GE Capital
GE's finance arm that grew to $500B in liabilities by 2007, nearly bankrupting its parent in 2008.
By 2007, GE Capital contributed over 50% of GE's profits while accumulating $500 billion in liabilities across real estate, leveraged buyouts, and consumer finance. When the 2008 financial crisis hit, this finance subsidiary—originally a small captive lender—had grown large enough to nearly kill its industrial parent.
The biological parallel is unregulated cell growth. GE Capital started as a specialized organ serving GE's industrial divisions with equipment financing. Over decades, it metastasized into commercial real estate lending, credit cards, and subprime mortgages—activities completely unrelated to jet engines or power turbines. Each new lending category triggered positive feedback loops: profits funded more lending, which generated more profits, which funded aggressive expansion into riskier assets.
When housing prices collapsed in 2008, GE Capital faced a liquidity crisis. The parent company was days from bankruptcy. Warren Buffett's $3 billion emergency investment and $139 billion in FDIC-backed debt guarantees kept both entities alive. The organism survived, but barely.
What followed was corporate autophagy on a historic scale. Between 2015-2016, GE sold over $200 billion in GE Capital assets: real estate portfolios to Blackstone and Wells Fargo, lending businesses dismembered and divested. The GE Capital Aviation Services (GECAS) fleet—$40 billion in commercial aircraft—was sold to AerCap in 2021. Electric Insurance Company went to RiverStone in 2024. What remains is a run-off insurance portfolio and mortgage operations in Poland (Bank BPH), vestigial remnants of what was once the dominant organ.
The cautionary biology is clear: specialized tissues can outgrow their function and threaten the host. GE Capital generated outsized profits during boom times because it took outsized risks. When those risks materialized, the parent company nearly died. Controlled autophagy—deliberate removal of failing or dangerous tissue—is painful but sometimes the only path to survival. GE Capital's dismantling enabled GE's eventual split into three focused companies in 2023-2024, each healthier independently than GE was as a conglomerate carrying a toxic finance arm.
Cautionary Notes on GE Capital
- Over-leverage with $500B+ in liabilities
- Nearly bankrupted parent company during 2008 financial crisis