CIT Group Inc , a major lender to small- and mid-sized U.S. businesses, said on Wednesday that talks with the government to bail out the company had ended, a development that could make bankruptcy likely.

Discussions with government agencies have ceased, the New York-based company said in a statement.

There is no appreciable likelihood of additional government support being provided over the near term.

The announcement came after last-ditch talks in which Treasury Department had been concerned about a worsening liquidity crunch at CIT over the last few days, and that government aid would not put the lender on a path to recovery.

CIT said its management, directors and advisers were evaluating alternatives. It did not elaborate.

A bankruptcy filing would mark one of the largest for a U.S. company since the global credit crisis accelerated last September.

Trading in CIT shares was halted on Wednesday afternoon, with the shares last trading at $1.65, up 4 cents.

Treasury had been considering an aid package that included a temporary loan to give CIT room to strengthen its balance sheet by raising additional capital through debt or equity, a person familiar with the matter had said.

Failure to reach an agreement could result in a bankruptcy, the person said. The person requested anonymity because the talks were private.

Other options discussed had been access to the U.S. Federal Reserve's discount window, as well as asset transfers.

Treasury has also been supportive of the Federal Deposit Insurance Corp granting CIT access to its government debt guarantee program, the person familiar said.

The FDIC has been reluctant to do so, however, because the program is designed for healthy institutions, and it believes CIT's participation involves too much risk.

Barney Frank, chairman of the House Financial Services Committee, said earlier on Wednesday he hoped the government could come up with a structured aid package for CIT.

If CIT doesn't get structured help, then it will have a very negative effect, I'm told, on small businesses around the country, he said in an interview with Reuters.

(Reporting by Karey Wutkowski, Rachelle Younglai and Jonathan Stempel; Editing by Tim Dobbyn and Ted Kerr)

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