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CARL C. ICAHNBoard of DirectorsCIT Group, Inc505 Fifth AvenueNew York, NY 10017October 19, 2009Ladies and Gentlemen:I am reaching out to you to address what I view as the latest example of incompetent andunconscionable behavior on the part of the Board of Directors of CIT. Specifically, I amreferring to approximately $6.0 billion in a secured term loan currently being offered bythe company. The economics offered to prospective lenders are well in excess of what thecurrent syndicated loan market should dictate, given the loan’s collateral coverage. Thisloan is a bad-faith attempt to buy votes for the company’s Exchange Offer/Plan of Reorganization, since all prospective lenders must vote their CIT debt in favor of thecompany’s plan in order to receive an allocation of the new loan. The FDIC currently hasa cease-and-desist order outstanding against your Utah Bank, and we would propose toissue our own cease-and-desist order against your rigging the voting process.The Board of CIT, after years of mismanaging our assets, has over the past year pleadedwith the government to bail them out. The government, after studying the problems at ourcompany, flatly turned down the bail-out. So now the Board, in their wisdom, hasdetermined to ask the unsecured creditors of CIT to bail them out by voting to approve apre-packaged bankruptcy plan. The plan would, of course, give the Board releases againstcertain claims that shareholders and bondholders would have against them, and I believethere are many. Even worse, the plan would leave a majority of the existing Board, ortheir chosen successors, in control of our company for years to come. The companyargues that they must stay in control because a change of control at the company mightcause the Federal government to close down our very small bank. Interestingly, thegovernment has already effectively shut down the bank by issuing a “cease and desist”order. Ironically, based on the actions of the government concerning our present Board,we believe that a complete change in the Board would be a positive, rather than anegative, factor in influencing the government to resuscitate our bank.We agree with the Board on one thing, that CIT’s roughly $60 billion of assets should beallowed to be “run-off” or sold. However, as CIT’s largest creditor, we see no reason thatthe current Board (whose negligence created this mess in the first place) should continueto control our company. Furthermore, the Board would have us remain a bank holdingcompany even though our banking operations are effectively shut down. The incrementalvalue which may, hypothetically, be built through the bank several years down the roadpales in comparison to the loss of value which would likely occur if this Board, like theproverbial fox in the henhouse, is left in place to manage our $60 billion in assets.
 
In the proposed plan to “bail-out” the Board at the expense of most bondholders, the newterm loan would amend and increase the company’s existing $3.0 billion first lien securedfacility and would result in term debt of approximately $9.0 billion. The term debt wouldbe secured by a first lien on virtually all of the company’s unencumbered assets, whichcurrently total over $30 billion. In exchange for committing to and funding the term loan,the company is offering prospective lenders a total of 5.0% in commitment and fundingfees, for a total cost to the company of $300 million in addition to an interest rate of atleast 9.50%. In light of the gross over-collateralization and rich pricing being offered toinvestors, we view this upfront payment as excessive. (By way of example, when thecompany arranged its $3.0 billion existing term loan in July, 2009, lenders were also paid5.0% for their commitment in the form of original issue discount. Once freed to trade inthe secondary market the loan immediately traded to approximately 105% of par,indicating that a 5.0% OID was far greater than what was necessary to syndicate thefacility. While the structure and pricing for the two facilities differ somewhat, it isobvious to us that the company is once again destroying value.)Were the transaction a simple financing with no requirements to vote in favor of thecompany’s proposal, we would attribute the exorbitant payment to continuedincompetence on the part of a Board and management team which has brought thecompany to the brink of bankruptcy. (This new credit facility, the existing term facilityand the Goldman Sachs swap financing completed in 2008 are only a few recentexamples which demonstrate that those running the company are incompetent, or worse,when seeking funding in the capital markets — disturbing given that CIT is a financialinstitution for whom the capital markets are its lifeblood). However, what is even morereprehensible than the wasted money is that this money is being used to buy votes toentrench and protect the current Board.We cannot sit idly by and watch you continue to destroy the value of the bondholders’assets, in this case by outrageously overpaying fees in order to induce your largestbondholders to vote for a plan which benefits and leaves in place an entrenched Board of Directors in charge of our company following its restructuring or bankruptcy. We willvote on your plan at the end of the month and I call on you to make this a fair vote. Assuch, subject to documentation acceptable to us which could be done in a matter of days,we are prepared to underwrite an alternative term loan on substantially the same termsand conditions as the currently proposed Expansion Term Facility outlined in the termsheets dated and sent to us September 30, 2009, with two modifications: (i) we willcharge a 1.25% commitment fee and a 1.25% funding fee, for a total of 2.50% (exactly50% of the currently proposed fees), and (ii) we will not require an affirmative vote forthe company’s Exchange Offer and/or Plan of Reorganization as a pre-condition tolenders participating in the financing.We are eager to move forward on the financing, which will be offered to all bondholders.This will be a first step toward protecting the value of our assets. We look forward toworking with you and your advisors to complete documentation for the facilities.However, if you do not wish to work with me because of our “strained relationship,” I am
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