Thain gains at CIT

October 5, 2010, 8:55 PM UTC

John Thain’s latest turnaround project is firmly on track.

CIT , the small business lender Thain has been running since February, said Tuesday it would call $860 million of debt it issued in its bankruptcy reorganization late last year. The move means New York-based CIT has redeemed $1.4 billion of costly bonds in recent months — about two-thirds of the total.

CIT: can it keep it up?

Thain has been stressing since taking over the firm that he wanted to bring down CIT’s funding costs. The firm has managed to refinance a big credit line on better terms, no doubt helped by the plunge of interest rates over the past six months.

“Improving our cost of funds by reducing our existing high cost debt facilitates our critically important role as a provider of essential financing to small business and middle market companies,” said Thain.

Thain comes to CIT with a substantial track record, as a top exec at Goldman Sachs before stints running what is now NYSE Euronext and then Merrill. It was there that Thain was briefly a hero of the financial crisis, managing to sell a brokerage firm facing the market firing squad at a healthy price, before he managed to turn himself into a goat by buying an expensive toilet.

It is far too early to say Thain has restored the luster he lost in that episode, and the firm declined comment pending its earnings release in three weeks. But a look at CIT’s stock (right) since Thain  arrived makes it clear that someone still believes in him.