Warren Buffett's $3 billion investment in General Electric saved the industrial titan from a catastrophic meltdown, a new book reveals
at the height of the financial crisis — and the famed investor's support likely saved the industrial titan from melting down, author Bill Cohan reveals in his new book.
GE's troubles stemmed from GE Capital, its financial-services arm. The division capitalized on GE's AAA credit rating to borrow cheaply from commercial-paper markets, then lend money out at much higher interest rates. When the housing bubble burst and credit markets froze up, GE Capital faced a liquidity crunch that threatened to force it into default and bankruptcy.
GE CEO Jeff Immelt hoped to avoid that grim outcome by raising $15 billion via an equity offering, but widespread fear in markets threatened to scupper the plan. He decided to invite Buffett to be an anchor investor, a role the Berkshire Hathaway CEO had served in a"They were freaking out, because had they not got the stock issued, they were probably toast," a senior Goldman banker involved in the offering told Cohan about GE's leadership team.
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