Good news for GE shareholders who suddenly realised they actually own a gigantic hedge fund that also happens to make refrigerators: CEO Jeff Immelt’s feeling as battered as they are. So battered, in fact, that he wants out of the hedge fund business, at least partially.
Specifically, Jeff is now committed to reducing the percentage of GE’s earnings that come from its hedge fund business (GE Capital) to only 40% of the company’s total earnings. And here’s some more good news: Now that GE Capital has blown up, its earnings are getting hammered, so Jeff won’t have to do much.
Meanwhile, we have some advice for Jeff on how to deal with the boneheads in GE Capital who just blew a hole in the hull: Get all Jack Welch on their asses.
Also: If Jeff wants to begin to repair his own clobbered reputation, he needs to stop breathing all that Wall Street exhaust and come clean about what happened here. GE Capital’s flop was not caused by “unprecendented weakness and volatility in the financial markets.” It was caused by GE Capital traders and risk managers who gambled and lost. The sooner Jeff owns up to that the better.
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