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MSNBC Commentators Protect Their Corporate Bosses at GE

Cliff Kincaid

The partisan commentators on the GE-owned MSNBC television network continued their class warfare rhetoric against Republicans on Thursday night over “tax cuts for the rich” but failed to cover the big financial news of the day—their corporate bosses had tapped the Federal Reserve for $16 billion in bailout money.

Charles Ortel, managing director of Newport Value Partners, says more bad news for the firm is coming. He does not believe U.S. government policies are addressing vexing structural problems and that, in the persistently tough economic environment, the “intrinsic worth” of GE’s stock is about $2, compared to its high of $60 and current price of $16. Ortel wonders whether the company is so poorly managed that it should be put into conservatorship.

The Fed’s massive GE bailout was a shocker. “Newly released documents from the Federal Reserve Board show that General Electric Co. was a significant user of one of the Fed’s rescue programs in the fall of 2008, even as the blue-ribbon company enjoyed the highest credit rating available at the time,” reported Jeff Gerth at ProPublica. GE owns the NBC television network and MSNBC and CNBC cable channels.

This dramatic development was followed early on Friday by news that the unemployment rate had risen to 9.8 percent.

Seizing on the news about GE, conservative commentator Rush Limbaugh connected the dots: “The CEO of GE is Jeffrey Immelt. Jeffrey Immelt sits on one of Obama’s economic commissions. General Electric has been big in this ‘green’ technology movement and every other week it seems all of GE from NBC to CNBC to MSNBC ‘goes green.’ Now we find out that the [Obama] regime found its way on the General Electric board in a sense.”

Immelt also sits on the board of the New York Federal Reserve Bank.

Could GE’s desperate need for federal help have been a factor in the pro-Obama “green” tilt at its media properties? Could GE’s need for such help have given the Obama Administration leverage over the firm’s cable and television channels, in terms of dictating stories, guests, and other content?

On Thursday night, as many different media outlets were covering the sensational news involving the federal bailout of GE, MSNBC commentators such as Keith Olbermann and Rachel Maddow didn’t want to talk about the federal financial “rescue” of the corporate bosses who pay their salaries and the conflict of interest it presents for themselves. Olbermann was preoccupied with helping the Democrats pass their agenda in the lame duck Congress, while Maddow was anxious to get the Senate to pass legislation allowing open gays in the military.

The GE story, which is just beginning to be understood by the media, involves more than just another federal bailout of a failing company.

Charles Ortel of Newport Value Partners has been warning investors since August 2007 that GE was actually an over-leveraged, poorly administered and over-valued financial institution, undeserving of its Triple A debt ratings and iconic reputation.

On September 16, 2008, Ortel made his first televised appearance with news anchor Pimm Fox on Bloomberg television, laying out the case against GE. He tells AIM, “Our work, done exclusively using publicly available data, showed how challenged GE’s core finance businesses were and how weak the remainder of GE’s ‘industrial’ businesses appeared from a financial standpoint. Then and now we believe GE’s financial business is accounted for using aggressive assumptions, and that this business needs more equity. Then and now, we are struck by the fact that the changing pile of supposed market-leading businesses outside finance is not generating consistent growth in revenues and free cash flows. This appears especially to be the case if one estimates performance inside and outside the U.S. and also excluding growth caused by acquisitions.”

One of his many media appearances on this matter came on Bloomberg radio, where he discussed GE’s “creative accounting.”

Ortel says that the firm is reportedly under investigation by the Securities and Exchange Commission (SEC) “for discrepancies in the bullish cases made by management in various presentations from September 2008 onwards concerning GE’s prospects and implications for investors and pleas for the extra-ordinary government assistance this then-Triple A rated company received.”

As recently as October 15, 2010, Ortel discussed GE’s financial problems on Bloomberg.

Ortel predicts mounting public anger and Congressional scrutiny when it is more widely understood that the firm was securing federal assistance while selling common stock to gullible investors. Some of these investors thought GE was a good buy because legendary investor Warren Buffett had invested in it.

At the time, the MSNBC website carried an AP story proclaiming, “Warren Buffett’s Berkshire Hathaway Inc. is investing $3 billion in General Electric Co., a huge vote of confidence for an iconic American company battered by the financial crisis.”

“My guess is that many of these investors, who paid $ 22.25 per share—a level never remotely seen since, did not fully understand that Warren Buffett supported GE on much richer terms for him than any common investor got,” Ortel told AIM. “Common investors in October 2008 put their money in on October 7 before TARP was approved and before GE shared its estimated third quarter results. In contrast, Buffett funded his purchase of high-yielding senior preferred securities with extraordinarily-highly valued warrants on the 16th of October.”

Ortel says the GE board is at least guilty of dereliction of duty in allowing Jeffrey Immelt, chairman and CEO, and Keith S. Sherin, senior vice president and GE’s chief financial officr, who have presided over GE’s financial implosion, to remain as senior level executives.

He added, “Even if GE’s condition was worse than understood at the time Immelt replaced John F. Welch (on September 7, 2001), these men have garnered tens of millions in compensation while shareholders were crushed, while debt was piled on and while stated and contingent liabilities have soared.”

What’s worse, Ortel goes on, Immelt and other executives appear to have received outsized total compensation packages while severely underfunding the pension system for GE workers and retirees and failing to provide proper visibility into GE’s true financial performance inside the U.S. and in key foreign locations.

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