GE Reaps Billions From Bailout Loophole

Loophole lets company pull down $74B from FDIC
By Jason Farago,  Newser Staff
Posted Jun 29, 2009 8:09 AM CDT
GE Reaps Billions From Bailout Loophole
General Electric Co. CEO Jeffrey Immelt, center, is applauded by Michigan Gov. Jennifer Granholm during a news conference Friday, June 26, 2009, in Birmingham, Mich.   (AP Photo/Carlos Osorio)

The biggest beneficiary of the federal government's debt guarantee program, one of Washington's key bank rescue efforts, isn't a bank or a financial services company—it's General Electric, which exploited a loophole it had lobbied aggressively to insert, and reaped billions in bailout money. A joint investigation by ProPublica and the Washington Post found that GE used its ownership of two tiny Utah banks to qualify for $74 billion in federally guaranteed loans, while evading the Fed's stress test and Treasury's limits on executive pay.

GE Capital, the company's huge financing arm, is not classified as a bank and nearly didn't qualify for the bailout, so a team of executives and lawyers descended on Washington—and two days later, the FDIC said "affiliates" of a bank were eligible. That let GE, through its Utah companies, use government-guaranteed loans to shore up its funding. The company has no apologies for its strategy: "We were accepted on the merits of our application," said a spokesman.
(Read more General Electric stories.)

We use cookies. By Clicking "OK" or any content on this site, you agree to allow cookies to be placed. Read more in our privacy policy.
Get the news faster.
Tap to install our app.
Install the Newser News app
in two easy steps:
1. Tap in your navigation bar.
2. Tap to Add to Home Screen.