Comments on: Should GE be a AAA company? http://www.creditwritedowns.com/2008/11/should-ge-be-aaa-company.html Sat, 21 Nov 2009 08:48:41 -0700 http://wordpress.org/?v=2.8.6 hourly 1 By: Anonymous http://www.creditwritedowns.com/2008/11/should-ge-be-aaa-company.html/comment-page-1#comment-627 Anonymous Mon, 17 Nov 2008 05:05:00 +0000 http://www.creditwritedowns.com/2008/11/should-ge-be-a-aaa-company.html#comment-627 For what it's worth, GE Capital is bank holding company with two depository institutions. It includes both a traditional bank (GE Money Bank -- go to http://www2.fdic.gov/idasp/main.asp and search for FDIC certificate number 27314) and an industrial loan corporation (GE Capital Financial). For what it’s worth, GE Capital is bank holding company with two depository institutions. It includes both a traditional bank (GE Money Bank — go to http://www2.fdic.gov/idasp/main.asp and search for FDIC certificate number 27314) and an industrial loan corporation (GE Capital Financial).

]]> By: Edward Harrison http://www.creditwritedowns.com/2008/11/should-ge-be-aaa-company.html/comment-page-1#comment-613 Edward Harrison Thu, 13 Nov 2008 18:14:00 +0000 http://www.creditwritedowns.com/2008/11/should-ge-be-a-aaa-company.html#comment-613 David, good posts. And also, I appreciate your mentioning bond market spreads. I used to work on a bond trading desk so I know exactly hat you are saying.<br/><br/>Credit spreads show that market participants often signal that they believe certain credits are not worthy of their rating long before they get marked down. If you look at Enron, the bond market was on to this well before the equity markets. I believe the same was true for Worldcom.<br/><br/>My hope is that all of this turmoil will lead to something positive in terms of risk taking and compensation. GE is certainly a respectable company, but they have had a poor funding model for quite a while now. GE Capital, much like private equity shops, is an organization that should probably be reigned in. David, good posts. And also, I appreciate your mentioning bond market spreads. I used to work on a bond trading desk so I know exactly hat you are saying.

Credit spreads show that market participants often signal that they believe certain credits are not worthy of their rating long before they get marked down. If you look at Enron, the bond market was on to this well before the equity markets. I believe the same was true for Worldcom.

My hope is that all of this turmoil will lead to something positive in terms of risk taking and compensation. GE is certainly a respectable company, but they have had a poor funding model for quite a while now. GE Capital, much like private equity shops, is an organization that should probably be reigned in.

]]> By: David Merkel http://www.creditwritedowns.com/2008/11/should-ge-be-aaa-company.html/comment-page-1#comment-612 David Merkel Thu, 13 Nov 2008 17:21:00 +0000 http://www.creditwritedowns.com/2008/11/should-ge-be-a-aaa-company.html#comment-612 Good post. GE has not been a AAA institution for a decade, and their plenteous debt has traded more like a single-A security than a AAA. Their finance arms traded even worse. (AIG was similar.) The bond market often ferrets out what the rating agencies miss. (Sometimes the converse is true as well.)<br/><br/>As for the comments on the Depression, here are links to two of my recent posts.<br/><br/>http://alephblog.com/2008/11/12/what-is-a-depression/<br/><br/>http://alephblog.com/2008/11/10/failure-to-admit-failure/<br/><br/>http://alephblog.com/2008/11/08/financial-dominoes/ (sorry, three)<br/><br/>We're in a pickle. What's worse, our leaders are pursuing strategies that will have marginal value at best. Good post. GE has not been a AAA institution for a decade, and their plenteous debt has traded more like a single-A security than a AAA. Their finance arms traded even worse. (AIG was similar.) The bond market often ferrets out what the rating agencies miss. (Sometimes the converse is true as well.)

As for the comments on the Depression, here are links to two of my recent posts.

http://alephblog.com/2008/11/12/what-is-a-depression/

http://alephblog.com/2008/11/10/failure-to-admit-failure/

http://alephblog.com/2008/11/08/financial-dominoes/ (sorry, three)

We’re in a pickle. What’s worse, our leaders are pursuing strategies that will have marginal value at best.

]]> By: Edward Harrison http://www.creditwritedowns.com/2008/11/should-ge-be-aaa-company.html/comment-page-1#comment-607 Edward Harrison Thu, 13 Nov 2008 11:30:00 +0000 http://www.creditwritedowns.com/2008/11/should-ge-be-a-aaa-company.html#comment-607 Tom, thanks for the input. I read your post as well. Do you really think we can avoid depression? I'd love to hear your take as to why. I thin we could but it is looking ever more unlikely. Tom, thanks for the input. I read your post as well. Do you really think we can avoid depression? I’d love to hear your take as to why. I thin we could but it is looking ever more unlikely.

]]> By: Tom Lindmark http://www.creditwritedowns.com/2008/11/should-ge-be-aaa-company.html/comment-page-1#comment-606 Tom Lindmark Thu, 13 Nov 2008 04:20:00 +0000 http://www.creditwritedowns.com/2008/11/should-ge-be-a-aaa-company.html#comment-606 It's a compulsion to do something, anything to stop an out of control downward spiral. The Hoover and Roosevelt administrations acted much the same. Here's a link to a post I wrote a couple of weeks ago with an embedded link to a WSJ editorial that does a much better job of explaining why the mania for action can be so self-defeating.<br/>http://butthenwhat.blogspot.com/search/label/Depression It’s a compulsion to do something, anything to stop an out of control downward spiral. The Hoover and Roosevelt administrations acted much the same. Here’s a link to a post I wrote a couple of weeks ago with an embedded link to a WSJ editorial that does a much better job of explaining why the mania for action can be so self-defeating.
http://butthenwhat.blogspot.com/search/label/Depression

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