The MS-NBC bailout?

posted at 5:05 pm on June 29, 2009 by Ed Morrissey

A few e-mailers have made the argument that the Obama administration may have conducted its first media bailout, whether purposefully or inadvertently, but actually the fault lies with the outgoing Bush administration.  Today’s Washington Post reports that FDIC regulators stretched its definition of “banking” to include General Electric in its bailout last fall.  The parent company of NBC and its spinoffs also has a large credit division, but qualified for its government assistance by owning a couple of small banks in Utah:

General Electric, the world’s largest industrial company, has quietly become the biggest beneficiary of one of the government’s key rescue programs for banks.

At the same time, GE has avoided many of the restrictions facing other financial giants getting help from the government.

The company did not initially qualify for the program, under which the government sought to unfreeze credit markets by guaranteeing debt sold by banking firms. But regulators soon loosened the eligibility requirements, in part because of behind-the-scenes appeals from GE.

As a result, GE has joined major banks collectively saving billions of dollars by raising money for their operations at lower interest rates. Public records show that GE Capital, the company’s massive financing arm, has issued nearly a quarter of the $340 billion in debt backed by the program, which is known as the Temporary Liquidity Guarantee Program, or TLGP. The government’s actions have been “powerful and helpful” to the company, GE chief executive Jeffrey Immelt acknowledged in December.

GE’s finance arm is not classified as a bank. Rather, it worked its way into the rescue program by owning two relatively small Utah banking institutions, illustrating how the loopholes in the U.S. regulatory system are manifest in the government’s historic intervention in the financial crisis.

The FDIC action took place last October, in the middle of the meltdown.  The program was specifically intended to exclude industrials like GE, but the company applied anyway and lobbied hard for its inclusion.  The FDIC allowed GE to buy its loan guarantees in the TLGP program, but excluded GE competitors like CIT Group.  As a result, GE is thriving, and its competition has been hobbled.

No one has lost money in this exchange, as the FDIC has not had a single loan default in its TLGP.  However, this shows why government needs to stay out of the private sector.  GE could have raised its own capital without FDIC guarantees, and in fact should have done so.  At the same time that GE got a government-granted competitive advantage in the market, it was also exempted from the intrusive regulation of executive compensation as other TLGP beneficiaries received as a condition of their assistance. And no one can explain how that happened, either.

But no one can blame Obama for this debacle.  GE’s admission to TLGP took place before Obama won the election, and months before he took office.  The Post reports that Obama wants to tighten eligibility now in a move that could kick GE out, but now it’s a moot point.  The FDIC already did the damage to GE’s competitors.

Update: I probably should have made this clearer, but I was being sarcastic about the “media bailout” aspect of the story.  Some e-mailers suggested it, but I don’t think George Bush would have gone out of his way to bail out MS-NBC’s parent company for their sake.


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GE’s admission to TLGP took place before Obama won the election, and months before he took office.

“You, sir, Mr. Bush are a fascist traitor!! How dare you, sir!!”

Nah, I can’t pull it off.

SteveMG on June 29, 2009 at 5:13 PM

Fascism.

the_nile on June 29, 2009 at 5:14 PM

Even if they take the money away, Immelt is still one of his trusted advisors.

kingsjester on June 29, 2009 at 5:15 PM

FACEism.

portlandon on June 29, 2009 at 5:16 PM

This whole deal went down before Obama was sworn in. The blame lies with Bush

equality on June 29, 2009 at 5:16 PM

What is really sickening is that GE will be one of the largest beneficiaries of the cap & trade legislation. They bought time on fox news, and now I hear the Great One – Mark Levin espousing how GE supports the troops. I don’t blame Mark Levin for taking their money though.

fourdeucer on June 29, 2009 at 5:18 PM

kingsjester on June 29, 2009 at 5:15 PM

Who will also benefit GREATLY from the kneeCap and Trade bs.

tru2tx on June 29, 2009 at 5:19 PM

Why would GE need any money? Aren’t they betting on making billions from the cap & tax scheme?

txag92 on June 29, 2009 at 5:20 PM

A good question to ask Obermann and Matthews. How are those new contracts you negotiated while you were blasting AIG on their bonuses?

djaymick on June 29, 2009 at 5:21 PM

Why would GE need any money? Aren’t they betting on making billions trillions from the cap & tax scheme?

txag92 on June 29, 2009 at 5:20 PM

FIFY

VibrioCocci on June 29, 2009 at 5:24 PM

So it needs to be siezed and sold to the Italians.

seven on June 29, 2009 at 5:27 PM

Shouldn’t Chris Matthews be thanking George Bush?

You’d expect at least a little tingle.

Disturb the Universe on June 29, 2009 at 5:28 PM

Wow, what a leg-tingler of an article.

Surprise? Nope. Not a nano-micron of a surprise with anything coming out of this administration.

I’ll stick to posting snarkified comments for awhile, because as of now, I just want to know two things:

The first being somebody please tell me when the shooting starts, so I can get home and protect my property.

The second thing…… I’d really like to figure out how these Fascist bastages in the administration are going to tell over 88 million legal firearms owners that they have to surrender over 325 million legally owned firearms…… because that’s coming. Maybe they won’t say anything and all at once, many of us will get that 2am knock on the door.

Cheers !

Kenny Solomon
Locked and loaded in South Flori-duh.

E T Cartman on June 29, 2009 at 5:36 PM

This whole deal went down before Obama was sworn in. The blame lies with Bush

equality on June 29, 2009 at 5:16 PM

Somehow this doesn’t make it any better.

sonofdy on June 29, 2009 at 5:37 PM

Where is the salary czar on this one?

gatorboy on June 29, 2009 at 5:38 PM

But no one can blame Obama for this debacle. GE’s admission to TLGP took place before Obama won the election, and months before he took office.

Let’s hope for some hope ‘n change……

“Hope ‘n change, hope ‘n change, hope ‘n change,
when will we see you?”

“Hope ‘n change, hope ‘n change, hope ‘n change,
where might thou be?”

“Hope ‘n change, hope ‘n change, hope ‘n change,
I wish, I wish I could see you!”

“Hope ‘n change, hope ‘n change, hope ‘n change,
EFF YOU!!
Let’s just keep things the same!

Mad Dog on June 29, 2009 at 5:40 PM

Not sure if anyone knows, but GE used to be one of the biggest producers of America’s nuclear weapons.

Maybe they’re out of that business, but they sure as hell have tight access to government contracts.

Liam on June 29, 2009 at 5:44 PM

GE and Goldman Sachs have got their sticky little corrupt fingers all over our corrupt government.

MB4 on June 29, 2009 at 5:46 PM

Good News:

Last thursday a young gent rang our doorbell. When my wife answered the door he identified himself as GE Security Services. My wife being her quickly cut him off with a resounding “not interested”. With a solemn look the young man asked “you don’t like GE?”. Of course she anwsered “No” without any explanation. The young quickly said “I’m getting that alot” and left.

Maybe the tide is turning. Don’t be too hard on my wife we lost quite a bit on GE stock.

HoustonRight on June 29, 2009 at 5:47 PM

The corruption between GE and BOTH political parties could be the biggest scam ever pulled on the American people. We have to flush every lying back-stabbing incumbent from the government. I know that the ignorance of the American people will not comprehend the severity of the condition we are in, but unless things are changed soon, the direction may not be able to be changed in the future.

volsense on June 29, 2009 at 5:50 PM

Good, honest post, Ed. Thanks!

tneloms on June 29, 2009 at 5:57 PM

Disturb the Universe on June 29, 2009 at 5:28 PM

+100

excellent

cmsinaz on June 29, 2009 at 6:03 PM

As an ex-GE employee, none of this surprises me.

Anybody notice Obama’s new push for energy saving light bulbs? That will be a nice bump in earnings for GE, as well.

Star20 on June 29, 2009 at 6:11 PM

Good News:

Last thursday a young gent rang our doorbell. When my wife answered the door he identified himself as GE Security Services. My wife being her quickly cut him off with a resounding “not interested”. With a solemn look the young man asked “you don’t like GE?”. Of course she anwsered “No” without any explanation. The young quickly said “I’m getting that alot” and left.

Maybe the tide is turning. Don’t be too hard on my wife we lost quite a bit on GE stock.

HoustonRight on June 29, 2009 at 5:47 PM

My daughter just bought her first house. Had to buy new appliances. She went to a local “big box” store that was running a sale on GE products. She told them she wouldn’t take them if they were free. The salesman asked why and she told them she was a conservative so of course she hated GE.He laughed and said she wasn’t the first with that comment either.

Jeff from WI on June 29, 2009 at 6:14 PM

unintended consequences of government interrupting free markets. No one, no thing is smarter than the free market. Let it work/correct and all will be better.

marklmail on June 29, 2009 at 6:15 PM

At GE our main concern is… power.

andycanuck on June 29, 2009 at 6:16 PM

Like Obama, GE can say “I won”.

GarandFan on June 29, 2009 at 6:28 PM

I am seriously shocked at how Bush ended his term. It is like he sold out to big government at the end. Sad.

petunia on June 29, 2009 at 6:50 PM

My daughter just bought her first house. Had to buy new appliances. She went to a local “big box” store that was running a sale on GE products. She told them she wouldn’t take them if they were free. The salesman asked why and she told them she was a conservative so of course she hated GE.He laughed and said she wasn’t the first with that comment either

http://www.ge.com/products_services/directory/by_product.html

I highly doubt anyone could avoid using or being used by GE. The list is gigantic.

harry on June 29, 2009 at 7:00 PM

Somebody should literally bailout Chrissy’s head.
He’s looking top heavy, taking on fluids, might capsize.

I’ll leave it to you to speculate on what those head fluids are exactly:)

Brian1972 on June 29, 2009 at 7:24 PM

George Bush started all these bailouts, that idiot. Now in 4 years when the economy is crap Obama can just look back and say that Bush started the ball down the hill. What happened to conservative principles? With all the money that Bush and the Republican congress spent, they disgraced the Republican party and it’s conservative ideals. Now look at the mess we’re in. That’s why people voted for Obama!

golfballs03 on June 29, 2009 at 11:13 PM

I try to see to it each day that this sleazy company does not make a dime off me. They are as criminal and evil as the devil in the White House ( evil eyes )

bluegrass on June 30, 2009 at 9:12 AM

Anyone know which banks in Utah? I want to be sure to avoid those… institutions.

karl9000 on June 30, 2009 at 1:36 PM