U.S. mulls temporary loan for CIT - source

By Rachelle Younglai and Elinor Comlay

WASHINGTON/NEW YORK (Reuters) - U.S. officials are considering giving CIT Group Inc a temporary loan as part of an aid package to help the lender avoid collapse, a source familiar with regulators' thinking said on Tuesday.

The temporary loan is one option being considered to give CIT room to strengthen its balance sheet by raising additional capital through debt or equity, said the source who requested anonymity because the plans could change.

Other options include access to the U.S. Federal Reserve's discount window and asset transfers, the source said. The source said there was no guarantee a plan would be reached.

CIT, a lender to thousands of small businesses, is pushing for government aid in its fight to survive. CIT clients tapped their credit lines, drawing some $750 million from the company in two days, the Wall Street Journal reported, citing unnamed sources.

The government's plan calls for CIT to transfer assets to its bank, use some of them to pledge at the Federal Reserve's discount window and refinance some debt, the paper reported on its website.

Chief Executive Jeffrey Peek's future role was also unclear, it said.

CIT was not immediately available to comment.

Earlier on Tuesday, shares of the lender rebounded sharply as investors bet that the discussions would be fruitful, averting a disruption in credit for many companies.