NEW YORK (AP) — John Thain is getting a second chance. CIT Group Inc. tapped the former Merrill Lynch CEO to become its chairman and chief executive.

Thain brokered Merrill's sale to Bank of America as the credit crisis peaked in the fall of 2008, but was forced to resign after the deal closed because of controversy over bonus payments and mounting losses at the investment bank.

CIT, one of the largest US lenders to small and mid-sized businesses, is betting Thain can repair his image and the company's after a difficult 2009. CIT went through bankruptcy reorganisation late last year after it was unsuccessful in trying to restructure its debt.

Thain will try to revitalise a commercial lender that was among the hardest hit by the recession and credit crisis. CIT Group, which lends to more than 3,000 businesses including supermarkets and department stores, was forced into bankruptcy after failing to raise cash to pay off outstanding debt. The more than 100-year-old company also was hurt by mounting loan losses as more customers fell behind on repaying loans during the recession.

Thain, 54, took over on Monday. He replaces interim CEO Peter Tobin, who will remain on CIT's board of directors. Tobin had been serving as CEO since Jeffrey Peek retired January 15.

New York-basd CIT will pay Thain an annual cash salary of $500,000. He will also receive $5.5 million in stock annually, of which $2.5 million will be subject to a one-year holding period. The remaining $3 million cannot be sold for three years.

Thain could also receive up to $1.5 million in bonuses based on the performance of the company. The board will determine whether to award the performance-based bonuses.

As chairman and CEO of Merrill Lynch, Thain's deal to sell Merrill was considered a lifesaving move for the company at the height of the financial crisis. But he was criticised for having paid out $3.6 billion in bonuses to Merrill employees just before the deal closed, and for spending more than $1 million to redecorate his office at Merrill, despite its massive losses. Thain resigned as head of global wealth management of the combined company in January 2009, after news of the bonus payments first surfaced. Bank of America Corp. last week agreed to settle a case with the Securities and Exchange Commission over claims it misled shareholders about the bonuses and more than $15 billion in fourth-quarter losses at Merrill to ensure the deal would be approved.

Thain inherits a company that in addition to its lending activities is the third-largest railcar leasing firm in the US and the third-largest in airline financing globally, according to its website.

"Much has been accomplished in recent months to position CIT for renewed success," Thain said in a statement. "We will build upon this progress and work even harder to support small and mid-market businesses. CIT can and will serve an important role in the recovery of the U.S. economy and the creation of jobs."