One of the names mentioned as a replacement for Larry Summers as director of the National Economic Council is Jeffrey Immelt, the CEO of General Electric Company. Summers was hip deep in bankster waters, as I reported here:
Larry Summers was paid $5.2mn by the hedge fund that employed him, D.E. Shaw, according to the Wall Street Journal. That isn’t all the cash showered on him either. Here are some of his $2.77mn in speaking fees: JP Morgan ($67.5K), Skagen Funds ($180K), Citigroup ($99K), Goldman Sachs ($202.5K), Lehman Bros. ($67.5K), CEO 100 ($45K), Price Waterhouse Coopers ($67.5K), State Street Corporation ($112.5K) McKinsey and Co. ($135K), Merrill Lynch ($45K, donated to charity).
As one might have expected, Summers did everything possible to help his friends, and nothing for the rest of us. He became a lightening rod for anger with the Obama administration’s failure to deal with the problems of the middle class. So naturally, the administration is looking for a replacement who will try to fill his shoes. Although the President is said to be looking for a woman CEO for this slot, we shouldn’t discount the likelihood of putting another bankster failure in the job. So why not Jeffrey Immelt?
People used to think of GE as an American success story. It was an innovative manufacturer of machines, from small appliances to jet aircraft engines, and medical machinery that was a marvel. In fact, GE’s financing businesses averaged over 37% of total revenues for the period 2006-8, and averaged 46% of total earnings from continuing operations. The Great Crash was a serious problem for GE Capital. Its earnings fell by 80% from 2008 to 2009, and its access to the capital markets in late 2008 was precarious.
It was not eligible for support from the FDIC, which was rushing programs into place to insure continued access for banks to short-and medium-term funding, including the Temporary Liquidity Guarantee Program, set in place in October, 2008. However, according to the Washington Post, GE went to see the FDIC and pleaded for access. The FDIC did not want to guarantee the debt of other companies.
GE owned two small thrift institutions, which were regulated by the Office of Thrift Supervision. The OTS, along with whoever else made calls to whoever else, persuaded the FDIC to expand access to the Temporary Loan Guarantee Program to include affiliates of FDIC-insured institutions. This startling decision let GE get an FDIC guarantee of over $100 billion of securities, allowing it to issue those securities at lower interest rates than would otherwise have been available, and saving it billions in interest charges, if, indeed, it could have accessed public markets at all.
The Post reported that GE was not subject to restrictions applicable to other recipients of government bailouts, including restrictions on compensation.
Immelt screwed up a profitable business in a greedy search for money, and then got a government bailout. He was wrong about his own business, just like Larry Summers was at Harvard, and in the financial deregulation movement. That qualifies him for a job in this administration. We couldn’t expect to see someone who gives a rat’s ass about normal people in such a job, now could we?