President Obama announced on Friday that he is appointing General Electric CEO Jeffrey Immelt to lead an economic advisory panel called the President's Council on Jobs and Competitiveness. Rush Limbaugh responded on his radio show by accusing Obama of “serious insider dealing” with GE and spinning out a conspiracy theory based on the falsehood that the Obama administration expanded the Troubled Asset Relief Program (TARP) in order to bail out GE. “Congress needs to really look into this,” Limbaugh said.
The discussion about whether Limbaugh has a point can start and end with one fact: GE Capital, the financial services division of GE, asked to be included in the bailout program in question -- and was granted entry to it -- in the fall of 2008, before Obama became president.
The sheer volume of details that Limbaugh got wrong while discussing this story is staggering, and it's plain that he got some of them wrong knowingly in an attempt to vilify Obama.
Limbaugh led off his discussion of Obama and GE by incorrectly stating that Immelt was appointed to Obama's “Council of Economic Advisers”; the panel Immelt is leading is actually new. Limbaugh then got to the purported connections between Obama and GE:
LIMBAUGH: New Congress. A lot of people saying that this really needs to be investigated. General Electric and Obama are in bed with each other. General Electric got gobs of TARP money. They got stimulus money. They don't need it. General Electric didn't need any of that money. General Electric has been in bed with Obama on this green energy garbage. MSNBC, the NBC networks go green many weeks a year, with their graphics and all this other stuff.
And they've used government money to create this green energy division that they have. And they're behind these compact fluorescent light bulbs. They run NBC and MSNBC at a steep loss in order to give Obama his own cheerleading news network, and this CEO ends up on an advisory board now.
To be clear, GE didn't get “gobs of TARP money.” It got none. A December 1, 2010, Bloomberg article reported that “GE and GE Capital didn't participate” in the “Troubled Asset Relief Program, or TARP.”
The bailout program that Limbaugh built his conspiracy theory around is actually called the Temporary Liquidity Guarantee Program, or TLGP. It's administered by the FDIC, an independent agency of the government, and it's meant to help financial institutions access credit markets. (TARP, by contrast, is administered by the Treasury Department.)
After Limbaugh returned from a commercial break, he said, “Let me summarize this [Washington Post] story for you.” He continued: “TARP was expanded by Obama for GE, which did not qualify as a bank. Remember, now, TARP was to bail out banks. TARP was expanded by Obama for GE, which didn't qualify as a bank. GE's bank became the top beneficiary of TARP funds. Jeffrey Immelt involved here.” He went on to quote selectively from the Post article.
Obama didn't expand TARP or TLGP, because he wasn't in charge of either the Treasury Department or the FDIC in the fall of 2008.
The Post article that Limbaugh so badly misrepresented explains the actual circumstances of GE Capital's entry into TLGP:
The FDIC launched the program Tuesday, Oct. 14 [2008], the same day Treasury officials announced large capital infusions into nine of the country's banking giants under TARP. That day, the FDIC also expanded its deposit guarantees to a broader range of accounts.
Within days, the FDIC held conference calls with bankers to explain the program. Agency officials explained that not all companies that owned banks were eligible. “The idea is not to extend this guarantee to commercial firms,” David Barr, an FDIC spokesman, said during one of the calls.
A Broader Program
GE was watching closely. Though GE Capital owned an FDIC-insured savings and loan and an industrial loan company, they accounted for only 3 percent of GE's assets. Company officials concluded that GE couldn't meet the program's eligibility requirements.
So the company requested that the program “be broadened,” [GE spokesman Russell Wilkerson] said. GE's main argument was fairness: The FDIC was trying to encourage lending, and GE Capital was one of the country's largest business lenders.
GE deployed a team of executives and outside attorneys, including Rodgin Cohen, a banking expert with the New York firm Sullivan & Cromwell.
“GE was among the parties that discussed this with the FDIC,” along with the Treasury and Fed, according to FDIC spokesman Andrew Gray. He said the details about eligibility “had not been specifically addressed” in the beginning.
Citigroup, the troubled banking giant, also was pressing for an expansion of the FDIC program. Though Citigroup was included in the debt guarantee program, its main finance arm, Citigroup Funding, appeared ineligible. Fed Vice Chairman Donald L. Kohn wrote to [FDIC chairman Sheila Bair] on Oct. 21, arguing that debt issued by Citigroup Funding should be covered “as if it were issued directly by Citigroup, Inc.”
Two days later, the FDIC announced a new category of eligible applicants -- “affiliates” of an FDIC-insured institution. Bair explained that “there may be circumstances where the program should be extended” to keep credit markets flowing. That meant “certain otherwise ineligible holding companies or affiliates that issue debt” could apply, she said.
GE Capital now was eligible.
Raising Billions
GE Capital won approval to enter the FDIC program in mid-November with support from its regulator, the Office of Thrift Supervision. The company used the government guarantee to raise about $35 billion by the end of 2008. By the end of the first quarter of 2009, the total reached $74 billion, helping to cover the company's 2009 funding needs and about $8 billion of its projected needs for 2010.
So, GE and other parties, including Citigroup, wanted to be included in the program. After the vice chairman of the Federal Reserve urged the chair of the FDIC to expand eligibility for the program -- in 2008 -- it did so.
Nevertheless, Limbaugh reinforced his point later in the show, saying, “I don't know that one reading of this is sufficient. I'm going to go back to this. June 29, 2009. From an unfazed Washington Post.” He began reading from the article: “General Electric, the world's largest industrial company, has quietly become the biggest beneficiary” -- at this point, he stopped reading and started using his own words -- “of a TARP program, which was for banks. They recategorized General Electric as a bank to get it TARP money, and then subjected it to no regulations, like all the other banks were subjected to.”
It bears repeating: GE Capital didn't get TARP money, and the Obama administration didn't “recategorize” it as a bank. MarketWatch reported on November 13, 2008 -- the day after GE Capital decided to participate in TLGP -- “The program doesn't require GE Capital to register as a bank holding company, and is not a part of the Treasury's Troubled Asset Relief Program, or TARP.”
Below is transcript of the segment in which Limbaugh read at length from the Post story. The best way to see how he selectively quoted from the article -- and inserted words that aren't in it -- is to compare the transcript side by side with the full text of the story. (While Limbaugh read the date that the Post article was published, he never gave any indication of when the events it describes took place.):
LIMBAUGH: A story from The Washington Post. June 29th of 2009. Let me summarize this story for you. TARP was expanded by Obama for GE, which did not qualify as a bank. Remember, now, TARP was to bail out banks. TARP was expanded by Obama for GE, which didn't qualify as a bank. GE's bank became the top beneficiary of TARP funds. Jeffrey Immelt involved here. The story from The Washington Post is Monday, June 29th, 2009. “How a loophole benefits GE in bank rescue. Industrial giant becomes top recipient in debt-guarantee program.” You need any more? I'll give you -- this is -- it's astounding here. There needs to be a stop right now and an investigation of all of this.
“General Electric, the world's largest industrial company, has quietly become the biggest beneficiary of one of the government's key rescue programs for banks. At the same time, GE has avoided many of the restrictions facing other financial giants getting help from the government. The company did not initially qualify for the” TARP “program, under which the government sought to unfreeze credit markets by guaranteeing debt sold by banking firms. But regulators soon loosened the eligibility requirements, in part because of behind-the-scenes appeals from GE.”
So the outfit that makes your jet engines -- for those of you that have them -- your refrigerators, your microwaves, your washers and dryers, all this stuff -- is a bank. They were qualified as a bank so they could get TARP bailout money.
“As a result, GE has joined major banks collectively saving billions of dollars by raising money from their operations at lower interest rates” via TARP. “Public records show that GE Capital, the company's massive financing arm, has issued nearly a quarter of the $340 billion in debt backed by the program, known as the Temporary Liquidity Guarantee Program, or TLGP. The government's actions have been 'powerful and helpful' to the company, GE chief executive Jeffrey Immelt acknowledged in December. GE's finance arm is not classified as a bank. Rather, it worked its way into the rescue program by owning two relatively small Utah banking institutions, illustrating how the loopholes in the U.S. regulatory system are manifest in the government's historic intervention in the financial crisis.”
“Unlike other major lenders participating in the debt guarantee program, including Bank of America, Citigroup and J.P. Morgan Chase, GE has never been subject to the Fed's stress tests or its rules for limiting risk. Also unlike firms that have received bailout money in the Troubled Asset Relief Program, or TARP, GE is not subject to restrictions such as limits on executive compensation.”
So GE -- unlike AIG, Goldman Sachs -- can bonus their execs whatever amount they want. They can pay their execs whatever amount they want. They were recategorized as a bank, so as to get bank bailout money. And now yesterday, GE's chairman ends up on a new advisory committee on jobs and the economy set up by executive order. And The Washington Post is totally unfazed as they report this. It's just more Obama structural brilliance, as far they are concerned.
Now, this seems to call for an investigation. I mean, this is serious insider dealing here between this company and this president.
Now, it's obvious -- been clear to everybody -- Obama has a plan in place. And it's -- again, as I say -- a very obvious plan: Use the bureaucracy, and not legislation.