GE Capital Cuts Off Lending to Gun Shops
Just saw this on CNBC.
GE has been one of the company I respected until this....
I will buy as much firearm as I can , when price become stable.
http://online.wsj.com/article/SB1000...634381232.html
BUSINESS Updated April 24, 2013, 2:44 p.m. ETGE Capital Cuts Off Lending to Gun Shops
By JOE PALAZZOLO And KATE LINEBAUGH
General Electric Co. is quietly cutting off lending to gun shops, as the company rethinks its relationship to firearms amid the fallout from the school shooting in Newtown, Conn.
This month, Glenn Duncan, owner of Duncan's Outdoor Store in Bay City, Mich., said he received a letter from GE Capital Retail Bank in which the lender said it had made "the difficult decision" to stop providing financing services to his store. Other gun dealers have received similar notices.
GE is at least the second big financial firm to retreat from the gun business following the school shootings, which claimed the lives of 20 first-graders and six adults in December.
Days after the killings, private-equity firm Cerberus Capital Management LP said it would try to sell the gun company it owns—Freedom Group Inc.— which makes brands including Remington, Bushmaster, Marlin and H&R.
The moves highlight how companies, closely attuned to the concerns of investors and employees, have reacted to public horror caused by the attacks, even as complicated political considerations doomed new gun-control legislation in the Congress.
GE is based in Fairfield, Conn., and many of the GE's employees live around Newtown, and several have children in the Sandy Hook elementary school, where the shootings took place. Peter Lanza, the father of Sandy Hook gunman Adam Lanza, is an executive at GE Capital. GE Chief Executive Jeff Immelt held a town hall meeting with affected employees after the shooting, and the board has been updated on efforts to help staff, a person familiar with the matter said.
"Industry changes, new legislation and tragic events" led GE Capital to reexamine its policies on financing firearms, spokesman Russell Wilkerson said.
The company's exit has little overall impact in a U.S. gun market, where sales last year totaled $11.7 billion, according to IBIS World. While a typical handgun can cost more than $300, financing remains a marginal activity.
GE's ban applies only to retailers whose sole business is selling firearms, an "insignificant and immaterial" part of GE Capital's business, Mr. Wilkerson said. The lender is still doing business with merchants with more diverse lines of business, including Wal-Mart Stores Inc., the nation's largest seller of guns and ammunition, and Dick's Sporting Goods Inc., he said.
But GE's withdrawal has symbolic significance, as well as real consequences for the companies that used the service. Gun sellers said financing leads customers to spend more on firearms and accessories.
GE has grown to be a bigger lender than all but four of the country's commercial banks in large part by catering to specialized niches and hundreds of thousands of smaller customers like fast-food franchises and retailers that weren't a priority for bigger rivals.
The company's involvement in gun finance dates back to 2006. Rex McClanahan, co-owner of Buds Gun Shop in Lexington, Ky., remembered first meeting GE representatives at an outdoor trade show called Nations Best Sports in Fort Worth, Texas, in 2007.
"GE showed up there wanting to sell their service. We signed up, and it took off right away," he said, adding that thousands of customers took advantage of the financing in the first year.
In 2008, GE shifted gears and stopped taking on new customers whose primary business is firearm sales. The financing for Mr. McClanahan's store along with other existing customers was grandfathered in. But this February, he was informed that GE was terminating the financing program. Mr. McClanahan said he is talking with other lenders to re-establish a credit program.
"Your options are very limited by being in our business," he said.
A spokeswoman for Wells Fargo & Co. said bank officials decided to exit gun financing nearly a decade ago. Bank of America Corp., which got out of the business in 2008, didn't respond to requests for comment. A spokeswoman for Citigroup Inc. said the bank doesn't finance loans for firearms.
Smaller lenders have helped fill the gap. Last July, Randy Frazier opened a new division of his direct-marketing business called Gun Financing, promising on its website to arrange loans for "hottest firearms." Mr. Frazier said his audience is young men with spotty credit seeking high-end rifles and equipment for sport shooting.
Law Enforcement Finance, a company that launched about two weeks before the Sandy Hook massacre, offers police officers low-interest financing for rifles and body armor.
Daniel Johnson, a patrolman in the Bourbonnais Police Department in northern Illinois, said he got a loan to purchase a $2,250 Daniel Defense M4 Carbine, a sleek looking black rifle with plenty of "bells and whistles," after he was selected for the county SWAT team.
"It's kind of like, do you want to play basketball with Michael Jordan, or do you want to play with a local high school kid?" he said, explaining why he didn't use the standard-issue AR15 supplied by the force. Married with two kids and a mortgage, he found the three-year financing deal a "great help."
On a recent morning, half a dozen customers were browsing ammunition, sights and personal protection firearms over the thumping of gunfire from the attached shooting range at Duncan's Outdoors Store in Bay City. A flier from GE Capital was displayed above a case of handguns, saying in red marker: "6 mo same as cash."
Mr. Duncan, the owner, said the financing made it easier for buyers to spend more. Now that he's been cut off by GE, he may offer a layaway plan. "So we are the finance company, not GE Capital," he said.
Write to Joe Palazzolo at joseph.palazzolo@wsj.com and Kate Linebaugh at kate.linebaugh@wsj.com
Colorado AR-15 Shooters Club Discussion Forums
Welcome to the Colorado AR-15 Shooters Club Discussion Forums.
Reply With Quote
Originally Posted by asmo
