The announcement came after a sharp rise in the cost of insuring debt for GE's finance arm forced the group to reassure investors for the third time in a month that it would not face a funding squeeze. But recent bank failures and the US Congress's rejection of financial bail-out legislation put pressure on company executives to seek additional capital in case credit markets began to choke their access to short-term loans and imperil GE's pristine debt ratings.
The agreement with Berkshire marks the second time in a week Mr Buffett has invested billions of dollars in a US bellwether whose aura of financial acumen has faded with the deepening crisis; the billionaire investor bought $5bn in preferred shares in Goldman Sachs a week ago.
GE plans to issue at least $12bn in common shares to investors. It will sell $3bn in preferred shares to Berkshire, which will also receive warrants to buy another $3bn in common stock at $22.25 within five years.