CIT Group Inc. announced today that its Board of Directors has adopted a “Tax Benefits Preservation Plan” that is designed to preserve shareholder value by “protect[ing] the Company’s ability to utilize its net operating losses and other tax assets.” If CIT experiences an “ownership change,” which occurs under U.S. federal income tax rules if more than 5% of its shareholders increase their ownership in CIT by 50% or more in the aggregate over any three-year period, such an event could reduce the value of CIT’s tax assets. The plan lays out certain incentives to discourage shareholders from becoming a “5% shareholder” under the federal tax rules.

Both CIT and the Federal Reserve also announced that CIT has entered into a Written Agreement with the Federal Reserve Bank of New York (“FRBNY”) yesterday, which sets forth CIT’s new reporting requirements to the FRBNY, including the submission of plans related to “corporate governance, credit practices, capital and liquidity.” Any CIT plans with respect to these areas are now subject to certain restrictions and must be approved by the FRBNY. Under the Agreement, the FRBNY must also approve any payment of dividends or distributions, the incurrence of debt, or the purchase or redemption of stock, as well as CIT’s methodology for its consolidated allowance for loan and lease losses.