GE Capital CDS levels spiked recently after a deep decline, driven by the events with CIT. All of a sudden the realization set in that CIT wasn't the only middle market and ABS lender.
GE Capital CDS
To address this concern in the market, GE Capital announced that it is pulling out of the FDIC insurance note program. The GE Capital FDIC notes now trade at sub-LIBOR yield levels (close to US government paper).
GE Capital 1.8% FDIC notes ($4 billion outstanding)
Of course it's a gimmick, because GE Capital is not in any way obligated to use the program. They can issue unsecured paper if they wish (the way Citi has done recently) while leaving themselves the option to use the FDIC program later. But they are trying to send a message to the market that GE Capital liquidity is strong enough to stand without any government help. Plus issuing more paper at near government rates (when you don't exactly need it), will make a few taxpayers unhappy.
From CNNMoney
GE Capital, the massive financing arm of General Electric, announced Wednesday morning that it had received approval from the Federal Deposit Insurance Corp. (FDIC) to exit a program that had allowed GE Capital to issue debt at super-low interest rates backed by the government
Overall GE has more wood to chop, beyong reparing GE Capital. It's a misconception that GE underperformance is entirely driven by it's large finance subsidiary. The underperformance vs. the S&P500 started back in 2006 (when GE Capital's business was considered solid), and over the past 5 years had reached 56%.
GE shares vs. the S&P500
Disclosure: the author has no positions in GE
