More Private Risk Transferred to Public; GE to Issue FDIC Backed Bonds
Monday, March 9, 2009 10:34Private gains through public risk.
In the latest of public subsidies handed out to private corporations, GE Capital will sell debt this week under the Federal Deposit Insurance Corp.’s (FDIC) Temporary Liquidity Guarantee Program. GE will enjoy a very low cost of borrowing as it issues bonds backed by the full faith and credit of the United States of America.
GE magically still has a AAA credit rating though the market doesn’t buy it. GE corporate bonds have been dropping in value due to concerns about the companies capital requirements. The newly issued bonds will likely return a yield of 2% to investors.
GE common stock dropped 79 percent in the past year as the recession and credit crisis eroded profit at GE Capital and undermined the value of real estate on its books.
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