After months of trying to sell its rail leasing business, CIT pulled the plug on the auction, saying it no longer needed to do so.

CIT decided to keep its $4.5 billion rail franchise as a result of the progress it had made managing its balance sheet and strengthening its liquidity position, it said. 

“We are very pleased with the progress we have made in securing more than $11 billion in liquidity over the past five months,” CEO Jeffrey Peek said. 

Sources told us last month that the auction had become a bit of a drag. The credit crisis was making it difficult for potential buyers to come up with financing. And GE spoiled the party by putting its own rail car business on the market around the same time, so that the two units were competing for buyers. GE may also have an advantage luring buyers, as it can possibly provide at least some seller financing for its business.

These businesses can be attractive. Returns on investment for rail car leases are often over 15 percent a year and with the price of scrap metal rising, the value of rail cars is also rising.

But in these conditions, finding somebody to pay a premium can be tough.

(Photo credit: Reuters)