CIT Group Inc, a lender to hundreds of thousands of small and medium-sized businesses, filed for bankruptcy as the global economic crisis left the company unable to finance itself.

The bankruptcy is one of the largest in US corporate history, and has been expected for months. CIT's problems could affect the already fragile US economy.

The United States government, which had invested 2.33 billion dollars in CIT in December through the Troubled Asset Relief Program, will likely lose their money.

Taxpayers will receive money after bank debt and bond investors are repaid.

According to Jack Williams, a bankruptcy law professor at Georgia State University College of Law, said that "the longer a financial institution stays in bankruptcy, the more the value of the business dissipates."

CIT filed for protection under Chapter 11 in the Southern District of New York, and plans to reduce its total debt by about 10 billion dollars in bankruptcy.