Diary

There are some fishy things going on with Uncle Sam and GE

This is why the government should stay out of private business — it shouldn’t be picking winners and losers

I wish blackhedd were still hanging around here to offer his fine insight, but even to someone of limited understanding like me it’s clear that the Obama administration and the Democrats in Congress are doing some huge favors for GE lately. We’ve seen lots of stories about how GE will make out like bandits under cap and trade. Here is a different area where GE is making a killing.

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.

What does this mean? Well you can compare and contrast GE Capital’s situation with that of CIT Group. CIT is much smaller but not insignificant. They did get a little bailout money (you know how things are when $2B is considered small), but GE now has between $75B and $100B of guarantees thanks to us taxpayers, while it looks like CIT is going to have to declare bankruptcy to try to survive.

You can google GE and CIT to see lots of comparisons. Some say hurting one big player hurts confidence in the other players; some say GE will benefit if a competitor is taken out of play. But there is no doubt that having Obama’s troops jump in on GE’s side has changed the game here.

It’s interesting how the world’s largest public company and the parent of Obama’s biggest TV cheerleaders (aka NBC News and MSNBC) happens to keep coming out a winner every time something happens in Washington.