8/4/2009

General Electric assured markets that it is holding more than enough in reserves to cope with GE Capital's loan defaults. But a close look at the financial unit's $38 billion leveraged-loan portfolio raises questions about whether that is true. The company is holding 1.2% of its exposure in reserves, but leveraged loans are trading at 81 cent on the dollar in the marketplace, suggesting GE might need substantially more reserves.

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