General Electric (NYSE: GE) has announced that it will being selling $30 billion of its financial portfolio to Wells Fargo (NYSE: WFC). This is mainly due to new regulations forcing massive conglomerate companies to decentralizing their companies and not making them “too big to fail”. In addition, the management of GE stated that they wish to return back to their industrials roots and concentrate more of their attention towards those goals. The regulation also states that companies who fall into this specific bucket of “massive conglomerate companies” need to sell off at least $100 billion of financial assets or portfolios that do not directly correlate to the mission statement of the company. All such companies need to sell at least $100 billion worth of assets by the end of this calendar year. If GE can close this deal by Wednesday of next week, it would place GE at the $97 billion mark.
Wells Fargo has been an anxious buyer of General Electric’s assets. GE and Wells Fargo have already made four deals together regarding specialty finance portfolios. They have made deals to buy a train leasing business, foreign mortgages, real estate, and other portfolios. Blackstone has also been in many of these deals.
While I understand why the US government may need to do this, I strongly disagree with what regulators are placing into effect. It’s almost as congress is punishing companies for being successful and expanding their goals. Google Capital, the investment arm of Google, is also under consideration for reform by congress. Founded in 1988 by its founders Larry Page and Sergey Brin, Google is a relatively new company that has seen tremendous growth. It survived the dotcom bubble and has continued to remain above the competition in innovating the world of technology. To regulate and force Google Capital to sell over $100 billion in assets is ludicrous to me. It almost seems that if you’re too successfully, you’ll be required to sell parts of your business and downside. I think Congress can think of better ways to regulate the power of corporations and limit their influence, but I do not think that forcing them to sell their business is necessarily the best method.
-- Kevin Dong