GE Capital, Jack Welch and Jeff Immelt: A Tissue of Lies & Subterfuge?

GE Capital, Jack Welch as well as Jeff Immelt

08 April 2010, By David Caploe PhD, Chief Political Economist, EconomyWatch.com

What follows are the contents of 2 emails, received by me via my friend Richard Martin,

08 04 2010, By David Caploe Expert degree, Chief Political Economist, EconomyWatch.com

What follows are the contents of two emails, received by me via my friend Richard Martin,

who subsequently received confirmation from the contents of the initial e-mail from a good anonymous source within GE Capital.

Ritholtz is Barry Ritholtz, whose blog, The Big Picture, was analyzing a book by Roger Lowenstein, "The actual End of Wall Street".

Jack Welch, of course, had been the revered head of GE, "one of America’s most respected companies",

and Immelt is Jeffrey Immelt, Welch’s successor at GE as Chairman and CEO …

From our point of view, it may sound like GE was using JUST the same tricks that Lehman Bros was using with Repo 105 — and, as we pointed out, GSachs with Greece … 😉 …

which undercuts YET AGAIN the ridiculous argument about the necessity of insane compensation levels in the financial sector to be able to attract "the best talent",

SINCE, APPARENTLY, THEY’RE ALL USING THE SAME BASIC BAG Associated with TRICKS ANYWAY 😉

Here’s the FIRST email:

“GE’utes Jack Welch pocketed over $400 million bucks in salary, bonuses, as well as options.

Lowenstein argued in his book that Welch essentially managed the actual earnings with very creative accounting, and the help of GE Capital’utes impenetrable financial black box.

The credit turmoil caused the collapse associated with GE’s earnings management, verifying Lowenstein’s thesis of earnings management.

It’s hard to avoid his conclusion that the finest industrial CEO in current American history was little more than a clever accounting cheat.”

And this short note from my friend RM brought This particular – highly detailed — SECOND email response from the anonymous supply within GE:

Lowenstein is absolutely correct in his ideas and views on Welch’s earnings management practices.

These practices did not end when [Jack] Welch left the company.

[His successor Jeffrey] Immelt was selected by Welch, and Immelt has maintained the same revenue management practices.

GE denies these allegations to the street, but it is widely known as well as accepted internally that

the company manages the quarterly outcomes by buying and selling assets and moving earnings as necessary.

In addition, on the equipment side of the business,

the company pushes product forward or holds it back depending on which quarter they want to go ahead and take profit.

This worked nicely in good times, but as we saw in the disaster in 2008/2009,

GE could not conceal their practices and had to scurry to manage their quarter revenue,

and hence why Immelt landed on his heels and the company skipped its quarterly numbers for the first time within history.

The street also has always said that the company is propped up through the commercial paper market,

and without which market, GE would not be able to exist.

This came true when the commercial paper market came to a standstill

[the on-going lending deep freeze, which was especially frightening throughout the immediate aftermath of Black September 2008]

and the company had to accept cash from [St. Warren of] Buffet to stay afloat

[a move which sounds awfully similar to exactly what St Waren pulled off with Goldman during that same period ].

The company might say this was a "precautionary" measure or a "proactive" action.

That is not the case – GE Capital was on the lifeline in Fall of 2008 and was near death.

The company could not keep its obligations and couldn’t fund its Borrowers.

What GE displays to the street and what really happens at the company are two entirely different things.

An additional side point I might add is that, in addition to the clever accounting occurring at the company,

GE also has significant Hr issues, with inappropriate and illegal behavior occurring and coverups like a regular course of business.

Of course I could talk about this for hours, however this is just a tidbit of the real functions of supposedly "the most respected company in the world".