Billionaire investor Warren E. Buffett's Berkshire Hathaway will pump $3 billion into General Electric in a huge vote of confidence for an iconic American company battered by the credit crisis.
It's the second time in as many weeks that Berkshire Hathaway has moved to shore up a company long associated with ironclad financial health. Last week, Buffett invested at least $5 billion in Goldman Sachs, whose shares had tumbled on investor fears that the firm could face the same kinds of funding squeezes as Bear Stearns and Lehman Brothers.
Buffett is buying $3 billion of General Electric preferred shares. The perpetual preferred stock carries a dividend of 10 percent, similar to the terms Buffett struck with Goldman Sachs. Buffett is a director of The Washington Post Co.
GE also plans to sell at least $12 billion worth of common stock to the public.
Shares of GE, which fell by as much as 8 percent earlier yesterday, pared their losses on the news. They closed down $1, or 3.9 percent, at $24.50.