NLPC Associate Fellow Fred N. Sauer asserts that General Electric is no longer a great industrial company, but is now dominated by its General Electric Capital Services (GECS) division. Contrary to the conventional wisdom of the financial media that GECS has been GE’s strength in recent years, Sauer argues that GECS is dangerously reliant on short-term financing to support its own lending. The result is a company ultimately dependent on political influence to mitigate the risk, creating opportunities for the well connected, like Warren Buffett.
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The role of CEO Jeffrey Immelt is explored and unfavorably contrasted to that of Jack Welch, his predecessor. Sauer charges that GE’s executives have put increasing their own compensation above the interests of shareholders- and taxpayers.