

Chris, I would add -- I don't know if it was last week or the week before when there was some noise about FAS 140 changing
and everything crashing back onto financial institutions' balance sheets. We just want to be clear that anything that we've taken
off the balance sheet in the securitization is in our capital ratio. There was some confusion in the marketplace last week.

We do keep capital against anything that is off balance sheet securitized. I know that is not directly what you were asking, but
we did hear some noise last week about that.

Thanks, guys.

Operator
Bruce Harting, Lehman Brothers.


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Bruce Harting - Lehman Brothers - Analyst
The 1.9 of additional liquidity, any comment on use of that?

Then I guess on the manufactured housing, that was in a money loss situation as well; so that was a net positive surprise that
you have been able to sell that. Can you just comment on that business? Thank you.

Yes, Bruce, in terms of use of proceeds I can't say anything more than I said. We are looking at what options we have. We will
have principally all the money or most of the money, 99% of the money, by next week.

We are sitting on a very liquid balance sheet currently, so we are taking a look at what is appropriate in terms of debt paydowns
and the like. We will have more to say on the Julys 17 call on that.

The second on manufactured housing, actually this is -- it's sort of the tale of two cities. There's two parts to this portfolio. There
is one legacy portfolio that is known as chattel paper, where there is no underlying real estate mortgage or land owned by the
customer. That is clearly the tougher part of the portfolio.

The portfolio where somebody had a manufactured home or prefab home and owned their underlying real estate actually was
performing quite well.

We have been trying, we had tried to sell this for a while. We didn't think we were getting appropriate values. As Jeff said over
the last couple of months we think values have improved. The bids improved, and we thought it was better to sell all these
consumer asset classes that we had in our Oklahoma City servicing centers. So the combination of the two transactions made
me even happier.

Thanks, Joe. Are you able to comment at all on the most recent delinquency trends in this business you sold? Were you starting
to see a peak, a firming up? Anything you can comment on that?

Then finally on page 13 of your segment data, for calculating the G&A and your earnings go-forward, we are getting pretty
good increment to our '09 run rate, backing out G&A from this business.

Do you have a headcount number as well that is leaving with the sale? Thanks.

You asked a lot of questions there, most of which will be covered in the July call, Bruce. I would say that on the portfolio, because
we have been saying this for the last 30 days, we continue to see deterioration in the severity. We continue to see significant
losses, total wipeouts, in seconds. And while roll rates were improving, delinquency levels were still rising, and we continued
to see problems in the states that you'd think we would have problems in. Those places where we had the boom -- the California
and Floridas of the world.

We will print all the numbers in the July, so that is as far as I am going.


FINAL TRANSCRIPT

Thanks.

Operator
(OPERATOR INSTRUCTIONS) Ryan O'Connell, Citigroup.

Ryan O'Connell - Citigroup - Analyst
Good morning and thanks for the call. Say Joe, I just want to clarify that -- the calculation of the loss on the sale of the $2.2
billion, so if you could just walk us through that quickly. You start with assets of about 9.3, the all-in purchase price is about 5.9;
so I am assuming you take accounts in reserves or something to get to a net asset figure. Could you help me out with that?

Yes, I will give you the round numbers. It is generally right. We are getting cash and assumed liabilities of about $6.2 billion.
You measure that against the UPB.

There are deal costs and other assets in the area of about $300 million that we accounted for. Then we took into account of the
$1.2 billion or so of reserves we had. So I think if you do that arithmetic you will get about $2.2 billion.

Ryan O'Connell - Citigroup - Analyst
Okay, great. Thanks.

Operator
(OPERATOR INSTRUCTIONS)

We have time for one more question.

Operator
Bruce Harting, Lehman Brothers.

What was the net interest margin on the Home Lending business, Joe? Any comments on funding commitments over the next
12 months?

Bruce, I don't know it offhand. It was modest, 1% comes to mind. But we will have to follow up with you on that.


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Then the second part of the question was what?

Just the funding. Can you remind us of funding commitments over the next 12 months?

No, we will do that on July 17. That's part of (multiple speakers).

Okay, all right. Well, congratulations on the sale.

Thank you, everybody, for your attention. As we said, we think this is a transformational deal for us. We will talk to you again
on the 17th of July. Thanks for your interest.

Operator
Thank you for your participation in today's call. You may now disconnect.

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