Wharton/UofP: GE Capital Sale ‘Been Worth the Wait’

According to an article that appeared in the online business journal of the Wharton School of the University of Pennsylvania (Knowledge@Wharton), the massive slimming down of GE Capital is one of the foremost examples of how the increased scrutiny of federal regulators is forcing big financial institutions to take a hard look at themselves.

The idea of a sale has “been under discussion for a long time. It was better for GE to wait to get a good price and it’s been worth the wait,” said Wharton management professor Michael Useem, who is also director of Wharton’s Center for Leadership and Change Management.

With the shedding of GE Capital, the manufacturing giant is returning to its industrial roots, said Wharton experts. “GE is the largest single diversified conglomerate and it’s now moving in a new direction,” Useem noted. “It’s the end of a conglomerate era and that’s probably a good thing.”

In an interview with CNBC, Jeffrey Immelt, GE’s chairman and CEO said, “The wholesale financial model is tougher and we’re disadvantaged from the banks. It’s the perfect market to sell financial assets. There’s slow growth, low-interest rates, lots of equity, people searching for yield.”

To view the full Wharton report, click here.

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