GE Brings (Some) Good Things to Light

Full disclosure: I don't own General Electric (GE). But I think GE's management deserves some kudos for Thursday's "deep dive" into GE Capital's books.

Management made themselves available for a call that lasted almost 6 hours. They explained virtually every detail and every mark. Forget about whether you were impressed or unimpressed, or whether you think they're being too aggressive on their marks, need more capital, what have you.

The point is simply this: They gave real disclosure. In free markets, having a good answer is not necessarily what's important. What matters is having the proper information to make decisions. GE gave you the facts yesterday. To the extent there was massive uncertainty around GE, I think it's largely been dispelled.

To be clear, risk is enormous around GE. But the risks are there in front of you - any investor can now go position by position and make a determination as to value.

Let's compare what we know about GE to, say, Bank of America (BAC). How about Wells Fargo (WFC)? Citigroup (C)? Goldman Sachs (GS)? Anybody out there want to come clean?

My hope is many will; my fear is that they either cannot, or will not. I understand it took a crisis to get GE to do this, but, hey - better late than never.

If markets hate uncertainty, then there's a chance GE will be rewarded for removing whatever uncertainty they could by giving full access. Taking the thought a bit further, the market would demand similar disclosure from other “black box” finance companies, such as the ones listed above, and others. If, say, Wells could satisfy the marketplace as to what was on its books, their shares would be rewarded; if Citi couldn't, punishment would result. That's what would happen in a free market.

Of course, our government is attempting to make everything right, and in doing so is causing all kinds of unintended consequences. Imagine Congress debating full disclosure requirements for finance companies. It would take half the House, billions of dollars lobbying, numerous grandstanding appearances and unlimited snickering from CNBC to come up with legislation that was perfectly useless (think Sarbannes-Oxley). Of course, all that was needed was for folks like GE to step up and say, here it is.

Now, GE may very well have done it only because their credibility was being threatened, and they actually have a business that appears it can survive.  Either way, the truth will come out.
Here’s to GE for bringing the facts to light.