Paulson-Backed CIT-IndyMac Merger Reported, Denied

Sep 29 2009 | 2:03pm ET

Those celebrating the impending merger between CIT Group and IndyMac Bank, spearheaded by hedge fund guru John Paulson, might want to put away the bubbly.

Just hours after the New York Post reported that the Paulson & Co. chief was mulling a plan to merge the troubled lender with the bank he bought as part of a consortium of hedge funds and private equity firms, the anonymous denials started piling up fast and furious.

“There is absolutely no relation between IndyMac and CIT,” one unnamed source told Reuters. “Linking the two companies is just wrong.”

Business Insider’s source called the alleged talks “pure nonsense.”

The Post, citing its own unnamed sources, called the potential merger between CIT, which remains in hot water despite a multi-billion dollar hedge fund-backed bailout, and IndyMac, which is now called OneWest Bank, one of several options for saving CIT. The tabloid did say that no formal discussions between the two institutions had occurred, but that the plan had been kicked around by some creditors, including Paulson.

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