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CNBC EXCLUSIVE: CNBC TRANSCRIPT: JEFF IMMELT, CHAIRMAN & CEO GENERAL ELECTRIC, SITS DOWN FOR AN INTERVIEW TODAY ON CNBC'S "THE CALL"

CNBC EXCLUSIVE: CNBC TRANSCRIPT: JEFF IMMELT, CHAIRMAN & CEO GENERAL ELECTRIC, SITS DOWN FOR AN INTERVIEW TODAY ON CNBC'S "THE CALL"

WHEN: Today, Thursday, September 25th at 11AM ET

WHERE: CNBC's "The Call"

Following is the unofficial transcript of a CNBC EXCLUSIVE INTERVIEW with Jeff Immelt Chairman & CEO General Electric, today on CNBC's "The Call."

All references must be sourced to CNBC.

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Jeffrey Immelt
Jeffrey Immelt

FRANCIS: WE'LL DELVE INTO ALL THOSE QUESTIONS RIGHT NOW AND TALK ABOUT GENERAL ELECTRIC'S GUIDANCE AND STRATEGY MOVING FORWARD. I THINK THE QUESTION, THE GUYS WERE ASKING, WHAT IS THE VISION FOR GE CAPITAL GOING FORWARD, IT ORIGINATES TO SELL BUSINESS AND THAT MODEL SEEMS TO BE STRUGGLING, NO?

IMMELT: THIS IS AN ORIGINATE TO HOLD BUSINESS. I THINK IT'S IMPORTANT TO REALLY CLARIFY THIS. IN THE BEGINNING AND TODAY GE CAPITAL IS ABOUT HAVING IMMENSE INDUSTRIAL CASH FLOW, ABLE TO LEVER IT CONSERVATIVELY SIX OR SEVEN TO ONE AND HAVING OUR OWN ORIGINATORS THAT GO OUT AND ORIGINATE LOANS, SENIOR SECURED LOANS, HOLDING THEM ON OUR OWN BALANCED SHEET AND DOING OUR OWN RISK MANAGEMENT AND ON A GLOBAL BASIS, BEING MATCH FUNDED AND NOT BEING A SPECULATOR AND THINGS LIKE THAT. THIS BUSINESS HAS EARNED AN INCREDIBLE AMOUNT OF MONEY FOR GE INVESTORS FOR A LONG TIME AND WILL EARN $9 BILLION THIS YEAR IN ONE OF THE TOUGHEST FINANCIAL MARKETS ANYBODY HAS EVER SEEN. SO I STILL THINK THE BUSINESS MODEL IS STRONG BUT WE'VE NEVER BEEN AN ORIGINATE TO SELL BUSINESS. WE'VE BEEN AN ORIGINATE TO HOLD BUSINESS WHICH IS VERY DIFFERENT.

FRANCIS: YOU'RE TALKING ABOUT TAKING THAT LEVERAGE DOWN AND THAT WAS ONE OF THE THINGS THAT A LOT OF THE ANALYSTS ON THE CALL SAY THAT IS HOW YOU MADE YOUR MONEY. HOW DO YOU CONTINUE TO MAKE MONEY GOING FORWARD?

IMMELT: WELL, WE'RE IN A MONTH THAT IS NOT A ONE IN TEN-YEAR MONTH, IT'S A ONE IN 100 YEAR MONTH.SO WE SIT HERE HOW DO WE MAKE THE COMPANY AS SAFE AS HUMANLY POSSIBLE? WE TAKE THE LEVERAGE DOWN AND IMPROVE LIQUIDITY WHICH WE'VE DONE, BUT PRICING AS THE GUYS WERE JUST SAYING, BOB AND DYLAN,THE PRICE FOR NEW BUSINESS WE'RE WRITING IS HISTORICALLY HIGH SO OUR LIQUIDITY CAN BE REPRICED IN THIS MARKET AT VERY ATTRACTIVE RETURNS SO THIS IS A FINANCIAL SERVICE BUSINESS THAT IN ONE OF

THE TOUGHEST MARKETS IN HISTORY IS GOING TO EARN A HIGH TEEN RETURN ON EQUITY WHICH IS REALLY GREAT.

FRANCIS: DAVID?

FABER: BEFORE WE GET INTO SOME OF THE SPECIFICS OF GE CAPITAL, YOU JUST SAID WE'RE IN A ONE MONTH IN 100-YEAR PERIOD. WHAT WAS LAST THURSDAY LIKE WHEN YOU TALKED TO PEOPLE AT GE CAPITAL? A LOT OF PEOPLE SAY WE LOOKED INTO THE ABYSS. IT WAS ARMAGEDDON. WHAT WERE YOU SEEING AT GE CAPITAL AND HOW SERIOUS WAS IT?

IMMELT: YOU KNOW, DAVID, I THINK WHEN YOU GET THE AMOUNT OF UNCERTAINTY, RIGHT, YOU HAD FANNIE AND FREDDIE ONE WEEKEND AND LEHMAN BROTHERS THE NEXT WEEKEND. YOU HAD AIG. YOU HAD PEOPLE BREAKING THE BUCK. WE WERE CONCERNED, BUT I THINK IT'S ONE OF THOSE THINGS, DAVID,THERE'S A REASON WHY YOU'RE AAA. I HAD A THOUSAND PEOPLE TELL ME IN THE LAST FIVE YEARS DUMP THE AAA, LEVER UP, BLAH, BLAH, BLAH, WE DIDN'T DO IT. AND THE REASON WHY WE ARE AAA IS BECAUSE WE WOKE UP WEDNESDAY MORNING, THURSDAY MORNING, FRIDAY MORNING, ROLLED OUR CP WITH NO TROUBLE, GOT GOOD PRICING RELATIVE TO LIBOR AND THAT'S WHY YOU'RE AAA.THAT'S WHY WE PROACTIVELY WORK ON IT AND HAVE A PHILOSOPHY THAT ADHERES TO THAT AND THAT IS WHY WE HAVE NEVER DEVIATED FROM THAT.

FABER: YOU MENTIONED PROACTIVE SO I CAN ASSUME THAT THE RATING AGENCIES CAME TO GE CAPITAL AND SAID WE'RE GOING TO REMOVE THE AAA RATING IF YOU DON'T DO CERTAIN THINGS.

IMMELT: WE'VE BEEN A AAA COMPANY FOR FIVE YEARS AND YOU'RE AAA FOR A REASON. IT'S BECAUSE YOU GO PROACTIVELY.YOU WORK ON THE THINGS THAT ARE IMPORTANT, AND WE THINK IT'S A PHILOSOPHY ON HOW WE RUN THE COMPANY. LOOK, THIS IS -- THIS IS NOT SOMETHING THAT JUST DAWNED ON ANYBODY. WE WANT TO BE PROACTIVE, AND WE WANT TO BE CONSERVATIVE IN THIS ENVIRONMENT.

FRANCIS: YOU KNOW, YOU WERE SAYING THAT ON THE CALL YOU DON'T NEED FURTHER FUNDING PAST 2009. HAVE YOU THOUGHT ABOUT PRE-FUNDING OBLIGATIONS PAST THAT? ARE YOU DOING THAT AGGRESSIVELY?

IMMELT: WE GET REVERSE INQUIRIES EVERY DAY. IF WE GET MORE REVERSE INQUIRIES THAT GREAT. WE'RE NOT COUNTING ON IT, BUT IF WE GET THE OPPORTUNITY, FANTASTIC, AND LIKE I SAID EVERY -- AND THE GUYS HAVE BEEN SAYING, EVERY DOLLAR OF NEW LIQUIDITY GETS REPRICED AT VERY ATTRACTIVE RATES AND WE THINK WE'LL SEE SOME FUNDING OPPORTUNITIES IN THE NEXT ONE MONTH, TWO MONTHS, THREE MONTHS THAT WILL BE EXTRAORDINARY.

FRANCIS: YOU HAVE A $62 BILLION BACK STOP IN THE SHORT TERM IN TERMS OF LINES OF CREDIT.DO YOU THINK YOU'LL HAVE TO TAP THAT?

IMMELT: WE DON'T, MELISSA. I THINK KEITH SAID IT WELL ON THE CALL TODAY.WE'VE GOT IMMENSE LIQUIDITY. WE GENERATE, JUST OUR COLLECTIONS IS LIKE $120 BILLION, $130 BILLION A YEAR, WE'VE GOT GREAT LIQUIDITY INSIDE THE COMPANY AND INSIDE GE CAPITAL.THE BANK LINES AT A DOOMSDAY SCENARIO, WE JUST DON'T SEE IT AND WE'RE NOT PLANNING ON IT AND WE REALLY DON'T THINK THAT'S GOING TO TAKE PLACE.

FABER: JEFF, I KNOW YOU'VE TALKED ABOUT $2 BILLION IN QUARTERLY EARNINGS FOR GE CAPITAL. I'M CURIOUS ABOUT THE RETURN ON EQUITY YOU'LL SEE FROM THE UNIT OR THAT WE CURRENTLY ARE, IF YOU CAN SPEAK TO THAT AT ALL.

IMMELT: YOU KNOW, DAVID, RETURN ON EQUITY FOR FINANCIAL SERVICES WILL BE IN THE HIGH TEENS THIS YEAR, YOU KNOW. IT'S BEEN IN THE LOW 20S, BUT IT'S GOING TO BE SOMEWHERE BETWEEN 15% AND 20% FOR THE YEAR AND, YOU KNOW, LOOK, DAVE, OUR WEIGHTED AVERAGE COST TO CAPITAL IS PROBABLY SOMEWHERE 10%ISH, SOMETHING LIKE THAT SO WE GENERATE VERY ATTRACTIVE RETURNS FOR OUR INVESTORS BY INVESTING IN GE CAPITAL.

FABER: IN TERMS OF BORROWING COSTS, WE'VE HEARD A LOT OF DIFFERENT THINGS, YOU GUYS ARE BORROWING BELOW LIBOR ON THE SHORTER END, BUT LONG TERM YOUR BASIS POINTS ARE 100 POINTS WIDER AND YOU'RE SEEING HIGHER BORROWING COSTS. ULTIMATELY IS THAT GOING TO MEAN SIGNIFICANT LOSS OF PROFITABILITY IN 2009 FOR GE CAPITAL?

IMMELT: AGAIN, DAVID, LOOK AT THE WORLD. THINK ABOUT WHAT'S HAPPENED -- YOU GUYS HAVE BEEN COVERING THIS FOR DECADES. THINK ABOUT WHAT'S HAPPENED IN THE LAST MONTH, JUST THINK ABOUT IT. NOW BORROWING COSTS WILL GO UP AND THE MONEY THAT WE REDEPLOY IS ALSO GOING UP BY MORE. YOU KNOW, OUR PROFIT ON NEW BUSINESS WE'RE WRITING RIGHT NOW, EVEN WITH A HIGHER BORROWING COST IS UP 40, 50 BASIS POINTS SO THAT'S VERY, YOU KNOW, THAT'S WHAT IT'S ALL ABOUT, YOU KNOW. IT WOULD BE DIFFERENT IF WE WEREN'T MATCH-FUNDED OR HAD OTHER CONSTRAINTS LIKE THAT BUT THAT'S WHAT'S AVAILABLE TO US

RIGHT NOW.

FRANCIS: NO FEWER THAN THREE PEOPLE ON THE CALL ASKED IF YOU WOULD SPIN OUT GE CAPITAL. IS THAT A CONSIDERATION?

IMMELT: AT LEAST IT TOOK OVER FROM ARE WE GOING TO SPIN OUT NBC?

FRANCIS: THAT WOULD HAVE BEEN A BAD MOVE, RIGHT?

IMMELT: HERE'S WHAT I WOULD SAY. IMMENSE INDUSTRIAL CASH FLOW ON OUR BALANCE SHEET, AAA-RATED, ACCESS TO CAPITAL AND LOW COST, DONE WITH AN INDUSTRIAL RISK MINDSET WITH GREAT ORIGINAL NATION WITH THE GE BRAND, WE DON'T THINK THAT BUSINESS MODEL IS BROKEN, YOU KNOW. FINANCIAL SERVICES IS GOING TO GO THROUGH A TOUGH CYCLE RIGHT NOW, BUT THIS IS AN IMMENSE INDUSTRY. WE'RE VERY SMALL. THINK OF COMMERCIAL PAPERS, A $1.6 TRILLION MARKET ON COMMERCIAL PAPER AND WE'RE A PIMPLE INSIDE THOSE FLOWS SO, YOU KNOW, WE STILL THINK THIS OVER THE LONG TIME IS A GOOD BUSINESS FOR GE TO BE IN.

RATIGAN: HEY, JEFF, IT'S DYLAN. I'M CURIOUS WHAT PERCENTAGE OF GE CAPITAL'S REVENUE CAME FROM THE SALE OF CREDIT DEFAULT SWAPS, FROM BASICALLY ASSUMING DEFAULT RISK ON BONDS AND WHETHER GE CAPITAL WAS IN THAT BUSINESS AT ALL?

IMMELT: WE'RE NOT IN THE BUSINESS AT ALL, DYLAN. IN OTHER WORDS, YOU KNOW, LOOK, WE DON'T DO THAT STUFF. WE'VE EXITED INSURANCE. WE'VE EXITED RE-INSURANCE, WE'VE EXITED BOND INSURANCE. WE EXITED THAT STUFF OVER THE LAST FOUR OR FIVE YEARS. WE GO OUT AND WE CALL ON A MID-MARKET CUSTOMER.WE DO SENIOR SECURED DEBT. WE HOLD THAT DEBT ON OUR BALANCE SHEET. WE HAVE THEM PAY US.THAT'S WHAT WE DO.

REGAN: HOW BAD IS IT OUT THERE REALLY? WE HAVE OBVIOUSLY SEEN SO MUCH AND WE'VE BEEN REPORTING SON SO MUCH. YOU'RE RIGHT IN THE THICK OF IT. DESCRIBE TO ME HOW THE DEBT MARKETS ARE RIGHT NOW IN THEIR CURRENT STATE.

IMMELT: YOU KNOW, TRISH, LOOK, IT'S CONCERNING. I THINK WHAT THE TEAM WAS SAYING EARLIER IS -- THERE'S LIQUIDITY OUT THERE, BUT IT'S NOT BEING USED RIGHT NOW, AND IT'S NOT BEING USED BECAUSE EVERYBODY IS AFRAID, AND MY HOPE IS THAT -- YOU KNOW, THE BILL THAT'S IN CONGRESS, ONE OF THE THINGS IT NEEDS TO DO IS GIVE PEOPLE CONFIDENCE THAT THEY CAN START LENDING MONEY AGAIN. THAT IS JUST ISN'T HAPPENING RIGHT NOW. NOW IN THE MEANTIME, YOU KNOW, WE GET A WIND TURBINE ORDER FROM ROMANIA AND A GAS TURBINE ORDER FROM IRAQ. OUR SPARES ORDERS IN AVIATION, OUR DOUBLE-DIGIT REVENUE "V" IN THE QUARTER, THEIR UP $21 MILLION A DAY, OUR LONG-CYCLE ORDERS ARE UP 10% IN THE QUARTER AND SERVICE ORDERS UP 15% IN THE QUARTER SO, YOU KNOW, I DON'T KNOW IF IT'S TWO WORLDS OR SOMETHING LIKE THAT, BUT THERE STILL IS A WORLD OUT THERE THAT'S BUYING STUFF AND -- AND, YOU KNOW, WE'LL SEE HOW IT GOES.

FABER: JEFF, YOU KNOW, WHEN YOU LOOK BACK AT GE MONEY SPECIFICALLY AND THE ALLOWANCES THE COMPANY WAS TAKING.THEY DECREASED MARKEDLY FROM 'O1 TO '06. WERE YOU UNDER RESERVING AND ULTIMATELY PAYING PRICE FOR THAT AT THIS POINT?

IMMELT: RESERVING INSIDE THE COMPANY IS LIKE NIGHT FOLLOWS DAY. VERY VERY FORMULAIC RESERVING EQUATIONS THAT GO ON INSIDE OF THE COMPANY AND MY SENSE IS LOSS PROVISIONS WILL GO UP. THEY ALREADY HAVE AND WILL CONTINUE TO GO UP NEXT YEAR SO, YOU KNOW, DAVE, WE DO IT ALL FORMULAIC AND THAT'S HOW MOST PEOPLE DO IT.

FABER: JUST ON THE LARGER QUESTION HERE, OF COURSE, WE'RE ALL GE SHAREHOLDERS AS ARE YOU A SIGNIFICANT STAKEHOLDERS, SO MUCH CARNAGE IN THE FINANCIAL SERVICES INDUSTRY AND YET THIS COMPANY IS ABOUT SO MUCH MORE THAN THAT. SHARE, IF YOU CAN, YOUR FRUSTRATION AND TELL US SOMETHING THAT WE CAN GRAB A HOLD OF HERE THAT WILL MAKE US ALL FEEL GOOD AS WE WATCH OUR NET WORTH DECLINE OVER THE LAST YEAR.

IMMELT: THE DIVIDEND OF THE COMPANY AT THE PRICE TODAY IS 5%, SO SOMEBODY THAT'S GOING TO BUY THE STOCK TODAY IS GOING TO GET AN AIR TIGHT 5% DIVIDEND AND THEN, YOU KNOW, 2009 IS GOING TO BE 2009. IN OTHER WORDS, THE ECONOMY IS GOING TO GO WITH WHAT THE ECONOMY DOES AT A TIME LIKE THIS, RIGHT? YOU'VE GOT CREDIT UNWINDS, PEOPLE WILL HAVE TO WRESTLE THAT STUFF BUT IF YOU LIKE A 5% DIVIDEND IN THE SHORT TERM AND WILLING TO LOOK OUT TO THE END OF 2009 AND 2010, WE'VE GOT 50% INFRASTRUCTURE, A GREAT MEDIA FRANCHISE.WE'LL HAVE ONE OF THE MOST EFFECTIVE AND MOST PROFITABLE FINANCIAL SERVICES COMPANY IN THE WORLD, THERE'S A LOT TO LIKE HERE AND THIS ISN'T A BAD ENTRY POINT, BUT YOU'LL HAVE TO HAVE A VISION THAT LASTS LONGER THAN A DAY.

FRANCIS: YEAH. YOU SAID YOU DON'T EXPECT THE FINANCIAL SERVICES MARKET TO IMPROVE IN THE NEAR FUTURE WAS THE QUOTE THAT EVERYONE WAS CARRYING TODAY. CAN YOU GIVE US ANY MORE COLOR ON THE TIMING ON THAT?

IMMELT: TRISH, REALLY, I WOULD SAY OUR TREASURY TEAM AND OUR BUSINESS LEADERS HAVE BEEN WORKING THE LAST COUPLE OF WEEKS, YOU KNOW, SINCE THE WORLD HAS KIND OF GONE CRAZY SAYING OKAY, WHERE ARE WE AND WHAT'S GOING ON? WHAT DO WE SEE AND WHAT KIND OF TRENDS? HERE'S WHAT WE'RE SEEING IN Q-3, THERE IS NO REASON AT ALL TO ASSUME IT'S ANY BETTER IN Q-4. LET'S NOT MAKE ANY MORE PROJECTIONS IN Q-4 THAT'S ANY DIFFERENT THAN RIGHT NOW.THAT'S WHERE WE ARE. IF LIQUIDITY COMES BACK THEN WE CAN CHANGE BUT RIGHT NOW IT IS WHAT IT IS TODAY.

FRANCIS: WE'LL TAKE A QUICK BREAK AND PAY SOME BILLS BECAUSE OBVIOUSLY WE HAVE TO.





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