General Electric Co. (GE:US), whose Connecticut headquarters is about 35 minutes by car from the site of the Newtown school massacre, said it tightened rules against providing consumer financing to firearms retailers.
“Industry changes, new legislation and tragic events that have caused widespread re-examination of policies on firearms” spurred the move by the GE Capital unit, Russell Wilkerson, a spokesman, said yesterday by e-mail.
GE’s decision follows a policy adopted in 2008 to halt financing for “merchants whose primary business is to sell firearms,” Wilkerson said. More-rigorous audits of sporting- goods businesses screened out fewer than 75 retailers, an “immaterial part” of GE Capital’s sales, he said.
The pullback is a symbolic step in a country that has more than 300 million firearms, based on data compiled by Bloomberg. The Dec. 14 murders of 26 people at Sandy Hook Elementary, including 20 children, ignited a national debate, spurred a push for federal and state laws, and prompted some investors to reassess their holdings.
Wilkerson said Fairfield, Connecticut-based GE’s changes were part of a regular review of lending practices and affected roughly 0.001 percent of all gun retailers.
“GE Capital Retail Bank has made the difficult decision to discontinue offering the GE Capital Sport Finance program to your store(s),” the company said in a letter dated April 9 sent to merchants including Mike Stulce, owner of a Texas gun shop.
In addition to canceling the financing, GE said it suspended Visa and MasterCard processing and notified clients it would have a FedEx Corp. agent pick up their point-of-sale terminals. The halt was effective yesterday, GE said in the letter, which didn’t mention guns or firearms.
“They didn’t specify but I’m going to take a wild guess and say it has something to do with the politics, the way the wind is blowing right now,” said Stulce, whose Champion Firearms shop in College Station employs 15 people.
Champion Firearms made 7 percent of its sales with GE Capital financing last year, Stulce said in a telephone interview. His shop offered customers no-interest financing for six months and absorbed the 3 percent interest charge from GE Capital, he said. Financing was available for up to 18 months.
Financing was cut off earlier this year at Duncan’s Outdoor Shop in Bay City, Michigan, which offered 60-day, same-as-cash terms, General Manager Ernie LeMay said yesterday in a telephone interview. LeMay didn’t have details on the date.
“All I was told was, we can’t do GE anymore,” he said.
In the U.S., the making of personal firearms has become an industry populated chiefly by closely held manufacturers such as Freedom Group Inc., whose brands include Remington and Bushmaster. Consumer financing has been harder to come by as well, and Duncan’s went without an outside lender for several years before getting GE “a couple of years” ago, LeMay said.
“We were just getting back into promoting it,” LeMay said. “We didn’t have a huge base yet but we were building on it. People that had it seemed to like it.”
Duncan’s is seeking new financing, according to LeMay, who said he didn’t know the store’s previous lender before GE Capital.
GE was the last lender still financing firearm sales, Champion’s Stulce said. His shop previously had two other lenders that dropped service, with the most recent exit coming about five years ago, he said. Customers will have to pay cash or use their own credit cards now.
GE Capital has other retail customers for which firearms are only a portion of the business. For example, GE Capital Retail Bank’s credit-card customers include Wal-Mart Stores Inc. and Dick’s Sporting Goods, according to the lender’s website.
Outrage over the Newtown shootings spurred some pension investors such as the California Public Employees’ Retirement System to vote to divest shares in gunmakers Smith & Wesson Holding Corp. (SWHC:US) and Sturm Ruger & Co. (RGR:US)
Cerberus Capital Management LP, the private-equity firm founded by Stephen Feinberg, put Freedom Group up for sale after the Newtown slayings. This month, people familiar with the matter said Feinberg and his partners may try to buy the company from the private-equity funds managed by his firm.
The Wall Street Journal reported on the financing cutoff yesterday.
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