FDIC to back GE finance unit’s debt

General Electric Co. said Wednesday that its massive finance business, hard hit by turmoil in the credit markets, is now eligible for federal backing of $139 billion of its debt.

The Federal Deposit Insurance Corp. approved GE Capital Corp. to participate in the Temporary Liquidity Guarantee Program, GE said.

As much as $139 billion in short- and long-term debt is guaranteed, putting GE on the same footing as competitors who also have federal backing, GE said.

“Our participation helps level the playing field,” GE spokesman Russell Wilkerson said. “It’s beneficial to us and the marketplace. It ensures a stronger lending market.”

GE Capital provides consumer financing for car loans, mortgages outside the United States and credit cards. Its commercial business finances real estate, corporate lending and leasing. GE also finances energy projects and airline leasing.

Nearly half of GE’s earnings are from its finance businesses, with the remainder from its industrial divisions, which make products as diverse as locomotives and water treatment plants, and from NBC Universal.

Wilkerson said the move was another step in GE’s efforts to “strengthen liquidity.”

Robert Cornell at Barclay’s Capital said in a note to investors that GE’s participation in the FDIC program “could take the cost of debt down meaningfully and give GE flexibility to position GE Capital’s portfolio to generate attractive longer term returns.”

GE last month said it has registered to tap a new Federal Reserve program that backs up its commercial paper, the short-term debt used by businesses for daily expenses.

GE shares tumbled $1.52, or nearly 9%, to $16.29.