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GENERAL ELECTRIC CAPITAL CORP - 10-Q - Management's Discussion and Analysis of Financial Condition and Results of Operations.

Edgar Online, Inc.

A. Results of Operations


In the accompanying analysis of financial information, we sometimes use
information derived from consolidated financial information but not presented in
our financial statements prepared in accordance with U.S. generally accepted
accounting principles (GAAP). Certain of these data are considered "non-GAAP
financial measures" under the U.S. Securities and Exchange Commission (SEC)
rules. For such measures, we have provided supplemental explanations and
reconciliations in Exhibit 99 to this Form 10-Q Report.

Unless otherwise indicated, we refer to captions such as revenues and earnings
from continuing operations attributable to GECC simply as "revenues" and
"earnings" throughout this Management's Discussion and Analysis. Similarly,
discussion of other matters in our condensed, consolidated financial statements
relates to continuing operations unless otherwise indicated.

Overview


Revenues for the first quarter of 2012 were $11.4 billion, a $1.6 billion (12%)
decrease from the first quarter of 2011. Revenues were reduced by $0.2 billion
as a result of dispositions. Revenues for the quarter also decreased as a result
of the absence of the 2011 gain on sale of a substantial portion of our Garanti
Bank equity investment (2011 Garanti gain) and organic revenue declines,
primarily due to lower GE Capital Ending Net Investment (ENI). Earnings were
flat in the first quarter of 2012 as result of lower impairments and lower
provisions for losses on financing receivables, reflecting improved portfolio
quality, partially offset by the absence of the 2011 Garanti gain and
operations. Excluding the first quarter 2011 Garanti gain and operations, our
earnings increased 27%.

Overall, acquisitions contributed $0.1 billion and an insignificant amount to
total revenues in the first quarters of 2012 and 2011, respectively. Our
earnings in both the first quarters of 2012 and 2011 included an insignificant
amount from acquired businesses. We integrate acquisitions as quickly as
possible. Only revenues and earnings from the date we complete the acquisition
through the end of the fourth following quarter are attributed to such
businesses. Dispositions also affected our operations through lower revenues of
$0.2 billion and $0.4 billion in the first quarters of 2012 and 2011,
respectively. The effects of dispositions on earnings were $0.2 billion and an
insignificant amount in the first quarters of 2012 and 2011, respectively.

Our effective income tax rate is lower than the U.S. statutory rate primarily
because of benefits from lower-taxed global operations, including the use of
global funding structures. There is a benefit from global operations as non-U.S.
income is subject to local country tax rates that are significantly below the
35% U.S. statutory rate. These non-U.S. earnings have been indefinitely
reinvested outside the U.S. and are not subject to current U.S. income tax. The
rate of tax on our indefinitely reinvested non-U.S. earnings is below the 35%
U.S. statutory rate because we have significant business operations subject to
tax in countries where the tax on that income is lower than the U.S. statutory
rate and because General Electric Capital Corporation (GECC) funds the majority
of its non-U.S. operations through foreign companies that are subject to low
foreign taxes.

We expect our ability to benefit from non-U.S. income taxed at less than the
U.S. rate to continue subject to changes of U.S. or foreign law, including, as
discussed in Note 10 of the 2011 Form 10-K, the expiration on December 31, 2011
of the U.S. tax law provision deferring tax on active financial services income.
If this provision is not extended, our tax rate will increase significantly
after 2012. In addition, since this benefit depends on management's intention to
indefinitely reinvest amounts outside the U.S., our tax provision will increase
to the extent we no longer indefinitely reinvest foreign earnings.

The provision for income taxes was an expense of $0.2 billion for the first
quarter of 2012 (an effective tax rate of 9.4%), compared with $0.4 billion
expense for the first quarter of 2011 (an effective tax rate of 19.1%). The tax
expense decreased in the first quarter 2012 by $0.2 billion from the absence of
the 2011 high-taxed disposition of Garanti, which decreased pre-tax income and
contributed to increased benefits from low taxed global operations.



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Segment Operations

As of July 1st, 2014: a new strategy to avoid RMDs


Operating segments comprise our five businesses focused on the broad markets
they serve: Commercial Lending and Leasing (CLL), Consumer, Real Estate, Energy
Financial Services and GE Capital Aviation Services (GECAS). The Chairman
allocates resources to, and assesses the performance of, these five businesses.
In addition to providing information on segments in their entirety, we have also
provided supplemental information for the geographic regions within the CLL
segment for greater clarity.

Corporate items and eliminations include unallocated Treasury and Tax
operations; Trinity, a group of sponsored special purpose entities; certain
consolidated liquidating securitization entities; the effects of eliminating
transactions between operating segments; results of our run-off insurance
operations remaining in continuing operations attributable to GECC;
underabsorbed corporate overhead; certain non-allocated amounts determined by
the Chairman; and a variety of sundry items. Corporate items and eliminations is
not an operating segment. Rather, it is added to operating segment totals to
reconcile to consolidated totals on the financial statements.

Segment profit is determined based on internal performance measures used by the
Chairman to assess the performance of each business in a given period. In
connection with that assessment, the Chairman may exclude matters such as
charges for restructuring; rationalization and other similar expenses;
acquisition costs and other related charges; technology and product development
costs; certain gains and losses from acquisitions or dispositions; and
litigation settlements or other charges, responsibility for which preceded the
current management team.

Segment profit excludes results reported as discontinued operations, earnings
attributable to noncontrolling interests of consolidated subsidiaries and
accounting changes. Segment profit, which we sometimes refer to as "net
earnings", includes interest and income taxes. GE allocates service costs
related to its principal pension plans and GE no longer allocates the retiree
costs of its postretirement healthcare benefits to its segments. This allocation
methodology better aligns segment operating costs to the active employee costs,
which are managed by the segments.

On February 22, 2012, our former parent, General Electric Capital Services, Inc.
(GECS), merged with and into GECC. GECC's continuing operations include the
run-off insurance operations previously held and managed in our former parent,
GECS, and which are reported in corporate items and eliminations. The operating
businesses that are reported as segments, including CLL, Consumer, Real Estate,
Energy Financial Services and GECAS, are not affected by the merger. Unless
otherwise indicated, references to GECC and GE Capital relate to the entities as
they exist subsequent to the February 22, 2012 merger.

We have reclassified certain prior-period amounts to conform to the current-period presentation. Refer to the Summary of Operating Segments on page 7 for a reconciliation of the total reportable segments' profit to the consolidated net earnings attributable to the Company.

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CLL


                                     Three months ended March 31,
(In millions)                                2012               2011

Revenues                          $         4,442     $        4,608

Segment profit                    $           685     $          554


                                            At
                      March 31,       December 31,          March 31,
(In millions)             2012               2011               2011

Total assets         $ 189,993    $       193,869     $      197,467


                                     Three months ended March 31,
(In millions)                                2012               2011

Revenues
  Americas                        $         2,774     $        2,726
  Europe                                      852                965
  Asia                                        598                559
  Other                                       218                358

Segment profit
  Americas                        $           542     $          459
  Europe                                       59                 91
  Asia                                         86                 33
  Other                                        (2)               (29)


                                            At
                      March 31,       December 31,          March 31,
(In millions)             2012               2011               2011

Total assets
  Americas           $ 113,920    $       116,034     $      116,186
  Europe                45,512             46,590             48,555
  Asia                  16,996             17,807             17,795
  Other                 13,565             13,438             14,931




CLL revenues decreased 4% and net earnings increased 24% in the first quarter of
2012. Revenues were reduced by $0.1 billion as a result of dispositions.
Revenues also decreased as a result of organic revenue declines ($0.1 billion),
primarily due to lower ENI. Net earnings increased in the first quarter of 2012,
reflecting core increases ($0.1 billion) and lower provisions for losses on
financing receivables.


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Consumer


                                     Three months ended March 31,
(In millions)                               2012               2011

Revenues                          $        3,877     $        4,823

Segment profit                    $          829     $        1,241


                                           At
                      March 31,      December 31,          March 31,
(In millions)             2012              2011               2011

Total assets         $ 135,926    $      138,534     $      141,853




Consumer revenues decreased 20% and net earnings decreased 33% in the first
quarter of 2012. Revenues were reduced by $0.1 billion as a result of
dispositions. Revenues also decreased as a result of the absence of the 2011
Garanti gain ($0.7 billion) and organic revenue declines ($0.2 billion),
primarily due to lower ENI. The decrease in net earnings resulted from the
absence of the 2011 Garanti gain ($0.3 billion), lower Garanti results ($0.1
billion) and dispositions ($0.1 billion), partially offset by lower provisions
for losses on financing receivables ($0.1 billion).

Real Estate


                                     Three months ended March 31,
(In millions)                                2012              2011

Revenues                          $           836     $         907

Segment profit                    $            56     $        (358)


                                           At
                      March 31,       December 31,         March 31,
(In millions)             2012               2011              2011

Total assets         $  59,204    $        60,873     $      70,934




Real Estate revenues decreased 8% and net earnings were favorable in the first
quarter of 2012. Revenues decreased as a result of organic revenue declines
($0.1 billion), primarily due to lower ENI, partially offset by increases in net
gains on property sales. Real Estate net earnings increased as a result of lower
impairments ($0.3 billion) and core increases ($0.1 billion). Depreciation
expense on real estate equity investments totaled $0.2 billion in both the first
quarters of 2012 and 2011.


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Energy Financial Services


                                     Three months ended March 31,
(In millions)                                2012              2011

Revenues                          $           239     $         345

Segment profit                    $            71     $         112


                                           At
                      March 31,       December 31,         March 31,
(In millions)             2012               2011              2011

Total assets         $  19,303    $        18,357     $      18,821



Energy Financial Services revenues decreased 31% and net earnings decreased 37% in the first quarter of 2012. Revenues decreased as a result of lower gains ($0.1 billion) and organic revenue declines.

As of July 1st, 2014: a new strategy to avoid RMDs

GECAS


                                     Three months ended March 31,
(In millions)                                2012              2011

Revenues                          $         1,331     $       1,325

Segment profit                    $           318     $         306


                                           At
                      March 31,       December 31,         March 31,
(In millions)             2012               2011              2011

Total assets         $  48,720    $        48,821     $      48,560



GECAS revenues were flat and net earnings increased 4% in the first quarter of 2012. Revenues for the quarter were flat reflecting organic revenue growth, substantially offset by lower gains. The increase in net earnings resulted primarily from core increases, partially offset by lower gains.

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Corporate Items and Eliminations


Corporate items and eliminations include Treasury operation expense of $0.1
billion for the first quarter of 2012 and an insignificant amount of earnings
for the first quarter of 2011. These Treasury results were primarily related to
derivative activities that reduce or eliminate interest rate, currency or market
risk between financial assets and liabilities.

Corporate items and eliminations include an insignificant amount of unallocated tax benefits for the first quarters of 2012 and 2011, respectively.


Certain amounts included in Corporate items and eliminations are not allocated
to the five operating businesses because they are excluded from the measurement
of their segment operating performance for internal purposes. Unallocated costs
included an insignificant amount in both the first quarters of 2012 and 2011,
respectively, primarily related to restructuring and other charges.

Discontinued Operations

                                                         Three months ended March
                                                                    31,
(In millions)                                                2012             2011

Earnings (loss) from discontinued
operations,
   net of taxes                                         $    (217)     $        35



Discontinued operations primarily comprised GE Money Japan (our Japanese
personal loan business, Lake, and our Japanese mortgage and card businesses,
excluding our investment in GE Nissen Credit Co., Ltd.), our U.S. mortgage
business (WMC), our U.S. recreational vehicle and marine equipment financing
business (Consumer RV Marine), Consumer Mexico, Consumer Singapore, our Consumer
home lending operations in Australia and New Zealand (Australian Home Lending)
and our Consumer mortgage lending business in Ireland (Consumer Ireland).
Results of these businesses are reported as discontinued operations for all
periods presented.

Loss from discontinued operations, net of taxes, for the first quarter of 2012, primarily reflected a loss related to the sale of Consumer Ireland.

For additional information related to discontinued operations, see Note 2 to the condensed, consolidated financial statements.

B. Statement of Financial Position

Overview of Financial Position

As of July 1st, 2014: a new strategy to avoid RMDs

Major changes in our financial position for the three months ended March 31, 2012 resulted from the following:

· Repayments exceeded new issuances of total borrowings by $9.8 billion and

collections on financing receivables exceeded originations by $6.6 billion;

· The U.S. dollar was weaker for most major currencies at March 31, 2012 than at

December 31, 2011, increasing the translated levels of our non-U.S. dollar

   assets and liabilities.



Our assets were $573.4 billion at March 31, 2012, an $11.2 billion decrease from
December 31, 2011, and reflect a reduction of net financing receivables of $7.5
billion, primarily through collections exceeding originations ($6.6 billion),
which includes sales, and a decrease in derivative assets ($4.2 billion).

Our liabilities decreased $13.3 billion from December 31, 2011 to $493.4 billion at March 31, 2012, and reflect a $9.8 billion net reduction in borrowings, primarily in long-term borrowings and commercial paper, consistent with our overall reduction in assets and lower deposits of $2.6 billion at our banks.




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Cash Flows


Our cash and equivalents were $76.2 billion at March 31, 2012, compared with
$67.3 billion at March 31, 2011. Our cash from operating activities totaled $4.7
billion for the three months ended March 31, 2012, compared with cash from
operating activities of $4.8 billion for the same period of 2011.

Consistent with our plan to reduce our asset levels, cash from investing activities was $6.4 billion during the three months ended March 31, 2012, resulting from a $6.6 billion reduction in financing receivables due to collections exceeding originations, partially offset by net purchases of equipment leased to others (ELTO).


GECC cash used for financing activities for the three months ended March 31,
2012 of $12.6 billion related primarily to a $9.8 billion reduction in total
borrowings, consisting primarily of reductions in long-term borrowings and
commercial paper and $2.6 billion of lower deposits at our banks.

Fair Value Measurements


See Note 1 in our 2011 consolidated financial statements for disclosures related
to our methodology for fair value measurements. Additional information about
fair value measurements is provided in Note 10 to the condensed, consolidated
financial statements.

At March 31, 2012, the aggregate amount of investments that are measured at fair
value through earnings totaled $5.2 billion and consisted primarily of various
assets held for sale in the ordinary course of business, as well as equity
investments.

C. Financial Services Portfolio Quality


Investment securities comprise mainly investment grade debt securities
supporting obligations to annuitants, policyholders and holders of guaranteed
investment contracts (GICs) in our run-off insurance operations and Trinity,
investment securities at our treasury operations and investments held in our CLL
business collateralized by senior secured loans of high-quality, middle-market
companies in a variety of industries. The fair value of investment securities
increased to $47.8 billion at March 31, 2012 from $47.4 billion at December 31,
2011, primarily due to the impact of lower interest rates and additional
purchases in our CLL business. Of the amount at March 31, 2012, we held debt
securities with an estimated fair value of $46.9 billion, which included
corporate debt securities, asset-backed securities (ABS), residential
mortgage-backed securities (RMBS) and commercial mortgage-backed securities
(CMBS) with estimated fair values of $26.2 billion, $5.3 billion, $2.5 billion
and $3.0 billion, respectively. Net unrealized gains on debt securities were
$3.3 billion and $3.0 billion at March 31, 2012 and December 31, 2011,
respectively. This amount included unrealized losses on corporate debt
securities, ABS, RMBS and CMBS of $0.4 billion, $0.1 billion, $0.2 billion and
$0.2 billion, respectively, at March 31, 2012, as compared with $0.6 billion,
$0.2 billion, $0.3 billion and $0.2 billion, respectively, at December 31, 2011.

We regularly review investment securities for impairment using both qualitative
and quantitative criteria. We presently do not intend to sell the vast majority
of our debt securities and believe that it is not more likely than not that we
will be required to sell these securities that are in an unrealized loss
position before recovery of our amortized cost. We believe that the unrealized
loss associated with our equity securities will be recovered within the
foreseeable future.

Our RMBS portfolio is collateralized primarily by pools of individual, direct
mortgage loans (a majority of which were originated in 2006 and 2005), not other
structured products such as collateralized debt obligations. Substantially all
of our RMBS are in a senior position in the capital structure of the deals and
more than 75% are agency bonds or insured by Monoline insurers (on which we
continue to place reliance). Of our total RMBS portfolio at both March 31, 2012
and December 31, 2011, approximately $0.6 billion relates to residential
subprime credit, primarily supporting our guaranteed investment contracts. A
majority of exposure to residential subprime credit related to investment
securities backed by mortgage loans originated in 2006 and 2005. Substantially
all of the subprime RMBS were investment grade at the time of purchase and
approximately 70% have been subsequently downgraded to below investment grade.



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Our CMBS portfolio is collateralized by both diversified pools of mortgages that
were originated for securitization (conduit CMBS) and pools of large loans
backed by high quality properties (large loan CMBS), a majority of which were
originated in 2007 and 2006. The vast majority of the securities in our CMBS
portfolio have investment grade credit ratings and the vast majority of the
securities are in a senior position in the capital structure.

Our ABS portfolio is collateralized by senior secured loans of high-quality,
middle-market companies in a variety of industries, as well as a variety of
diversified pools of assets such as student loans and credit cards. The vast
majority of our ABS are in a senior position in the capital structure of the
deals. In addition, substantially all of the securities that are below
investment grade are in an unrealized gain position.

If there has been an adverse change in cash flows for RMBS, management considers
credit enhancements such as Monoline insurance (which are features of a specific
security). In evaluating the overall creditworthiness of the Monoline insurer
(Monoline), we use an analysis that is similar to the approach we use for
corporate bonds, including an evaluation of the sufficiency of the Monoline's
cash reserves and capital, ratings activity, whether the Monoline is in default
or default appears imminent, and the potential for intervention by an insurance
or other regulator.

Monolines provide credit enhancement for certain of our investment securities,
primarily RMBS and municipal securities. The credit enhancement is a feature of
each specific security that guarantees the payment of all contractual cash
flows, and is not purchased separately by GE. The Monoline industry continues to
experience financial stress from increasing delinquencies and defaults on the
individual loans underlying insured securities. We continue to rely on Monolines
with adequate capital and claims paying resources. We have reduced our reliance
on Monolines that do not have adequate capital or have experienced regulator
intervention. At March 31, 2012, our investment securities insured by Monolines
on which we continue to place reliance were $1.5 billion, including $0.3 billion
of our $0.6 billion investment in subprime RMBS. At March 31, 2012, the
unrealized loss associated with securities subject to Monoline credit
enhancement, for which there is an expected credit loss, was $0.2 billion.

Total pre-tax, other-than-temporary impairment losses during the first quarter of 2012 were an insignificant amount which was recognized in earnings and primarily relates to credit losses on non-U.S. corporate securities and other-than-temporary losses on equity securities.


Total pre-tax, other-than-temporary impairment losses during the first quarter
of 2011 were $0.1 billion, of which $0.1 billion was recognized in earnings and
primarily relates to credit losses on RMBS, non-U.S. government securities,
non-U.S. corporate securities and other-than-temporary losses on equity
securities.

Our qualitative review attempts to identify issuers' securities that are
"at-risk" of other-than-temporary impairment, that is, for securities that we do
not intend to sell and it is not more likely than not that we will be required
to sell before recovery of our amortized cost, whether there is a possibility of
credit loss that would result in an other-than-temporary impairment recognition
in the following 12 months. Securities we have identified as "at-risk" primarily
relate to investments in RMBS and non-U.S. corporate debt securities across a
broad range of industries. The amount of associated unrealized loss on these
securities at March 31, 2012, is $0.4 billion. Unrealized losses are not
indicative of the amount of credit loss that would be recognized as credit
losses are determined based on adverse changes in expected cash flows rather
than fair value. For further information relating to how credit losses are
calculated, see Note 3 in our 2011 consolidated financial statements.
Uncertainty in the capital markets may cause increased levels of
other-than-temporary impairments.

At March 31, 2012 and December 31, 2011, unrealized losses on investment
securities totaled $1.1 billion and $1.6 billion, respectively, including $0.9
billion and $1.2 billion, respectively, aged 12 months or longer. Of the amount
aged 12 months or longer at March 31, 2012, more than 65% are debt securities
that were considered to be investment grade by the major rating agencies. In
addition, of the amount aged 12 months or longer, $0.5 billion and $0.3 billion
related to structured securities (mortgage-backed and asset-backed) and
corporate debt securities, respectively. With respect to our investment
securities that are in an unrealized loss position at March 31, 2012, the
majority relate to debt securities held to support obligations to holders of
GICs. We presently do not intend to sell the vast majority of our debt
securities and believe that it is not more likely than not that we will be
required to sell these securities that are in an unrealized loss position before
recovery of our amortized cost. For additional information, see Note 3 to the
condensed, consolidated financial statements.



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Financing receivables is our largest category of assets and represents one of
our primary sources of revenues. Our portfolio of financing receivables is
diverse and not directly comparable to major U.S. banks. A discussion of the
quality of certain elements of the financing receivables portfolio follows.

Our consumer portfolio is largely non-U.S. and primarily comprises mortgage,
sales finance, auto and personal loans in various European and Asian countries.
Our U.S. consumer financing receivables comprise 16% of our total portfolio. Of
those, approximately 64% relate primarily to credit cards, which are often
subject to profit and loss sharing arrangements with the retailer (the results
of which are reflected in revenues), and have a smaller average balance and
lower loss severity as compared to bank cards. The remaining 36% are sales
finance receivables, which provide electronics, recreation, medical and home
improvement financing to customers. In 2007, we exited the U.S. mortgage
business and we have no U.S. auto or student loans.

Our commercial portfolio primarily comprises senior, secured positions with
comparatively low loss history. The secured receivables in this portfolio are
collateralized by a variety of asset classes, which for our CLL business
primarily include: industrial-related facilities and equipment, vehicles,
corporate aircraft, and equipment used in many industries, including the
construction, manufacturing, transportation, media, communications,
entertainment, and healthcare industries. The portfolios in our Real Estate,
GECAS and Energy Financial Services businesses are collateralized by commercial
real estate, commercial aircraft and operating assets in the global energy and
water industries, respectively. We are in a secured position for substantially
all of our commercial portfolio.

Losses on financing receivables are recognized when they are incurred, which
requires us to make our best estimate of probable losses inherent in the
portfolio. The method for calculating the best estimate of losses depends on the
size, type and risk characteristics of the related financing receivable. Such an
estimate requires consideration of historical loss experience, adjusted for
current conditions, and judgments about the probable effects of relevant
observable data, including present economic conditions such as delinquency
rates, financial health of specific customers and market sectors, collateral
values (including housing price indices as applicable), and the present and
expected future levels of interest rates. The underlying assumptions, estimates
and assessments we use to provide for losses are updated periodically to reflect
our view of current conditions. Changes in such estimates can significantly
affect the allowance and provision for losses. It is possible to experience
credit losses that are different from our current estimates.

Our risk management process includes standards and policies for reviewing major risk exposures and concentrations, and evaluates relevant data either for individual loans or financing leases, or on a portfolio basis, as appropriate.


Loans acquired in a business acquisition are recorded at fair value, which
incorporates our estimate at the acquisition date of the credit losses over the
remaining life of the portfolio. As a result, the allowance for losses is not
carried over at acquisition. This may have the effect of causing lower reserve
coverage ratios for those portfolios.

For purposes of the discussion that follows, "delinquent" receivables are those
that are 30 days or more past due based on their contractual terms; and
"nonearning" receivables are those that are 90 days or more past due (or for
which collection is otherwise doubtful). Nonearning receivables exclude loans
purchased at a discount (unless they have deteriorated post acquisition). Under
Financial Accounting Standards Board (FASB) Accounting Standards Codification
(ASC) 310, Receivables, these loans are initially recorded at fair value and
accrete interest income over the estimated life of the loan based on reasonably
estimable cash flows even if the underlying loans are contractually delinquent
at acquisition. In addition, nonearning receivables exclude loans that are
paying on a cash accounting basis but classified as nonaccrual and impaired.
"Nonaccrual" financing receivables include all nonearning receivables and are
those on which we have stopped accruing interest. We stop accruing interest at
the earlier of the time at which collection of an account becomes doubtful or
the account becomes 90 days past due. Recently restructured financing
receivables are not considered delinquent when payments are brought current
according to the restructured terms, but may remain classified as nonaccrual
until there has been a period of satisfactory payment performance by the
borrower and future payments are reasonably assured of collection.

Further information on the determination of the allowance for losses on financing receivables and the credit quality and categorization of our financing receivables is provided in Notes 4 and 12.

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                      Financing receivables at          Nonearning receivables at          Allowance for losses at
                       March 31,      December 31,        March 31,     December 31,        March 31,     December 31,
(In millions)              2012              2011             2012             2011             2012             2011

Commercial
CLL
Americas          $      79,645     $      80,505     $      1,664     $      1,862     $        802     $        889
Europe                   35,613            36,899            1,354            1,167              458              400
Asia                     11,048            11,635              245              269              112              157
Other                       382               436                9               11                2                4
Total CLL               126,688           129,475            3,272            3,309            1,374            1,450

Energy
 Financial
   Services               5,287             5,912               29               22               25               26

GECAS                    11,721            11,901               17               55               14               17

Other                       681             1,282               42               65               20               37
Total
 Commercial             144,377           148,570            3,360            3,451            1,433            1,530

Real Estate
Debt(a)                  23,518            24,501              522              541              812              949
Business
 Properties(b)            8,013             8,248              239              249              117              140
Total Real Estate        31,531            32,749              761              790              929            1,089

Consumer
Non-U.S.
 residential
  mortgages(c)           35,257            35,550            2,863            2,870              498              546
Non-U.S.
  installment
   and revolving
    credit               18,963            18,544              253              263              726              717
U.S. installment
 and revolving
  credit                 44,283            46,689              876              990            1,845            2,008
Non-U.S. auto             5,166             5,691               30               43               88              101
Other                     7,520             7,244              381              419              195              199
Total Consumer          111,189           113,718            4,403         
  4,585            3,352            3,571
Total             $     287,097     $     295,037     $      8,524     $      8,826     $      5,714     $      6,190



(a) Financing receivables included $0.1 billion of construction loans at both

March 31, 2012 and December 31, 2011.

(b) Our Business Properties portfolio is underwritten primarily by the credit

quality of the borrower and secured by tenant and owner-occupied commercial

     properties.


(c) At March 31, 2012, net of credit insurance, approximately 25% of our secured

Consumer non-U.S. residential mortgage portfolio comprised loans with

introductory, below market rates that are scheduled to adjust at future

dates; with high loan-to-value ratios at inception (greater than 90%); whose

terms permitted interest-only payments; or whose terms resulted in negative

amortization. At origination, we underwrite loans with an adjustable rate to

the reset value. Of these loans, 82% are in our U.K. and France portfolios,

which comprise mainly loans with interest-only payments, high loan-to-value

ratios at inception and introductory below market rates, have a delinquency

rate of 15%, have a loan-to-value ratio at origination of 76% and have

re-indexed loan-to-value ratios of 84% and 56%, respectively. At March 31,

2012, 7% (based on dollar values) of these loans in our U.K. and France

     portfolios have been restructured.





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The portfolio of financing receivables, before allowance for losses, was $287.1
billion at March 31, 2012, and $295.0 billion at December 31, 2011. Financing
receivables, before allowance for losses, decreased $7.9 billion from December
31, 2011, primarily as a result of collections exceeding originations ($6.6
billion) (which includes sales) and write-offs ($1.7 billion), partially offset
by the weaker U.S. dollar ($1.8 billion) and acquisitions ($0.1 billion).

Related nonearning receivables totaled $8.5 billion (3.0% of outstanding receivables) at March 31, 2012, compared with $8.8 billion (3.0% of outstanding receivables) at December 31, 2011. Nonearning receivables decreased from December 31, 2011, primarily due to improved performance in Commercial and improved economic conditions in the U.S. and collections in Consumer.


The allowance for losses at March 31, 2012 totaled $5.7 billion compared with
$6.2 billion at December 31, 2011, representing our best estimate of probable
losses inherent in the portfolio. Allowance for losses decreased $0.5 billion
from December 31, 2011, primarily because provisions were lower than write-offs,
net of recoveries, by $0.5 billion, which is attributable to a reduction in the
overall financing receivables balance and an improvement in the overall credit
environment. The allowance for losses as a percent of total financing
receivables decreased from 2.1% at December 31, 2011 to 2.0% at March 31, 2012
primarily due to a decrease in the allowance for losses as discussed above,
partially offset by a decline in the overall financing receivables balance as
collections exceeded originations. Further information surrounding the allowance
for losses related to each of our portfolios is detailed below.


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The following table provides information surrounding selected ratios related to nonearning financing receivables and the allowance for losses.



               Nonearning financing
                    receivables          Allowance for losses      

Allowance for losses

                  as a percent of           as a percent of           as a 

percent of

               financing receivables     nonearning financing         total financing
                        at                  receivables at            receivables at
                March       December      March       December      March       December
                  31,            31,        31,            31,        31,            31,
                2012           2011       2012           2011       2012           2011
Commercial
CLL
Americas         2.1  %         2.3  %    48.2  %        47.7  %     1.0  %         1.1  %
Europe           3.8            3.2       33.8           34.3        1.3            1.1
Asia             2.2            2.3       45.7           58.4        1.0            1.3
Other            2.4            2.5       22.2           36.4        0.5            0.9
Total CLL        2.6            2.6       42.0           43.8        1.1            1.1

Energy           0.5            0.4       86.2          118.2        0.5            0.4
Financial
Services

GECAS            0.1            0.5       82.4           30.9        0.1            0.1

Other            6.2            5.1       47.6           56.9        2.9            2.9

Total            2.3            2.3       42.6           44.3        1.0            1.0
Commercial

Real Estate
Debt             2.2            2.2      155.6          175.4        3.5            3.9
Business         3.0            3.0       49.0           56.2        1.5            1.7
Properties

Total Real       2.4            2.4      122.1          137.8        2.9            3.3
Estate

Consumer
Non-U.S.
 residential     8.1            8.1       17.4           19.0        1.4            1.5
mortgages
Non-U.S.
 installment
and
  revolving      1.3            1.4      287.0          272.6        3.8            3.9
credit
U.S.
installment
 and revolving   2.0            2.1      210.6          202.8        4.2            4.3
credit
Non-U.S. auto    0.6            0.8      293.3          234.9        1.7            1.8
Other            5.1            5.8       51.2           47.5        2.6            2.7

Total Consumer   4.0            4.0       76.1           77.9        3.0            3.1

Total            3.0            3.0       67.0           70.1        2.0            2.1



Included below is a discussion of financing receivables, allowance for losses, nonearning receivables and related metrics for each of our significant portfolios.


CLL - Americas. Nonearning receivables of $1.7 billion represented 19.5% of
total nonearning receivables at March 31, 2012. The ratio of allowance for
losses as a percent of nonearning receivables increased slightly from 47.7% at
December 31, 2011, to 48.2% at March 31, 2012, reflecting an overall decrease in
nonearning receivables. The ratio of nonearning receivables as a percent of
financing receivables decreased from 2.3% at December 31, 2011, to 2.1% at March
31, 2012, primarily due to reduced nonearning exposures in our media, industrial
and consumer-facing portfolios. Collateral supporting these nonearning financing
receivables primarily includes assets in the restaurant and hospitality,
trucking and industrial equipment industries and corporate aircraft, and for our
leveraged finance business, equity of the underlying businesses.



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CLL - Europe. Nonearning receivables of $1.4 billion represented 15.9% of total
nonearning receivables at March 31, 2012. The ratio of allowance for losses as a
percent of nonearning receivables decreased from 34.3% at December 31, 2011, to
33.8% at March 31, 2012. The decrease reflected an increase in nonearning
receivables in our asset-backed lending portfolio, and equipment finance
portfolio requiring a relatively lower reserve level based on the strength of
the underlying collateral values. This was partially offset by increases in
nonearning receivables and the allowance for losses in our Interbanca S.p.A.
portfolio. The majority of nonearning receivables are attributable to the
Interbanca S.p.A. portfolio, which was acquired in 2009. The loans acquired with
Interbanca S.p.A. were recorded at fair value, which incorporates an estimate at
the acquisition date of credit losses over their remaining life. Accordingly,
these loans generally have a lower ratio of allowance for losses as a percent of
nonearning receivables compared to the remaining portfolio. Excluding the
nonearning loans attributable to the 2009 acquisition of Interbanca S.p.A., the
ratio of allowance for losses as a percent of nonearning receivables decreased
from 55.9% at December 31, 2011, to 51.5% at March 31, 2012, primarily due to an
increase in nonearning receivables in our asset-backed lending and equipment
portfolios. The ratio of nonearning receivables as a percent of financing
receivables increased from 3.2% at December 31, 2011, to 3.8% at March 31, 2012,
for the reasons described above. Collateral supporting these secured nonearning
financing receivables are primarily equity of the underlying businesses for our
Interbanca S.p.A. business and equipment for our equipment finance portfolio.

CLL - Asia. Nonearning receivables of $0.2 billion represented 2.9% of total
nonearning receivables at March 31, 2012. The ratio of allowance for losses as a
percent of nonearning receivables decreased from 58.4% at December 31, 2011, to
45.7% at March 31, 2012, primarily due to a decline in reserves as a result of
write-offs in Japan, partially offset by collections and write-offs of
nonearning receivables in our asset-based financing businesses in Japan. The
ratio of nonearning receivables as a percent of financing receivables decreased
from 2.3% at December 31, 2011, to 2.2% at March 31, 2012, primarily due to the
decline in nonearning receivables related to our asset-based financing
businesses in Japan, partially offset by a lower financing receivables balance.
Collateral supporting these nonearning financing receivables is primarily
commercial real estate, manufacturing equipment, corporate aircraft, and assets
in the auto industry.

Real Estate - Debt. Nonearning receivables of $0.5 billion represented 6.1% of
total nonearning receivables at March 31, 2012. The decrease in nonearning
receivables from December 31, 2011, was driven primarily by the resolution of
North American multi-family nonearning loans, as well as European retail and
mixed use loans, through payoffs and foreclosures, partially offset by new U.S.
hotel delinquencies. The ratio of allowance for losses as a percent of total
financing receivables decreased from 3.9% at December 31, 2011 to 3.5% at March
31, 2012, driven primarily by write-offs related to settlements and payoffs from
impaired loan borrowers and improvement in collateral values. The ratio of
allowance for losses as a percent of nonearning receivables decreased from
175.4% to 155.6% reflecting write-offs and resolution of nonearning loans as
mentioned above.

The Real Estate financing receivables portfolio is collateralized by
income-producing or owner-occupied commercial properties across a variety of
asset classes and markets. At March 31, 2012, total Real Estate financing
receivables of $31.5 billion were primarily collateralized by owner-occupied
properties ($8.0 billion), office buildings ($6.7 billion), apartment buildings
($4.3 billion) and hotel properties ($3.6 billion). In the first quarter of
2012, commercial real estate markets showed signs of improved stability and
liquidity in certain markets; however, the pace of improvement varies
significantly by asset class and market and the long term outlook remains
uncertain. We have and continue to maintain an intense focus on operations and
risk management. Loan loss reserves related to our Real Estate-Debt financing
receivables are particularly sensitive to declines in underlying property
values. Assuming global property values decline an incremental 1% or 5%, and
that decline occurs evenly across geographies and asset classes, we estimate
incremental loan loss reserves would be required of less than $0.1 billion and
approximately $0.2 billion, respectively. Estimating the impact of global
property values on loss performance across our portfolio depends on a number of
factors, including macroeconomic conditions, property level operating
performance, local market dynamics and individual borrower behavior. As a
result, any sensitivity analyses or attempts to forecast potential losses carry
a high degree of imprecision and are subject to change. At March 31, 2012, we
had 118 foreclosed commercial real estate properties totaling $0.7 billion.



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Consumer - Non-U.S. residential mortgages. Nonearning receivables of $2.9
billion represented 33.6% of total nonearning receivables at March 31, 2012. The
ratio of allowance for losses as a percent of nonearning receivables decreased
from 19.0% at December 31, 2011 to 17.4% at March 31, 2012. In the first three
months of 2012, our allowance for losses decreased primarily as a result of
write-offs in our Hungary and U.K. portfolios while nonearning receivables
remained relatively flat. Our non-U.S. mortgage portfolio has a loan-to-value
ratio of approximately 75% at origination and the vast majority are first lien
positions. Our U.K. and France portfolios, which comprise a majority of our
total mortgage portfolio, have reindexed loan-to-value ratios of 84% and 56%,
respectively. About 4% of these loans are without mortgage insurance and have a
reindexed loan-to-value ratio equal to or greater than 100%. Loan-to-value
information is updated on a quarterly basis for a majority of our loans and
considers economic factors such as the housing price index. At March 31, 2012,
we had in repossession stock 488 houses in the U.K., which had a value of
approximately $0.1 billion. The ratio of nonearning receivables as a percent of
financing receivables remained constant at 8.1% at March 31, 2012.

Consumer - Non-U.S. installment and revolving credit. Nonearning receivables of
$0.3 billion represented 3.0% of total nonearning receivables at March 31, 2012.
The ratio of allowance for losses as a percent of nonearning receivables
increased from 272.6% at December 31, 2011 to 287.0% at March 31, 2012,
reflecting higher delinquencies, and lower nonearnings due to collections and
write-offs primarily in Australia and New Zealand.

Consumer - U.S. installment and revolving credit. Nonearning receivables of $0.9
billion represented 10.3% of total nonearning receivables at March 31, 2012. The
ratio of allowance for losses as a percent of nonearning receivables increased
from 202.8% at December 31, 2011, to 210.6% at March 31, 2012 as a result of
lower entry rates and improved collections resulting in reductions in our
nonearning receivables balance. The ratio of nonearning receivables as a
percentage of financing receivables decreased from 2.1% at December 31, 2011 to
2.0% at March 31, 2012 primarily due to lower delinquencies reflecting an
improvement in the overall credit environment.

Nonaccrual Financing Receivables


The following table provides details related to our nonaccrual and nonearning
financing receivables. Nonaccrual financing receivables include all nonearning
receivables and are those on which we have stopped accruing interest. We stop
accruing interest at the earlier of the time at which collection becomes
doubtful or the account becomes 90 days past due. Substantially all of the
differences between nonearning and nonaccrual financing receivables relate to
loans which are classified as nonaccrual financing receivables but are paying on
a cash accounting basis, and therefore excluded from nonearning receivables. Of
our $16.1 billion nonaccrual loans at March 31, 2012, $7.3 billion are currently
paying in accordance with their contractual terms.


                                        Nonaccrual     Nonearning
                                         financing      financing
(In millions)                          receivables    receivables

March 31, 2012

Commercial
CLL                                   $     4,806    $     3,272
Energy Financial Services                      29             29
GECAS                                          17             17
Other                                          87             42
Total Commercial                            4,939          3,360

Real Estate                                 6,551            761

Consumer                                    4,611          4,403
Total                                 $    16,101    $     8,524





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Impaired Loans


"Impaired" loans in the table below are defined as larger balance or
restructured loans for which it is probable that the lender will be unable to
collect all amounts due according to original contractual terms of the loan
agreement. The vast majority of our Consumer and a portion of our CLL nonaccrual
receivables are excluded from this definition, as they represent smaller balance
homogeneous loans that we evaluate collectively by portfolio for impairment.

Impaired loans include nonearning receivables on larger balance or restructured
loans, loans that are currently paying interest under the cash basis (but are
excluded from the nonearning category), and loans paying currently but which
have been previously restructured.

Specific reserves are recorded for individually impaired loans to the extent we
have determined that it is probable that we will be unable to collect all
amounts due according to original contractual terms of the loan agreement.
Certain loans classified as impaired may not require a reserve because we
believe that we will ultimately collect the unpaid balance (through collection
or collateral repossession).

Further information pertaining to loans classified as impaired and specific reserves is included in the table below.

(In millions)                                                          At
                                                            March 31,     December 31,
                                                                2012             2011

Loans requiring allowance for losses

  Commercial(a)                                            $   2,206    $       2,357
  Real Estate                                                  4,286            4,957
  Consumer                                                     2,908            2,824
Total loans requiring allowance for losses                     9,400        

10,138

Loans expected to be fully recoverable

  Commercial(a)                                                3,707            3,305
  Real Estate                                                  3,953            3,790
  Consumer                                                       109               69
Total loans expected to be fully recoverable                   7,769        

7,164

Total impaired loans                                       $  17,169    $   

17,302

Allowance for losses (specific reserves)

  Commercial(a)                                            $     739    $         812
  Real Estate                                                    674              822
  Consumer                                                       660              680
Total allowance for losses (specific reserves)             $   2,073    $   

2,314


Average investment during the period                       $  17,236    $   

18,167

Interest income earned while impaired(b)                         190              733




          (a) Includes CLL, Energy Financial Services, GECAS and Other.



                   (b) Recognized principally on a cash basis.




We regularly review our Real Estate loans for impairment using both quantitative
and qualitative factors, such as debt service coverage and loan-to-value ratios.
We classify Real Estate loans as impaired when the most recent valuation
reflects a projected loan-to-value ratio at maturity in excess of 100%, even if
the loan is currently paying in accordance with contractual terms.

Of our $8.2 billion impaired loans at Real Estate at March 31, 2012, $7.3 billion are currently paying in accordance with the contractual terms of the loan and are typically loans where the borrower has adequate debt service coverage to meet contractual interest obligations. Impaired loans at CLL primarily represent senior secured lending positions.

Our impaired loan balance at March 31, 2012 and December 31, 2011, classified by the method used to measure impairment was as follows.

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                                                          At
                                               March 31,     December 31,
(In millions)                                      2012             2011

Method used to measure impairment
Discounted cash flow                          $   8,771    $       8,858
Collateral value                                  8,398            8,444
Total                                         $  17,169    $      17,302


See Note 1 in our 2011 consolidated financial statements for further information on our valuation processes.


Our loss mitigation strategy is intended to minimize economic loss and, at
times, can result in rate reductions, principal forgiveness, extensions,
forbearance or other actions, which may cause the related loan to be classified
as a TDR, and also as impaired. Changes to Real Estate's loans primarily include
maturity extensions, principal payment acceleration, changes to collateral terms
and cash sweeps, which are in addition to, or sometimes in lieu of, fees and
rate increases. The determination of whether these changes to the terms and
conditions of our commercial loans meet the TDR criteria includes our
consideration of all relevant facts and circumstances. At March 31, 2012, TDRs
included in impaired loans were $13.5 billion, primarily relating to Real Estate
($6.6 billion), CLL ($4.0 billion) and Consumer ($2.9 billion).

Real Estate TDRs decreased from $7.0 billion at December 31, 2011 to $6.6
billion at March 31, 2012, primarily driven by resolution of TDRs through
paydowns, restructuring and foreclosures, partially offset by extensions of
loans scheduled to mature during 2012, some of which were classified as TDRs
upon modification. For borrowers with demonstrated operating capabilities, we
work to restructure loans when the cash flow and projected value of the
underlying collateral support repayment over the modified term. We deem loan
modifications to be TDRs when we have granted a concession to a borrower
experiencing financial difficulty and we do not receive adequate compensation in
the form of an effective interest rate that is at current market rates of
interest given the risk characteristics of the loan or other consideration that
compensates us for the value of the concession. For the three months ended March
31, 2012, we modified $1.1 billion of loans classified as TDRs substantially all
in our Debt portfolio. Changes to these loans primarily included maturity
extensions, principal payment acceleration, changes to collateral or covenant
terms and cash sweeps, which are in addition to, or sometimes in lieu of, fees
and rate increases. The limited liquidity and higher return requirements in the
real estate market for loans with higher loan-to-value (LTV) ratios has
typically resulted in the conclusion that the modified terms are not at current
market rates of interest, even if the modified loans are expected to be fully
recoverable. We received the same or additional compensation in the form of rate
increases and fees for the majority of these TDRs. Of our $3.1 billion of
modifications classified as TDRs in the last twelve months, $0.2 billion have
subsequently experienced a payment default in the last three months.

The substantial majority of the Real Estate TDRs have reserves determined based
upon collateral value. Our specific reserves on Real Estate TDRs were $0.5
billion at March 31, 2012 and $0.6 billion at December 31, 2011, and were 7.3%
and 8.4%, respectively, of Real Estate TDRs. In many situations these loans did
not require a specific reserve as collateral value adequately covered our
recorded investment in the loan. While these modified loans had adequate
collateral coverage, we were still required to complete our TDR classification
evaluation on each of the modifications without regard to collateral adequacy.

We utilize certain short-term (three months or less) loan modification programs
for borrowers experiencing temporary financial difficulties in our Consumer loan
portfolio. These loan modification programs are primarily concentrated in our
non-U.S. residential mortgage and non-U.S. installment and revolving portfolios.
We sold our U.S. residential mortgage business in 2007 and as such, do not
participate in the U.S. government-sponsored mortgage modification programs. For
the three months ended March 31, 2012, we provided short-term modifications of
approximately $0.2 billion of consumer loans for borrowers experiencing
financial difficulties, substantially all in our non-U.S. residential mortgage,
credit card and personal loan portfolios, which are not classified as TDRs. For
these modified loans, we provided insignificant interest rate reductions and
payment deferrals, which were not part of the terms of the original contract. We
expect borrowers whose loans have been modified under these short-term programs
to continue to be able to meet their contractual obligations upon the conclusion
of the short-term modification. In addition, we have modified $0.5 billion of
Consumer loans for the three months ended March 31, 2012, which are classified
as TDRs. Further information on Consumer impaired loans is provided in Note 12
to the condensed, consolidated financial statements.



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Delinquencies

For additional information on delinquency rates at each of our major portfolios, see Note 12 to the condensed, consolidated financial statements.

GECC Selected European Exposures


At March 31, 2012, we had $91 billion in net financing receivables to consumer
and commercial customers in Europe. The GECC financing receivables portfolio in
Europe is well diversified across European geographies and customers.
Approximately 87% of the portfolio is secured by collateral and represents
approximately 500,000 commercial customers. Several European countries,
including Spain, Portugal, Ireland, Italy, Greece and Hungary ("focus
countries"), have been subject to credit deterioration due to weaknesses in
their economic and fiscal situations. The carrying value of GECC funded
exposures in these focus countries and in the rest of Europe comprised the
following at March 31, 2012.

                                                                                        Rest of      Total

March 31, 2012 Spain PortugalIrelandItaly Greece HungaryEuropeEurope (In millions)


Financing
receivables,
  before
allowance
  for losses on
  financing       $ 2,263    $     576    $    421    $ 7,209     $   73    $ 3,136    $ 79,024    $ 92,702
receivables

Allowance for
losses on
  financing           (83)         (23)        (19)      (266)         -       (114)     (1,428)     (1,933)
receivables

Financing
receivables,
  net of
allowance

for losses on 2,180 553 402 6,943 73

  3,022      77,596      90,769
  financing
receivables(a)(b)

Investments(c)(d)       2            -          13        631          -        167       2,230       3,043

Cost and equity
method
  investments(e)      865           27         341         70         32          5         728       2,068

Derivatives,
  net of               43            -           -         78          -          -         110         231
collateral(c)(f)

Total funded      $ 3,090    $     580    $    756    $ 7,722    $   105    $ 3,194    $ 80,664    $ 96,111
exposures(g)(h)

Unfunded          $    37    $       1    $     26    $   301    $     4    $   603    $  7,825    $  8,797
commitments




(a) Financing receivable amounts are classified based on the location or nature of

     the related obligor.


(b) Substantially all relates to non-sovereign obligors. Includes residential

mortgage loans of approximately $34.6 billion before consideration of

purchased credit protection. We have third-party mortgage insurance for

approximately 29% of these residential mortgage loans, substantially all of

which were originated in the U.K., Poland and France.

(c) Investments and derivatives are classified based on the location of the parent

of the obligor or issuer.

(d) Includes $1.0 billion related to financial institutions, $0.3 billion related

to non-financial institutions and $1.7 billion related to sovereign issuers.

Sovereign issuances totaled $0.1 billion and $0.1 billion related to Italy and

Hungary, respectively. We held no investments issued by sovereign entities in

     the other focus countries.



(e)  Substantially all is non-sovereign.



(f)  Net of cash collateral; entire amount is non-sovereign.


(g) Excludes $23.4 billion of cash on short-term placement with highly rated

global financial institutions based in Europe, sovereign central banks and

agencies or supra national entities, of which $1.2 billion is in focus

countries, and $20.0 billion of cash and equivalents placed with highly rated

European financial institutions on a short-term basis, secured by U.S.

Treasury securities ($10.9 billion) and sovereign bonds of non-focus countries

($9.1 billion), where the value of our collateral exceeds the amount of our

     cash exposure.


(h) Excludes ELTO ($11.7 billion) and real estate held for investment ($7.3

billion), of which $2.4 billion and $1.2 billion, respectively, are held in

focus countries. These assets are held under long-term investment and

operating strategies, and our ELTO strategies contemplate an ability to

redeploy assets under lease should default by the lessee occur. The values of

     these assets could be subject to decline or impairment in the current
     environment.





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We manage counterparty exposure, including credit risk, on an individual
counterparty basis. We place defined risk limits around each obligor and review
our risk exposure on the basis of both the primary and parent obligor, as well
as the issuer of securities held as collateral. These limits are adjusted on an
ongoing basis based on our continuing assessment of the credit risk of the
obligor or issuer. In setting our counterparty risk limits, we focus on high
quality credits and diversification through spread of risk in an effort to
actively manage our overall exposure. We actively monitor each exposure against
these limits and take appropriate action when we believe that risk limits have
been exceeded or there are excess risk concentrations. Our collateral position
and ability to work out problem accounts has historically mitigated our actual
loss experience. Delinquency experience has been relatively stable in our
European commercial and consumer platforms in the aggregate, and we actively
monitor and take action to reduce exposures where appropriate. Uncertainties
surrounding European markets could have an impact on the judgments and estimates
used in determining the carrying value of these assets.

Other assets comprise mainly real estate equity properties and investments,
equity and cost method investments, derivative instruments and assets held for
sale, and totaled $71.7 billion at March 31, 2012, a decrease of $3.9 billion,
primarily related to decreases in the fair value of derivative instruments ($4.2
billion) and the sale of certain held-for-sale real estate and aircraft ($0.8
billion) , partially offset by the consolidation of an entity involved in power
generating activities ($1.3 billion). During the three months ended March 31,
2012, we recognized an insignificant amount of other-than-temporary impairments
of cost and equity method investments, excluding those related to real estate.

Included in other assets are Real Estate equity investments of $23.6 billion and
$23.9 billion at March 31, 2012 and December 31, 2011, respectively. Our
portfolio is diversified, both geographically and by asset type. We review the
estimated values of our commercial real estate investments at least annually, or
more frequently as conditions warrant. Based on the most recent valuation
estimates available, the carrying value of our Real Estate investments exceeded
their estimated value by about $2.6 billion. Commercial real estate valuations
in 2011 and the first quarter of 2012 showed signs of improved stability and
liquidity in certain markets, primarily in the U.S.; however, the pace of
improvement varies significantly by asset class and market. Accordingly, there
continues to be risk and uncertainty surrounding commercial real estate values.
Declines in estimated value of real estate below carrying amount result in
impairment losses when the aggregate undiscounted cash flow estimates used in
the estimated value measurement are below the carrying amount. As such,
estimated losses in the portfolio will not necessarily result in recognized
impairment losses. During the first quarter of 2012, Real Estate recognized
pre-tax impairments of less than $0.1 billion in its real estate held for
investment, which were primarily driven by declining cash flow projections for
properties in Japan. Real Estate investments with undiscounted cash flows in
excess of carrying value of 0% to 5% at March 31, 2012 had a carrying value of
$0.6 billion and an associated estimated unrealized loss of approximately $0.1
billion. Continued deterioration in economic conditions or prolonged market
illiquidity may result in further impairments being recognized.

Liquidity and Borrowings

We maintain a strong focus on liquidity. We manage our liquidity to help ensure access to sufficient funding to meet our business needs and financial obligations throughout business cycles.


Our liquidity and borrowing plans for GE and GECC are established within the
context of our annual financial and strategic planning processes. At GE, our
liquidity and funding plans take into account the liquidity necessary to fund
our operating commitments, which include primarily purchase obligations for
inventory and equipment, payroll and general expenses (including pension
funding). We also take into account our capital allocation and growth
objectives, including paying dividends, repurchasing shares, investing in
research and development and acquiring industrial businesses. At GE, we rely
primarily on cash generated through our operating activities and also have
historically maintained a commercial paper program that we regularly use to fund
operations in the U.S., principally within fiscal quarters.

GECC's liquidity position is targeted to meet our obligations under both normal
and stressed conditions. GECC establishes a funding plan annually that is based
on the projected asset size and cash needs of GE, which over the past few years,
has included GE's strategy to reduce its ending net investment in GE Capital.
GECC relies on a diversified source of funding, including the unsecured term
debt markets, the global commercial paper markets, deposits, secured funding,
retail funding products, bank borrowings and securitizations to fund its balance
sheet, in addition to cash generated through collection of principal, interest
and other payments on our existing portfolio of loans and leases to fund its
operating and interest expense costs.



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Our 2012 funding plan anticipates repayment of principal on outstanding
short-term borrowings, including the current portion of our long-term debt
($82.7 billion at December 31, 2011, which includes $2.7 billion of alternative
and other funding), through issuance of long-term debt and reissuance of
commercial paper, cash on hand, collections of financing receivables exceeding
originations, dispositions, asset sales, and deposits and other alternative
sources of funding. Long-term maturities were $20 billion in the first quarter
of 2012. Interest on borrowings is primarily repaid through interest earned on
existing financing receivables. During the first quarter of 2012, we earned
interest income on financing receivables of $5.4 billion, which more than offset
interest expense of $3.2 billion.

We maintain a detailed liquidity policy for GECC which includes a requirement to
maintain a contingency funding plan. The liquidity policy defines our liquidity
risk tolerance under different stress scenarios based on our liquidity sources
and also establishes procedures to escalate potential issues. We actively
monitor our access to funding markets and our liquidity profile through tracking
external indicators and testing various stress scenarios. The contingency
funding plan provides a framework for handling market disruptions and
establishes escalation procedures in the event that such events or circumstances
arise.

We are a savings and loan holding company under U.S. law and became subject to
Federal Reserve Board (FRB) supervision on July 21, 2011, the one-year
anniversary of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
The FRB has recently finalized a regulation that requires certain organizations
it supervises to submit annual capital plans for review, including institutions'
plans to make capital distributions, such as dividend payments. The
applicability and timing of this proposed regulation to GECC is not yet
determined; however, the FRB has indicated that it expects to extend these
requirements to large savings and loan holding companies through separate
rulemaking or by order. While the aforementioned regulations are not final, our
capital allocation planning is still subject to FRB review, which could affect
the timing of the GE Capital dividend to the parent.

Actions taken to strengthen and maintain our liquidity are described in the following section.

Liquidity Sources

GE maintains liquidity sources that consist of cash and equivalents and a portfolio of high-quality, liquid investments (Liquidity Portfolio) and committed unused credit lines.


GE has consolidated cash and equivalents of $83.7 billion at March 31, 2012,
which is available to meet its needs. Of this, approximately $8 billion is held
at GE and approximately $76 billion is held at GECC.

Most of GE's cash and equivalents are held outside the U.S. and are available to
fund operations and other growth of non-U.S. subsidiaries; they are also
available to fund our needs in the U.S. on a short-term basis without being
subject to U.S. tax. Less than $1 billion of GE cash and equivalents is held in
countries with currency controls that may restrict the transfer of funds to the
U.S. or limit our ability to transfer funds to the U.S. without incurring
substantial costs. These funds are available to fund operations and growth in
these countries and we do not currently anticipate a need to transfer these
funds to the U.S.

At GECC, about $9 billion of cash and equivalents are in regulated banks and insurance entities and are subject to regulatory restrictions.

Under current tax laws, should GE or GECC determine to repatriate cash and equivalents held outside the U.S., we may be subject to additional U.S. income taxes and foreign withholding taxes.


In addition to GE's $83.7 billion of cash and equivalents, we have a
centrally-managed portfolio of high-quality, liquid investments with a fair
value of $3.6 billion at March 31, 2012. The Liquidity Portfolio is used to
manage liquidity and meet our operating needs under both normal and stress
scenarios. The investments consist of unencumbered U.S. government securities,
U.S. agency securities, securities guaranteed by the government, supranational
securities, and a select group of non-U.S. government securities. We believe
that we can readily obtain cash for these securities, even in stressed market
conditions.



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We have committed, unused credit lines totaling $51.6 billion that have been
extended to us by 57 financial institutions at March 31, 2012. These lines
include $34.5 billion of revolving credit agreements under which we can borrow
funds for periods exceeding one year. Additionally, $17.1 billion are 364-day
lines that contain a term-out feature that allows us to extend borrowings for
one year from the date of expiration of the lending agreement.

At March 31, 2012, our aggregate cash and equivalents and committed credit lines were more than twice our commercial paper borrowings balance.

Funding Plan

GE reduced its GE Capital ending net investment, excluding cash and equivalents, from $513 billion at January 1, 2009 to $436 billion at March 31, 2012.


In 2012, we completed issuances of $12.1 billion of senior unsecured debt with
maturities up to 22 years (and subsequent to March 31, 2012, an additional $4.1
billion). Average commercial paper borrowings during the first quarter were
$43.5 billion and the maximum amount of commercial paper borrowings outstanding
during the first quarter was $46.3 billion. Our commercial paper maturities are
funded principally through new issuances.

Under the Federal Deposit Insurance Corporation's (FDIC) Temporary Liquidity
Guarantee Program (TLGP), the FDIC guaranteed certain senior, unsecured debt
issued by GECC on or before October 31, 2009 for which we paid $2.3 billion of
fees to the FDIC for our participation. Our TLGP-guaranteed debt has remaining
maturities of $28 billion in 2012. We anticipate funding these and our other
long-term debt maturities through a combination of existing cash, new debt
issuances, collections exceeding originations, dispositions, asset sales,
deposits and other alternative sources of funding. GECC and GE are parties to an
Eligible Entity Designation Agreement and GECC is subject to the terms of a
Master Agreement, each entered into with the FDIC. The terms of these agreements
include, among other things, a requirement that GE and GECC reimburse the FDIC
for any amounts that the FDIC pays to holders of GECC debt that is guaranteed by
the FDIC.

We securitize financial assets as an alternative source of funding. During 2012,
we completed $4.1 billion of non-recourse issuances and had maturities of $3.8
billion. At March 31, 2012, our non-recourse borrowings were $29.5 billion.

We have deposit-taking capability at 12 banks outside of the U.S. and two banks
in the U.S. - GE Capital Retail Bank (formerly GE Money Bank), a Federal Savings
Bank (FSB), and GE Capital Financial Inc., an industrial bank (IB). The FSB and
IB currently issue certificates of deposit (CDs) in maturity terms from three
months to ten years.

Total alternative funding at March 31, 2012 was $64 billion, composed mainly of $41 billion bank deposits, $9 billion of funding secured by real estate, aircraft and other collateral and $9 billion GE Interest Plus notes. The comparable amount at December 31, 2011 was $66 billion.

Credit Ratings


On April 3, 2012, Moody's Investors Service (Moody's) announced that it had
downgraded the senior unsecured debt rating of GE by one notch from Aa2 to Aa3
and the senior unsecured debt rating of GECC by two notches from Aa2 to A1. The
ratings downgrade does not affect GE's and GECC's short-term funding ratings of
P-1, which were affirmed by Moody's.  Moody's ratings outlook for GE and GECC is
stable.  We do not anticipate any material operational, funding or liquidity
impacts from this ratings downgrade.




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As further disclosed in our 2011 consolidated financial statements, GECC has
fully guaranteed repayment of $4.1 billion of guaranteed investment contract
(GIC) obligations of Trinity.  As a result of Moody's downgrade, substantially
all of these GICs became redeemable by the holders. In addition, another
consolidated entity also had issued GICs where proceeds are loaned to GECC and
$1.1 billion of these GICs became redeemable by the holders. On May 1, 2012,
holders of $2.1 billion in principal amount of GICs redeemed their holdings and
GECC made related cash payments. These redemptions were fully considered in our
previously discussed liquidity plan. As of May 2, 2012, the contractual
redemption period for $0.8 billion of GICs had not yet expired. Subsequent to
this contractual redemption period, the remaining outstanding GICs will continue
to be subject to the existing terms and maturities of their respective
contracts.

Additionally, there were other contracts affected by the downgrade with
provisions requiring us to provide additional funding, post collateral and make
other payments. The total cash and collateral impact of these contracts was less
than $0.6 billion.

Income Maintenance Agreement

As set forth in Exhibit 12 hereto, GECC's ratio of earnings to fixed charges was
1.60:1 during the three months ended March 31, 2012 due to higher pre-tax
earnings at GECC, which were primarily driven by lower losses and delinquencies.
For additional information, see the Income Maintenance Agreement section in the
Management's Discussion and Analysis of Financial Condition and Results of
Operations in our 2011 consolidated financial statements.
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