Earlier this month, General Electric took a $6.2 billion charge to its insurance unit for the fourth quarter. And the company said it will set aside another $15 billion over seven years to bolster reserves at GE Capital.
The charge had to do with long-term care policies (to pay for nursing homes and other late-life care) GE holds on its books.
So, one of the oldest and most highly-regarded companies in America just made a small, $21 billion miscalculation. Oops.
Keep in mind, GE’s entire market cap is only $140 billion.
The insurance charge, along with costs tied to the US tax plan, led GE to a $9.64 billion loss in the fourth quarter.
Then last week, GE announced the Securities and Exchange Commission (SEC) was investigating the company’s accounting practices(specifically how the company books revenue from long-term service contracts on things like power-plant repairs and jet-engine maintenance).
But this isn’t GE’s first run in with the SEC…
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Sounds like Delphi automotive.
ReplyDeleteWhy aren't these C.E.O.s put in jail for what they do?
Because they own the jails and know the secret handshake.
DeleteGE capital was sued in the early 90's for bad loans in risky real estate ventures. Was a class action lawsuit I think.
ReplyDeleteGE made a huge mistake in going to mortgages and stayed there even when the compass pointed in a bad direction.
ReplyDelete