Commercial Paper Explained by GE
Jeff Immelt of GE and Jim Cramer talk about how commerical paper is used and discuss GE's position on commercial paper. CP acts as a means of short term financing for companies. When the times are good, it is very easy to borrow money on the cheap; however, when a crisis hits, spreads go up dramatically, increasing a corporations cost of funds. He talks about how he drastically reduced their reliance on commercial paper during the mini crisis of 2002.