UPDATE: We’ve posted a new document answering some recent questions about GE’s participation in the FDIC’s Temporary Liquidity Guarantee Program.
GE Capital Corporation (GECC) is an important source of funding for U.S. companies, industries and consumers. Through the recent credit crisis, GE Capital has continued to provide critical financing for U.S. infrastructure projects, municipalities and industries. Some examples include financial support for airlines, hospitals, utilities, and many middle market sectors. GE Capital has also been a leader in aiding U.S. companies in restructuring as the number one provider of debtor in possession (DIP) and bankruptcy lending. Today GE has been approved to participate in the Federal Deposit Insurance Corporation’s (FDIC) Temporary Liquidity Guarantee Program (TLGP).
Our participation in the program is a positive development for our investors. The U.S. Government will guarantee for up to June 30, 2012 all qualifying GECC debt issued from the date GECC becomes eligible under the program through June 30, 2009. For GE Capital, this will cover debt up to approximately $139 billion, (for example LT debt and CP*)
* Updated on November 26, 2008 due to new information released by the Federal Deposit Insurance Corporation (FDIC) on November 21, 2008 about their Temporary Liquidity Guarantee Program (TLGP), that revises the previously published interim rule. Based on our review of the final rules relating to the TLGP, our understanding is that GE Interest Plus Notes are not guaranteed under the TLGP. Click here to read more.
This does not mean that GE intends to issue this amount of debt, but, rather, that this is the maximum amount of debt, which the guarantee will cover.
This will allow us to source our debt competitively with the other financial institutions that are eligible for the new FDIC program. This program does not require a preferred equity investment in GE from the U.S. Government.
With this program, our participation in the Commercial Paper Funding Facility and all the actions we have taken to protect our liquidity, we are well positioned to meet short- and long-term debt obligations.
In summary, our financial services businesses earned $7.2 billion from continuing operations through 3Q 2008, making us one of the most profitable financial services providers in the world. We will continue to pursue actions and policy decisions that protect and support our investors and strengthen the company for long-term performance.
* Bloomberg: GE Wins FDIC Insurance for Up to $139 Billion in Debt
* Read GE’s letter to investors concerning the FDIC program and GE Capital.
* Read the Barclays Capital equity research note from Bob Cornell.
* Learn more about FDIC’s Temporary Liquidity Guarantee Program.
