A Wall Street Journal editorial today makes an inaccurate comment about GE’s participation in the FDIC’s Temporary Liquidity Guarantee Program or TLGP. In doing so, it compares GE to lender CIT.
Here are the facts. While GE Capital and CIT compete in some markets, GE Capital has a much more diverse set of assets. GE’s AA+ credit rating is 15 notches above CIT’s. GE’s high credit rating reflects the strength of our underwriting, risk management and asset quality. GE Capital made $8.5 billion in 2008, while CIT lost approximately $3 billion. The FDIC has made clear the TLGP program was set up to support healthy financial firms in an unprecedented market.
After its competitors were granted access to the program, GE applied, went through a rigorous review process and was accepted. GE has paid $1.3 billion to the government to use the guarantee programs. GE also is effectively issuing debt outside of this program, including almost $12 billion of long term debt, including a $3 billion issue yesterday for a total of more than $12 billion. GE has been the largest issuer of debt outside the guarantee program. GE has pre-funded 100% of its 2009 plan and more than a third of 2010. GE has $52 billion of cash and cash equivalents on hand. GE has strong and healthy capital ratios and is effectively managing losses through a difficult environment. Finally, GE has not taken any TARP funds as have CIT and many of GE’s competitors.
Look for more information here soon about GE Capital’s July 28 analyst meeting.
