It was a big deal in the entertainment world when NBC decided to can Tonight Show host Conan O’Brien. Personally, I found Conan’s final week hilarious and reminiscent of its good old days with Johnny Carson and “Coco” was very gracious as he said his goodbye.
And why shouldn’t he be? Under the terms of the separation contract, NBC is paying O’Brien $45 million to not work for the next eight months, and he got them to give another $12 million to his staff of 200.
Not bad for a 7-month stint, eh?
But the one question no one is asking is: exactly how can NBC possibly afford to pay out all this money? Well, dear readers, the joke’s on you. Via the government’s bank bailouts last spring.
I know, I know. NBC isn’t a bank.
But in the Obamanation, that’s just a little legal technicality when your parent company is GE.
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 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.
As a result, GE has joined major banks collectively saving billions of dollars by raising money for their operations at lower interest rates. 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, which is 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 [2008].
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Banking companies are regulated by the Federal Reserve and not allowed to engage in commerce, but federal law has allowed a small number of commercial companies to engage in banking under the lighter hand of the Office of Thrift Supervision. GE falls in the latter group because of its ownership of a Utah savings and loan.
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 Assets Relief Program, or TARP, GE is not subject to restrictions such as limits on executive compensation.
What was that again about “too big to fail”?