UPDATE 2-CIT gains on hopes of capital return after Fed drops curbs
* Federal Reserve terminates 2009 agreement with CIT
* Co announces $200 mln share buyback program
* Shares up 7 pct to their highest in more than two years (Adds source comments, share buyback announcement, updates share price)
By Aman Shah and Jessica Toonkel
May 30 (Reuters) - The Federal Reserve Bank of New York removed restrictions on small-business lender CIT Group Inc , imposed after the financial crisis, paving the way for a higher capital return to the company's shareholders and giving it more room to expand.
CIT shares rose as much as 7.4 percent to their highest in more than two years after Thursday's announcement that the agreement under which it has been operating since August 2009 has been terminated.
The agreement gave the Federal Reserve broad powers over CIT's capital plans and risk management.
"(This) is confirmation that CIT has met all the terms of the written agreement, there's nothing lurking out there that investors should be concerned about," Janney Capital Markets analyst Sameer Gokhale told Reuters.
"In my view, the fact that they have actually got the written agreement lifted now increases the likelihood that they can finally start to return capital," Gokhale said. Continued...