Thain back from wilderness to head CITBy Greg Farrell in New York

John Thain has been named chief executive of the CIT Group, the troubled middle- market financial company that emerged from bankruptcy in December under the control of its primary creditors. For Mr Thain, 54, the appointment is an opportunity to rehabilitate his career after a one-year stint as chief executive of Merrill Lynch resulted in a last-minute sale of the 94-year-old company to Bank of America, followed by his own dismissal a short time later.

“I’m excited about this,” Mr Thain told the Financial Times. “This is an opportunity to be part of a company that is key to the US economic recovery and the creation of jobs.”

CIT, which provides financing to small businesses and middle-market companies, enjoyed several years of robust growth and expansion under the leadership of Jeffrey Peek, but proved to be unprepared for the collapse of the US housing market in 2007 and subsequent credit crisis.

By the end of 2008, with delinquent loans soaring, CIT applied for and received $2.3bn in funds from the troubled asset relief programme (Tarp). It faltered again last July, when more than $5bn in loans came due and the federal government refused to inject more Tarp money.

In Mr Thain, CIT gets a marquee name, albeit one that was tarnished last year after leaving BofA, amid strong losses at Merrill and revelations that he had spent $1.2m of company funds to refurbish his office in 2008.

After Mr Thain took the helm of Merrill in December 2007, he helped it raise more than $30bn in fresh capital and rid it of $31bn in collateralised debt obligations, but was unable to preserve its independence and agreed to sell to BofA after a frenzied weekend of negotiations in September 2008.

At CIT, Mr Thain faces multiple challenges. The recapitalised company carries an expensive debt load he will try to renegotiate. He will have to work closely with the Federal Reserve and the Federal Deposit Insurance Corporation to bring it into compliance on a variety of issues.

Asked if he had learned any lessons from Merrill, Mr Thain said: “Fixing these kinds of financial problems is generally more difficult and takes more time than you think, because you keep uncovering new problems.”

Mr Thain will be paid a salary of $500,000 and receive 180,000 shares of restricted stock, worth $5.5m at current prices, that vest over several years.

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Source: FT.com