Power Failure: The Rise and Fall of an American Icon

by William D. Cohan

Did Jack set Jeff up for failure? Did Jack choose the wrong guy to succeed him? Or did Jeff play poorly the royal flush that Jack believed he had bequeathed his successor? Or did the world change materially for GE after September 11, four days after Jeff took over from Jeff? Or did the change come for Jeff and GE in the wake of the Sarbanes-Oxley disclosure law, making it increasingly difficult for GE to play the kinds of accounting shenanigans in which Jack seemed to revel, quarter after quarter? Why did Jeff fail to heed the powerful warnings he received from the likes of Bill Gross, Jim Grant, and Ravi Suria about the dangers lurking at GE Capital? Why didn’t Jeff—a product of a superior Ivy League education—take the time to understand GE Capital fully, including the risks in the way it funded itself and in its gargantuan asset portfolio? After all, GE Capital was generating more than 50 percent of GE’s earnings, meriting more than just a superficial understanding of what was going on there. Why was Jeff such a lousy dealmaker, overpaying for Alstom while selling NBCU on the cheap? Why did he send Genworth out the door without the two insurance subsidiaries that would later nearly blow up GE? Why did Jeff freak out after GE Capital became a SIFI and then decide the business should no longer be part of GE, before selling much of it for discounted prices—at a time, after the 2008 financial crisis, when big banks have never made more money? Why did he think it was a good idea