Yesterday, General Electric Company (GE) sent a letter to its shareholders indicating that its wholly-owned subsidiary lending arm GE Capital Corporation (the primary operating vehicle through which GE engages in financial services) has been approved to participate in the FDIC's Temporary Liquidity Guarantee Program. Under the terms of the debt guarantee program, the FDIC will guarantee all of GE Capital's newly issued senior unsecured debt issued on or after October 14, 2008 through and including June 30, 2009, up to 125% of the par value of GE Capital's senior unsecured debt outstanding, excluding any debt extended to affiliates, as of September 30, 2008 that is scheduled to mature on or before June 30, 2009. The FDIC will guarantee coverage for the newly issued debt until the earlier of the maturity date of the debt or until June 30, 2012. The FDIC may also grant GE Capital authority to temporarily exceed the 125% limitation.

The FDIC guarantee is not for debt issued directly by General Electric, but rather for GE Capital, its "eligible entity" subsidiary. Pursuant to the FDIC's Interim Rule, "eligible entities" (those entitled to participate in the debt guarantee program) include U.S. savings and loan holding companies with at least one chartered and operating insured depository institution within its holding company structure, and affiliates of FDIC-insured depository institutions subject to application to the FDIC. GE Capital is a an affiliate of GE Money Bank (a federal savings bank) and GE Capital Financial, Inc. (a Utah industrial bank), both FDIC-insured depository institutions, and is also a savings and loan holding company by virtue of its indirect 100% ownership interest in GE Money Bank.

The FDIC approval is subject to an Eligible Entity Designation Agreement among the FDIC, GE Capital and GE. The Agreement, which is a condition of eligibility for affiliates of depository institutions, is subject to various terms and conditions, including a reimbursement agreement by GE Capital and GE in the event the FDIC is required to make payments under the debt guarantee program.

Separately, GE also stressed to shareholders the importance of the Federal Reserve's Commercial Paper Funding Facility (CPFF) to GE, stating that the "[f]acility has added an important liquidity backstop to the $1.6 trillion dollar commercial paper market." GE currently is eligible to access the CPFF for up to $98 billion.