Report: Ge To Spin Off Consumer Finance Business

The newspaper also said Friday that the Fairfield, Conn., conglomerate is considering smaller spinoffs or asset sales, but it has started preliminary work on the IPO. The paper cited unnamed sources familiar with the matter. The consumer finance business provides store credit cards to about 55 million people for retailers like Wal-Mart Stores Inc. It accounts for $50 billion of GE Capital's $274 billion in outstanding loans, according to the report. Aside from its finance business, GE sells a wide variety of industrial equipment and appliances around the world. This includes jet engines, medical diagnostic equipment, oil and gas drilling equipment and washing machines. GE spokesman Seth Martin declined to comment on the report. CEO Jeff Immelt told analysts and investors at First Financial a conference in May that his company wanted a smaller GE Capital. He said they wanted to reduce the finance arm's assets from $402 billion in this year's first quarter to between $300 billion and $350 billion by the end of next year.

Not only would it do irreparable damage to the private mortgage market, undermining Congressional efforts to encourage private capital in the market, but it would also actually injure the local residents these efforts are supposed to be helping." The SFIG brief argues that efforts by Richmond and MRP to seize loans held in PLS Trusts is unconstitutional and could do permanent damage to the U.S. home mortgage system. The brief points to significant risk on three levels: -- The market for securities issued by PLS Trusts will be fundamentally shaken if the structure can be pulled apart by municipalities seizing loans, especially by cherry-picking individual performing loans. -- Each PLS Trust which holds to-be-seized loans will be damaged by an amount that exceeds the face value of the loan, because the structure, as a fixed, geographically diverse pool, will be undermined. The market value of the interests in the PLS Trust will likely decline by an amount which far exceeds the face amount of the loans seized. This injury may well be uncompensable through post-seizure compensation proceedings. -- Each PLS Trust which holds to-be-seized loans will, at a minimum, lose the value of those loans - which the seizure program, by its nature and structure, seriously undervalues as part of its very premise. The consequences will fall upon public and private pension plans, retirement accounts, college savings accounts, hospital and university endowments, and other funds, and ultimately will damage the ordinary Americans who are the beneficiaries of such accounts. The brief also demonstrates that the program would "harm prospective homeowners across the country by imposing new, unanticipated and unquantifiable risks upon investors in mortgages, depressing the value of mortgage-based investments, and impeding the return of private capital to the residential mortgage market." SFIG represents over 150 distinct individual organizations from all sectors of the securitization market, including investors, issuers, financial intermediaries, law firms, accounting firms, technology firms, rating agencies, servicers, and trustees. The group is focused on educating members, legislators, regulators, and others about structured finance, securitization and related capital markets; building the broadest possible consensus on policy, legal, regulatory and other matters affecting or potentially affecting these markets; and advocating on behalf of the structured finance and securitization industry. About Structured Finance Industry Group, Inc.Structured Finance Industry Group, Inc.

Write a comment

Comments: 1