The original boom in consumer credit, the moment that credit nannies look back on with the first twinges of horror, was not in credit cards or subprime mortgages, but in large consumer durables.  "Buying on time" for cars and radios was a major innovation, extending credit to a class of people who had heretofore had little access:  landless urban workers.

That legacy left our major industrial giants with massive finance arms:  not just the automakers, but places like GE, which was regarded as an interesting, even an innovative, place to get a finance job when I was in business school.  GE never reached the same dependence on financing than GM did, which was often aptly described over the last decade as "a bank with a sideline in cars".  But its profits were swollen by finance earnings . . . and now, like the other industrial giants, all that financial business is turning into a wee bit of a problem:

The conglomerate, which has industrial, financial and media operations, posted fourth-quarter net income of $3.72 billion, or 35 cents a share, down from $6.7 billion, or 66 cents a share, a year earlier. The latest results include $1.5 billion of restructuring and other charges, mainly related to GE Capital, but also a sizable tax credit.

Earnings from continuing operations were 36 cents a share, down from 68 cents the prior year. Last month, the company backed its downbeat view of 36 cents to 42 cents. Revenue fell 4.8% to $46.21 billion. Analysts polled by Thomson Reuters most recently expected earnings of 37 cents on revenue of $50.49 billion.

GE Capital turned in $383 million in profits, down 88%. Its revenue fell 18%. The unit said earlier this month that it would cut 7,000 jobs, or about 10% of its work force, according to a report on CNBC. GE hasn't confirmed the number of layoffs, which it had signaled in November in saying it would save about $2 billion this year as it shrinks the unit.

Of course, that's nt the only problem area:

The consumer and industrial business saw earnings plunge 86% as revenue fell 17%. Last month, the company called off a sale or spinoff of the unit, which includes light bulbs and appliances. The company affirmed a December projection that its industrial units would see sales growth of zero to 5% this year.

 Many of GE's other products are dependent on consumer access to credit, even if GE isn't providing it.  And the problems, especially at GE capital, are threatening GE's own AAA credit rating, which is a major strategic asset.


We want to hear what you think about this article. Submit a letter to the editor or write to letters@theatlantic.com.