GE sucks up to Obama while sucking up TARP funds

Washington Post:

General Electric, the world's largest industrial company, has quietly become the biggest beneficiary of one of the government's key rescue programs for banks.

At the same time, GE has avoided many of the restrictions facing other financial giants getting help from the government.

The company did not initially qualify for the program, under which the government sought to unfreeze credit markets by guaranteeing debt sold by banking firms. But regulators soon loosened the eligibility requirements, in part because of behind-the-scenes appeals from GE.

As a result, GE has joined major banks collectively saving billions of dollars by raising money for their operations at lower interest rates. Public records show that GE Capital, the company's massive financing arm, has issued nearly a quarter of the $340 billion in debt backed by the program, which is known as the Temporary Liquidity Guarantee Program, or TLGP. The government's actions have been "powerful and helpful" to the company, GE chief executive Jeffrey Immelt acknowledged in December.

GE's finance arm is not classified as a bank. Rather, it worked its way into the rescue program by owning two relatively small Utah banking institutions, illustrating how the loopholes in the U.S. regulatory system are manifest in the government's historic intervention in the financial crisis.

The Obama administration now wants to close such loopholes as it works to overhaul the financial system. The plan would reaffirm and strengthen the wall between banking and commerce, forcing companies like GE to essentially choose one or the other.

"We'd like to regulate companies according to what they do, rather than what they call themselves or how they charter themselves," said Andrew Williams, a Treasury spokesman.

GE's ability to live in the best of both worlds -- capitalizing on the federal safety net while avoiding more rigorous regulation -- existed well before last year's crisis, because of its unusual corporate structure.

Banking companies are regulated by the Federal Reserve and not allowed to engage in commerce, but federal law has allowed a small number of commercial companies to engage in banking under the lighter hand of the Office of Thrift Supervision. GE falls in the latter group because of its ownership of a Utah savings and loan.

...


There is much more on how they get the funds without the strings of most real banks. Missing from the lead is how GE though its NBC and MSNBC news divisions have been major suck ups and supporters of the Obama administration. This profitable arrangement should constitute a major conflict of interest that the news divisions should at least disclose as they continue to heap praise on Obama and attack conservatives and Republicans.

Comments

  1. Unknown3:09 PM

    Inclusion of GE in TARP occurred in November 2008 under the Bush administration, not Obama's. It was the Obama administration that later sought to close the loophole that allowed GE into the program.

    ReplyDelete
  2. Unknown6:32 PM

    GE was included into the Temporary Liquidity Guarantee Program, or TLGP (not TARP) in November 2008. No TARP money for GE at all. And again, it was the Obama administration that sought to close the loophole that allowed it.

    ReplyDelete

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