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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

(Newser) – 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.

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)

FDIC Chair Sheila Bair, listens to a question on Capitol Hill in Washington, Wednesday, May 6, 2009, while testifying before the Senate Banking Committee. (AP Photo/Alex Brandon)

General Electric Co. CEO Jeffrey Immelt speaks during a news conference, Friday, June 26, 2009 in Birmingham, Mich. (AP Photo/Carlos Osorio)

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COMMENTS

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Showing 3 of 19 comments

Snarfeh

Jun 30, 2009 10:01 AM CDT

Who? Why, it was Dubya...

Snarfeh

Jun 30, 2009 9:59 AM CDT

What ZeroThreeQuarter said as far as clarification of my comment is correct. What *I* say, however, in response to your ignorance in claiming Obama, whom I'm not truly that fond of as yet, has created a deeper deficit than Bush, you are...well, I already said it...ignorant. No one has dug us deeper in the hole than Bush. Obama has not caught up with him yet. He may...he probably will, but he hasn't even come close yet. TARP started with Bush and half of it was thrown at banks by Bush. Obama came in, started to dole out the other half but put conditions on it. Suddenly, not so many banks needed it after all! As we now know, though, GE was more than happy, with the republicans' help, to take a chunk of it. The stimulus Obama put through is also less than what Bush blew. The info is out there if you know how to use google....if you don't, let me know and I'll get some links for ya...

Yourself

Jun 30, 2009 3:39 AM CDT

@palerider, his statement was a correction of Citrixguy's mistaken statement. And yours is still wrong seeing as bush never took into account the cost of the wars in his budget. One can't have an expense in life as large as two wars and then just ignore the cost of it when it suits him. At least President Obama is taking that cost into account now.

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GE Reaps Billions From Bailout Loophole

Loophole lets company pull down $74B from FDIC

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General Electric • Treasury Department • FDIC • loopholes • bailout • financing • Wall Street bailout

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More Newser Stories

Paulson to Banks: Do It for Your Country

$250B bailout needed to restore faith, keep capital at home

Treasury to Sell Off $142B in Toxic Assets, Make Billions

'Notably improved' market means $15B-$20B profit for taxpayers

Taxpayers Will Score $12B on Citigroup Bailout: Treasury

Government strikes deal to sell remaining 2.4B shares

Citigroup to Repay $20B in TARP Loans

Will issue $17B in common stock to meet capital requirements

Treasury: Relax, TARP Cost Trimmed by $200B

Estimated loss to taxpayers down to just $42B as banks rebound

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GE Reaps Billions From Bailout Loophole

Loophole lets company pull down $74B from FDIC

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OTHER STORIES ON OUR RADAR

General Electric • Treasury Department • FDIC • loopholes • bailout • financing • Wall Street bailout

MOST POPULAR STORIES

[ By Views ]

[ By Comments ]

More Newser Stories

Paulson to Banks: Do It for Your Country

$250B bailout needed to restore faith, keep capital at home

Treasury to Sell Off $142B in Toxic Assets, Make Billions

'Notably improved' market means $15B-$20B profit for taxpayers

Taxpayers Will Score $12B on Citigroup Bailout: Treasury

Government strikes deal to sell remaining 2.4B shares

Citigroup to Repay $20B in TARP Loans

Will issue $17B in common stock to meet capital requirements

Treasury: Relax, TARP Cost Trimmed by $200B

Estimated loss to taxpayers down to just $42B as banks rebound

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Newser By Users

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