GE Could Tap Fed Fund, Goose Credit Markets

GE (GE) announced the intention of its finance division, GE Capital Corp, to access the Fed’s short term funding facility beginning next Monday on behalf of its commercial paper customers. This should raise a few eyebrows and deserves a closer watch.

So far GE’s $88bn of outstanding commercial paper is 12% less than last’s quarter’s $100bn and it is currently unable to quantify the liquidity needs of its customers.

Next week will definitely provide better visibility, and the market will probably take its cues from GE’s ability to assist the Fed’s cause. In addition to earnings and guidance, this development could also influence next week’s market direction and volatility.

Disclosures: None

Comments

[User 265729:]

Why I thought GE was "strong" and "sound"? What is all this talk of GE tapping into the Fed's pockets (actually the American taxpayers pockets) ?

Oh! I see... When Paulson and Bush plant positive rumors with CNN, CNBC, Bloomberg, The Wall Street Journal, The New York Times and now The Washington Post and they don't work we get:

"Next week will definitely provide better visibility, and the market will probably take its cues from GE’s ability to assist the Fed’s cause. In addition to earnings and guidance, this development could also influence next week’s market direction and volatility."

He! He! He! It sure will... GE is in big trouble too...

Bush! Paulson! Ya just got to shore the cards up a few more days until the election! Then...

2008 Oct 24 02:27 PM

[User 265729:]

PS:

Shouldn't this really say...

GE's Goose is Cooked, Tap Fed Fund

2008 Oct 24 02:31 PM

[Consider_this:]

GE, GM, FORD, CHRYSLER. The rest of the big US manufacturer is getting wasted as USD flies into the stratosphere.

The big ones must and need to fail.

The big failure must be allowed to happen to reboot the system.

Any other struggle is merely postponing the inevitable.

2008 Oct 24 03:25 PM

[Consider_this:]

Consider this:

Do a chapter 13 on top X % of most cash-poor companies. This will allow re-org of debt, contracts, wipe out claims. A single, massively painful *but contained* event.

When they emerge, they'll be the engine of growth for the country.

This is the poison pill every wall streeters and govt is fighting tooth and nail to avoid -- Unfortunately, this is also the medicine to cure us of the disease.

2008 Oct 24 03:29 PM

[Prudent Guy:]

Some of you people are astounding in your ignorance. Do you have any clue at all what GE is doing here?

They are trying to help restore cash to some of their short-term debtholders (such as pension funds and state gvt's). So they are planning to buy back their debt from those folks, restoring liquidity to the system, and instead funding their short-term debt through the fed program.

Virtually ALL big companies use commercial paper to some extent; it's not like GE is a black horse for doing that. However, GE would probably rather their short-term debt customers don't go up in smoke in the long term...so this is a good move.

Do your homework before you start bashing. K?

2008 Oct 26 12:09 AM