The Washington Post has an important story on GE: front page, above the fold, detailing how the federal government has given GE hundreds of billions in subsidies.
Jeff Gerth, formerly of the NY Times, and now at Pro Publica, the muckraking outfit, teamed up with another reporter, Brady Dennis, to write a great story for the WaPo, headlined, "How a Loophole Benefits GE in Bank Rescue/Industrial Giant Becomes Top Recipient in Debt-Guarantee Program." It's quite shocking, how GE has played Uncle Sam like a fiddle, getting hundreds of billions in subsidies. Here's the heart of it:
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.
And yes, there are some in the Obama administration who want to crack down on this giveaway, albeit after the money has been given away. But we'll have to wait to see if even that puny ex post facto reform survives GE's lobbying blitz.
H/T to the great Thomas Nast, the father of modern political cartooning in America.
