4. Jeff's Jive
Gee whiz, Jeff Immelt. You sure do have a short memory.
In a letter to shareholders released Monday, General Electric's (GE - Get Report) CEO warned his investors about "political storms" impacting capital investment, citing the government's fiscal situation, excessive regulations and repeated budget battles as reasons why American companies may choose not to invest at home.
"The amount of regulation tends to grow during periods of financial strain and we are certainly seeing that in the U.S.," opined Immelt. "The number of 'major regulations' -- regulations with more than $100 million in impact -- has exploded in the last few years. The result has been an additional burden on business. Until we solve for these constraints, it is hard to see that the U.S. will return to its full growth potential."Hey Jeff old buddy, we've got a solution if you are worried about sticky government red tape putting the kibosh on domestic PP&E spending: Don't screw up in the first place! While we agree that Uncle Sam's legislative incapacity is far from encouraging, Immelt glosses over the fact that GE Capital -- a division which held assets equal to the country's sixth largest bank prior to the financial crisis -- was partially responsible for the very creation of the regulations he is now whining about. And we're not merely talking about all those funky subprime loans issued by GE's now defunct mortgage originator WMC Direct. Back during the 2008 money market freeze, GE Capital converted itself -- with incredible state-assisted alacrity mind you -- to a bank and issued $139 billion in Federal Deposit Insurance Corp.-backstopped debt. GE Capital also raised over $16 billion in financing under the Federal Reserve's commercial paper funding facility. Not only that. Treasury Secretary Hank Paulson didn't just break the bank for GE at the drop of a dime, but he didn't ask for a nickel in return. For example, the U.S. government could have asked Jeff to bring back some of his overseas profits as payback for its largesse, yet neglected to do so. And as we learned from Bloomberg this week, GE currently holds $108 billion in untaxed corporate loot abroad, money which sure could build a lot of plants back home. No, asset repatriation wasn't part of Jeff's very sweet, skin-saving deal. It was all one way. Jeff gorged on cheap taxpayer money with no strings attached, even while GE was paying that Omaha-based loan-shark Warren Buffett through the nose for the privilege of owning GE's preferred stock. Actually, that's not entirely true. Immelt did pay back the government this week by giving former SEC chief Mary Schapiro a high-paying, low stress job as an independent director on GE's board. Perhaps having Schapiro on his payroll will give GE an even clearer path to Uncle Sam's piggy bank should the company hit money market turbulence again. And more to the point, Jeff did serve his country proudly on President Obama's so-called Council on Jobs and Competitiveness. Maybe that's why he forgot to mention his own role in creating the crisis that led to all those capital investment-killing regulations. Those handful of meetings he attended over the past two years must have truly taxed his memory. Lord knows that's the only thing of Jeff's that got taxed.
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