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Righteous Dude

Righteous Dude
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  • Time to Reenter GE [View article]
    Lummox -- your statement, GE mostly finances internal products and on a short term, is completely false:

    GE is the largest 3rd party consumer credit card issuer in the US. Hundreds of "store" credit cards are actually issued and serviced by GE Capital.

    GE Capital Leasing is the largest airplane leasing company in the world. Another section of GE Capital finances aircraft engines (not necessarily GE's own). GE Capital Leasing finances airplanes themselves, which GE does not make.

    GE also finances modular buildings used for temporary office space (often by construction companies). They finance shipping containers, rail cars, and trucks -- none of which GE makes. The lease terms generally go for at least a year. More importantly, the life of the asset (what GE has to finance) is many years. Having the lease expire while the loan on the asset is outstanding is the classic S&L maturity mismatch problem.

    GE Capital was a huge underwriter of mortgage backed securities -- even though GE is not a bank and did not create the loans. Mortgage loans are not short term.

    While the credit card loan age obviously varies with how fast consumers pay the charge back -- the majority of GE's financing goes on for many years. This is why PIMCO's Bill Gross said it was inappropriate for GE to be relying on short term commercial paper years ago (long before Lehman's issues). Jeff Immelt conceded the problem and worked to secure longer term financing with varying success... hence your suggestion that GE's loans are short term is just plain wrong and has been refuted by GE itself.

    And your statement:
    > It didn't need TARP, it needed cash.
    betrays that you don't really understand what the TARP program is


    On May 17 08:02 PM Lummox wrote:

    > GE Finance is different from most other banks. The majority of their
    > loans are for financing their internal business divisions. These
    > are all short term loans or leases. So it made sense to get financing
    > from the money market. After Lehman's collapse, the market dried
    > up and GE, couldn't get capital to finance their Sales. So the converted
    > their finance arm to a bank, so they could get money directly from
    > the FED. During this time money market accounts were hitting 24%.
    > It didn't need TARP, it needed cash.
    May 17, 2009. 09:01 PM | 5 Likes Like |Link to Comment
  • Time to Reenter GE [View article]
    buoy -- you should read GE's annual report some time. GE is already in China and India. They have been in both countries for many years. Both countries are already "on line"
    May 17, 2009. 03:50 PM | 3 Likes Like |Link to Comment
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