CIT, emerging from bankruptcy, hires Thain as CEO

After Thain left Goldman Sachs he lead the NYSE's transformation from a floor-based market to a mostly electronic model. That restructuring "is similar to what CIT has to do going forward," Tobin, the interim CEO, said in an interview.

About a year ago, Thain helped orchestrate the deal for Bank of America to acquire Merrill. The Charlotte, North Carolina-based bank fired Thain a few weeks later, and later dealt with the fallout of surprisingly large losses associated with its acquisition, as well as bonuses Merrill employees.

Some criticise Thain for being slow to recognise troubles at the storied investment bank he ran; others say he saved Merrill from the most devastating effects of the worst financial crisis since the Great Depression.

The Harvard-educated executive also attracted controversy when news broke about his lavish $1.2 million office renovation at Merrill, including an infamous $35,000 antique commode.

Although Thain's background is largely in investment banking, his first tasks will likely include reducing CIT's debt and re-establishing it as a lender for small and medium-sized businesses.

CIT's new CEO will likely have to negotiate with regulators to allow it to move some of its best businesses to its bank, where it can fund them with deposits.

"CIT can and will serve an important role in the recovery of the U.S. economy and the creation of jobs," Thain said in a statement. The company did not make Thain available for an interview.

Reuters reported last month CIT had talked to Thain about becoming CEO, citing sources. One source said the deal could also include hiring Chai.

(Reporting by Jonathan Spicer, additional reporting by Dan Wilchins and Elinor Comlay; Editing by Bernard Orr)