Confidence Building

GE Turns to Buffett for a $3 Billion Show of Confidence

In the latest unexpected deal stemming from the financial crisis, General Electric Co. turned to Warren Buffett to inject at least $3 billion in the company -- and, GE hopes, provide a much-needed boost in investor confidence.

Mr. Buffett's Berkshire Hathaway Inc. agreed to invest $3 billion, and perhaps as much as $6 billion, in GE. GE also said it would sell a minimum of $12 billion in stock to other investors.

U.S. business was getting a helping hand Wednesday, as the Senate appeared set to pass a bailout bill and Warren Buffett ploughed money into another corporate giant.

After Monday's botched attempt to get a $700 billion rescue package through the House of Representatives, senators loaded the measure with tax breaks and other sweeteners for the right and left. Leaders in both parties, as well as private economic chiefs everywhere, said Congress must quickly approve some version of the measure to start loans flowing and stave off a potential national economic catastrophe. "Inaction is not an option," Senate Majority Leader Harry Reid of Nevada said a few hours before the Senate was to vote Wednesday evening. "This is not a bailout for Wall Street. It's a bailout for our country." President Bush said, "It's very important for members to take this bill very seriously."

Even presidential candidates John McCain and Barack Obama made rare appearances to vote their support. That would send the package back to the House, where passage would require a turnaround of 12 votes. The House is expected to take up the reworked bill by the end of the week. As for Mr. Buffett, his attention was focuses on General Electric. Just a week after the famed investor put $5 billion into banking giant Goldman Sachs, Buffett investment arm Berkshire Hathaway said it has agreed to buy $3 billion in preferred stock from GE in a private offering. The conglomerate also is planning a public offering of at least $12 billion in common stock as it scrambles to raise capital amid a general squeeze on credit.

Mr. Buffett tried to reassure GE investors saying the company has "strong global brands and businesses with which I am quite familiar." GE shares fell by nearly 10% earlier in the day after a negative analyst note. But the stock pared its losses on the Berkshire news, closing down $1, or 3.9%. The Dow Jones Industrial Average also worked its way back from sharp losses, to finish 19.59 points lower, off 0.2%, at 10831.07. The S&P 500 slipped 0.5% to 1161.06, while the Nasdaq Composite Index slipped 1.1% to 2069.40.