GE: SEC Looking Into Comments During Credit Crisis

The Securities & Exchange Commission is investigating comments made by General Electric (GE) management in September of 2008, when GE told the world its commercial paper market was doing fine, apparently in contrast to the dire things CEO Jeff Immelt was telling then Treasury Secretary Henry Paulson.

GE shares are off 46 cents, or 2.4%, at $19.04. The news comes as GE today reported Q1 earnings ahead of expectations and improving fundamentals in its GE Capital financials business.

Bloomberg’s Joshua Gallu and Jesse Westbrook report a GE spokesperson wrote in an email that “The SEC has requested information about our September 2008 statements” and that “We are fully cooperating with them and are entirely confident our disclosures were accurate.”

The latest development follows on a comment by the same GE spokesperson back in February saying Immelt did not recall having made comments to Paulson at the time about problem with GE’s commercial paper.

What Paulson writes in his book, “On the Brink,” regarding Monday, September 8, 2008, the day Fannie Mae (FNM) was taken into conservatorship and Lehman Brothers was teetering on the brink is the following:

Lehman’s plight wasn’t the only troubling news. Late Monday morning, General Electric CEO Jeff Immelt called to tell me that his company was having problems selling commercial paper. This stunned me. Although GE’s giant financial unit, GE Capital, had faltered along with the rest of the industry, the company as a whole was an American business icon–one of the few with a triple-A credit rating. If GE could’t sell its paper, what did that mean for other U.S. companies?

And a week later, after Lehman was bankrupt:

If I had any doubts that we were about to enter a new, ugly phase of the crisis, they were erased when General Electric CEO Jeff Immelt stopped by to see me a little before 6:00 pm. We spoke privately in my office. I’d known Jeff for years and admired the cool, unflappable demeanor he had displayed as CEO of the biggest, most prestigious company in America. Jeff was following up on a phone call from the week before. “Jeff,” I remember saying, “we have got to put out this fire.”

As the authors note, however, GE on Sept. 14 told investors in a memo that GE’s corporate debt programs remained “robust.”