There is news out in the after-hours session that General Electric Co. (NYSE: GE) may be a bit safer from all of the fears that it would have to separate its manufacturing and its financial units. Bloomberg ran excerpts from a quick interview with U.S. Representative Barney Frank on this topic. We put in a call to our own GE contacts and this echoes (and magnifies) some of the company’s comments given yesterday.
GE has already said it is opposed to splitting the manufacturing from the financial operations. Despite the size and the ties, the reasons that GE is opposed to this are a little more than obvious. In normal times, this business has been wildly profitable.
One of the GE spokespeople gave us a direct quote: “We share Chairman Frank’s opposition to the provision to separate banking and commerce. This issue did not contribute to the financial crisis.”
Our contact inside GE also went on to say, “We support systemic regulation and look forward to continuing work with Congress and the Administration on meaningful financial services reform that ensures stability, protects consumers and encourages the responsible lending that drives economic growth.”
More regulation is coming to financial operations. Ditto for energy and manufacturing companies. That is obvious. But when regulating businesses outside of banking starts heading into every aspect of traditional businesses because companies are in theory large enough to create financial risk, then the pendulum is swinging too far as the Administration gets caught up in the moment. But that is also probably one reason that GE has removed or started to remove itself from that government loan program.
Barney Frank is not the entire government so he is not the only backstop, but his role as Chairman of the House Financial Services Committee does give him a fairly strong standing in the world of finance for those of us who have to watch how Uncle Sam treats the business community.
JON C. OGG
JULY 29, 2009
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