Stephen Foley: GE must pull the plug on financial fiasco
Saturday 17 October 2009
US Outlook: If there is a corporate metaphor for our intoxication with finance over the credit boom years, than General Electric is it. What started out as a small financial services division offering credit to homeowners who wanted to buy its appliances swelled and swelled until it was generating more than half the company's profits in 2007.
Obviously, it plunged to huge losses last year, on sub-prime mortgage lending, but results yesterday reveal that it is further from a return to health than many had hoped.
Jeff Immelt, GE chief executive, said he was shrinking the business quickly back down to size, but there should be more urgency, if not for GE's shareholders then for the financial system as a whole. GE Capital is just the sort of "too big to fail" institution that shouldn't be allowed to exist outside of a heavily regulated bank, yet GE's efforts at the moment are concentrated on (successfully) lobbying to fend off quick implementation of the new financial sector reforms, which could have forced it to immediately recapitalise and probably divest the division.
GE Capital was again the weak spot of quarterly earnings yesterday, and the company admitted that its commercial real estate investments were tacking close to the most adverse scenario imagined under the US government's "stress test". Its insistence that the business does not need to be recapitalised – with big dilution to GE shareholders – looked even more hollow last night than it did before. It certainly will need to be when the financial reforms are enacted and newly empowered regulators sweep through, and it is endangering the financial system while it remains so shaky and so reliant on wholesale funding markets. GE should face up to its responsibilities sooner rather than later.
New UK station Russia Today gives a very bizarre view of Britain
By performing as African Americans or Indians, white people get to play act a kind of 'imaginary liberation', writes Michael Mark Cohen
New essay by JK Rowling went live on Pottermore site this morning
Top Gear presenter is no stranger to foot-in-mouth controversy
- 1 Canadian actor punched in face after 'Islamophobia' experiment goes wrong in wake of Ottawa shooting
- 2 Topshop at centre of row over body image as 'shocking' skinny mannequin photo goes viral
- 3 Top Gear presenter Jeremy Clarkson criticised for beer tweet
- 4 The bubble bursts for Sodastream
- 5 If you think Russell Brand’s new book is confused, you should read what his critics have to say about it
'Nasa Confirms Six Days of Darkness in December': No, they don't - it's a hoax
Top Gear presenter Jeremy Clarkson criticised for beer tweet
The bubble bursts for Sodastream
Russian politician says Apple CEO Tim Cook should be 'banned' from country after coming out as gay
'Santa Claus' dead: John Moore starred in Coca Cola and Morrisons adverts
Pope Francis declares evolution and Big Bang theory are real and God is not 'a magician with a magic wand'
Huge surge in Ukip support after EU funding row, according to new poll
Ukip ‘exploiting grooming scandal’ to secure party’s first police chief
Nigel Farage: 'There’s nothing wrong with white people blacking up'
Maureen Lipman says 'she can't vote Labour while Ed Miliband is leader'
Muslims, immigration and teenage pregnancy: British people are ignorant about almost everything
iJobs Money & Business
£18000 - £23000 per annum + Comission: SThree: SThree, International Recruitme...
£20000 - £25000 per annum + OTE £35K: SThree: We consistently strive to be the...
£20000 - £23250 Per Annum pro rata: Clearwater People Solutions Ltd: Pro rata ...
£40 - 48k + Benefits: Guru Careers: We are seeking a Marketing Manager to join...