Authors: How Financialization Killed GE

[Music] tedman and thomas greita covered the shocking downward spiral of general electric working at the wall street journal the reporters expand on their findings in a new book that book lights out pride delusion and the fall of general electric explores the history behind the decline of ge analyzing what went wrong for that corporation so authors of lights out and reporters ted mann and thomas kreider join us now to discuss ge's downfall it's great to see you guys thanks for joining us thanks yeah absolutely so thomas let's start with you i read the book i was absolutely fascinated by it and to me it was really the broader story of american business you have this great company which creates these huge industrial engines builds things of real value and sometime around the 1980s starts engaging in these crazy accounting practices becomes financialized and then post you know the 2008 crash just begins to melt down slowly i mean what was it like to kind of reveal that story and how does it connect to a broader thing in the american economy um well i think you're exactly i think you're right when you say it is sort of looked at as this company that represents american corporations and their culture management culture and the economy itself what was it like to cover it it was a rollercoaster ride ted covered the company before i did for four years um and i came into the beat and things really started uh unraveling jeffrey meltz stepped down so ted and i were closely together um but it was one of those uh you know corporate beat stories yeah yeah and ted just take us through a little bit of the timeline and what happened as you saw and as your reporting revealed well um in terms of when i was covering them as a daily people no in terms of what happened with the company yeah well so if you you basically the story in the book is the story of the ceo for 16 years jeff immelt who took over at the turn of the century from a guy jack welch who was a world famous ceo who was acclaimed and was presided over just a gigantic brought up in the stock price immelt had to decide what needed to change about this company he had inherited um and he had to decide you know what stamp of his own to put on this company and what risks that welch had taken he needed to unwind so a lot of what he was doing was trying to invest where he felt welch had under invested in the industrial businesses um and also keeping the earnings that wall street was so happy about running and from the very beginning that was a really tough battle for ml both to sustain these incredibly high expectations people had under welch while also guiding the company into a into a sort of a safer position for the years to come but in a series of vets uh both plowing even further into ge capital growing into its greatest size um right before the the financial crisis and then later in his last attempt to transform the company buying a failing industrial rival in allston um trying to sell out of capital and doing tremendous amount of share buyback they really just kind of drove the company off the edge yeah and thomas i'm so fascinated right really reading your guys's book is because jack welch you know you think of him you're like oh he's the american ceo the 1980s on the today show all the time and all that and then you kind of learn um a that he loved being on the today show and it's part of why they bought nbc in order to pump up his brand but also that much of the stuff that he was doing for ge kind of ultimately led to his downfall what was it like uh to to report that and and were you fascinated by that when you're writing the book as much as i was yeah i think um i think that's right uh it is it was fascinating to see it um jack sort of you know kept doubling down on financial services it was working and at the time um i think you know wall street at that flaws um you know jeff certainly had plenty of time to sort of unwind that and as ted said he he doubled down as well and the financial crisis really just um really sort of crushed them i don't think they really recovered from that but you know jack jack has still seen um you know it's sort of uh in his time he certainly transformed ge he certainly ran to operate he ran a tight ship right all those sort of typical jack rich things um that people still point to i mean i wouldn't say his reputation is uh is completely down because yeah and ted what are the broader lessons and implications from what happened within this one incredibly storied american corporation for the broader economy um there are many uh one of the issues that continued to crop up in our reporting was what was a sort of cultural inability to deal with some bad news um and that sometimes was as simple as a deal like alstom where you had people throughout the organization who had doubts or some who just frankly thought it was a terrible thing to go through with um and yet it was a priority of the leaders it was a priority of steve bowles who ran the power business and of jeff immelt who wanted a big industrial deal for his strategy and ultimately what you get is a bunch of very very smart people seeing all the same red flags that should tell them to just fold the hand and back away from the table not being able to do so and the the result was something deeply ruinous to thousands of their employees and to shareholders into and to the company itself and and it did ultimately seem to us that the leadership culture within the company which was the they were proudest about ultimately let them down on a very basic ability to to look at bad news and decide you couldn't have the thing you wanted and you needed to try something else yeah really interesting well i okay i couldn't recommend the book enough i learned a lot from it thanks to you guys for joining and tell us about it telling us about it thank you thank you much i will have more rising for you after this

Channel: The Hill

Views: 55,494

Keywords: Rising, Krystal Ball, Saagar Enjeti, 2020, Campaign, 2020 Election, Progressive, Progressive Politics, Democrats, Democratic Party, Republicans, GOP, Republican Party, Lights Out, General Electric, Power Company, WSJ, Wall Street Journal, Ted Mann, Thomas Gryta

Id: 1nqqLGXrhSs

Length: 6min 22sec (382 seconds)

Published: Mon Sep 07 2020