Updated from 2:01 p.m. EDT
will take a meaningful hit from the credit card legislation to be signed Friday by President Obama, though how much of a hit is difficult to quantify.
The legislation will make it more difficult for credit card companies to jack up interest rates, or generally screw customers without at least making it clearer they are doing so. This will hurt GE and other big card issuers like
Bank of America
Capital One Financial
who issue cards to consumers with low credit scores.
Analyst Deane Dray of FBR Capital Markets asked GE CEO Jeff Immelt about the issue during a conference call Tuesday.
"...The way the legislation was written was exactly, I would say, equal to or better than what our expectation was," Immelt said. "So, I think, we're going to be OK."
Immelt then said Dray could track down Mark Begor, head of the GE Money unit that includes the credit card business, for more information. Dray declined to comment when reached by
, so we are left with this statement, emailed to me by GE spokeswoman Anne Eisele.
"The legislation will have an impact, but it has already been factored into our plan," she wrote.
In other words, GE is essentially saying, it'll hurt, and we won't say how much, but we've got it covered.
It shouldn't really be surprising that GE is so tight-lipped about this. After all, the company did not even disclose earnings from its credit card unit until the first quarter of this year, when it said it brought in $99 million, according to Eisele. That investors did not demand this kind of information earlier is somewhat astounding.
GE's "private label" credit card business, which is the credit behind cards pushed by retailers like
is a huge business -- the largest of its kind in the U.S., the company says. A year ago, while GE was trying to sell it
The Wall Street Journal
estimated it was worth $32 billion. Potential buyers, including
, ultimately passed. (I bet Jamie Dimon is extremely relieved about that!)
Credit card companies may lose $10 billion in interest revenue as a result of the new laws, according to the
, citing a report by Robert Hammer, a credit card consultant.
Eisele says "many analysts were rather pleased" about the company's new disclosure on its credit card business in the first quarter.
"While we traditionally hadn't broken out that business, as discussed, we did voluntarily provide additional detail on recent credit card earnings this time in response to investor interest," she wrote.
She also noted that GE's disclosure has passed muster with regulators for years.
Sadly for investors, that is true.