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
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)
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(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.