Jeff Immelt’s GE: The Too Biggest To Fail

[girl gone mad]

Jeff Immelt’s GE: The Too Biggest To Fail
http://emptywheel.firedoglake.com/2011/01/21/jeff-immelts-ge-the-too-biggest-to-fail/">Marcy Wheeler

In my first post on http://emptywheel.firedoglake.com/2011/01/21/obamas-kabuki-jobs-council-brought-to-you-by-nut-on-china-jeff-immelt/">how stupid it was for Obama to pick Jeff Immelt for his election season commission to appear focused on jobs, I looked mostly at how much GE has been outsourcing manufacturing and technology. Though I mentioned GE’s status as another TBTF finance company, I didn’t explain that in depth.

Mike Konczal has https://rortybomb.wordpress.com/2011/01/21/immelt-ge-capital-and-the-financialization-of-manufacturing/">a post in which he corrects Joe Klein’s http://swampland.blogs.time.com/2011/01/21/volcker-out-immelt-in/">misperception that GE is not another big finance company, and in the process shows how GE was one of the biggest beneficiaries of the government’s bailout of shadow banking in 2008-09.

In it, he shows how GE received the second biggest FDIC debt guarantees of any of the big finance firms, after only Citi. He borrows the graphic at the left from a Raj Date paper that also explains how GE leveraged (heh!) its teeny FDIC insured deposits to get a big debt guarantee.



" Only a small fraction of GE Capital’s funding (some $24 billion in the middle of 2008) came through FDIC-insured deposits. Despite that, the structure of the FDIC’s Debt Guaranty Program enabled GE Capital to issue well more than that (more than $50 billion) in unsecured debt that was, in effect, taxpayer-guaranteed. In essence, the program was structured in a way that almost uniquely favored a shadow bank like GE — one with a relatively small depository, but with immense unsecured debt that had been issued by the depository’s affiliates.

Konczal then goes on to cite another paper explaining why this happened: GE used the credit rating it won in its manufacturing business to make a lot of big finance games possible.

http://emptywheel.firedoglake.com/2011/01/21/jeff-immelts-ge-the-too-biggest-to-fail/">more...

[Vinnie From Indy]

1. GE's finance unit has long been a major part of the co.'s revenue

No news there!