Commercial lender CIT Group Inc. announced it has applied to become a bank holding company, looking to access part of the federal government's $700 billion in funds being pumped into financial companies and to participate in the Treasury Department's $250 billion capital-infusion program.

The news sent the company's shares up 22% to $4.10, reversing earlier losses of as much as 21%.

Numerous other financial firms, including Morgan Stanley, Goldman Sachs Group Inc. and American Express Co., have been applying for bank holding status so they can participate in the government's plan and get access to other sources of capital. For example, getting approval would allow CIT to borrow at the Federal Reserve's discount window if it faces liquidity problems.

The company said the government plan would provide it with greater access to capital, allowing it to continue its current operations and increase its deposit-taking capabilities, which would further stabilize and diversify its business model. It said it remains committed to providing loans to small and midsized businesses that have been struggling to get loans amid the global credit crunch.

Its wholly owned unit, Utah-based CIT Bank, also filed an application to convert its charter to a Utah state bank from an industrial bank.

CIT relies on its ability to raise money in the capital markets to pay for the loans it makes to businesses and individuals. But the company's access to funding evaporated in March, prompting the century-old firm to drain a $7.3 billion credit line. Since then, CIT had been looking to slim down, and unloaded its home-lending business in July.

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