General Electric (GE) has a real spending problem. Although the American engineering conglomerate claimed not to overcompensate executives, former CEO Jeff Immelt stepped down in 2017 with a retirement package worth upwards of $211 million (€171.1 million), while GE posted a $9.8 billion loss for last year. Something just doesn't add up.

GE's bonds are down and its stock is now at $14.26 a share, the worst hit since the 2009 recession. A weakening demand for energy-related products like gas turbines and oilfield equipment dampens hope for a turnaround. Last August Warren Buffett's holding company Berkshire Hathaway, which bailed GE out in 2008 through a $3 billion investment, sold $315 million worth of GE shares.

To make matters worse, GE announced late January that the Securities and Exchange Commission (SEC) — the US stock market watchdog — has opened an investigation into their accounting practices. Investors are now wondering, how bad can this get?

GE: The American golden child

GE represents the height of American business. The godfather of modern electricity, Thomas Alva Edison, provided notable inventions including the lightbulb and the locomotive while other GE scientists invented the x-ray machine and everyone's favorite summertime appliance: the electric fan. Katharine Burr Blodgett, the first female scientist hired by GE, invented the non-reflective glass that is used in cameras today. GE built a large portion of the American economy, expanding across industries with the grit and moxie American companies pride themselves on.

"While I believe Immelt compounded GE's problems, I also think these started under Welch, particularly when he allowed GE Capital to borrow way too much money," says investigative reporter Charles Ortel, one of the first to predict GE's downfall. "At heart of GE's pain likely were too many ill-advised and debt-financed investments that may, in theory, have offered earnings per share accretion potential, but confused financing and investment decisions."

And that brings us to GE Capital. Most people don't know much about GE Capital. Functioning as the financial services unit for GE it finances GE customers buying products like jet engines, industrial equipment, power turbines and medical machines. But under Jack Welch GE Capital amassed a portfolio of highly specific assets, financing everything from Mexican warehouses to condos, to leasing railcars and fleets, all of which came to a head during the 2008 financial crisis.

But they wanted it to be bigger

Responding to pressure from investors, Jack Welch expanded GE Capital, making it the largest issuer of commercial paper in the world, incurring debt to invest beyond their means. GE Capital made up 60 percent of GE's earnings growth between 1990 and 2005.

Jeff Immelt, nicknamed by the Harvard Business Review as "The Great Transformer" claimed to remodel GE toward industrial businesses, where GE's enormous scale made it a good fit. Immelt's letter, published in the HBR was titled "How I Remade GE" and describes a different company than the one investors saw.

In 2001, Welch received the largest retirement package in history. Valued at $420 million, it included access to an $80,000-per-month Manhattan apartment, tickets to elite sporting events and lifelong use of airplanes and other GE facilities. And it wasn't until Immelt stepped down that GE finally cut some costs.

Read more: General Electric to cut 12,000 jobs

During his tenure, it was not uncommong for Immelt to take company aircrafts to business meetings, often having an empty jet follow behind, just in case.

The 2008, crisis marked a point when GE had to make some big decisions. Rana Faroohar, an economic analyst for CNN, had conversations with executives who knew the choice was between being a bank or going back to innovation, "They decided to do the latter and they have moved away from finance. They have been selling off their financial assets and they are trying to now move into making things particularly geared for the emerging markets.

A lot of people are really watching that company to see, hey, can a big American company that went this far into the process of financialization pull back and really move to a different paradigm?"

What next?

A recent $6.2 billion charge for problems with its finance unit is only stoking concern about its survival. GE's new chief executive John Flannery has spoken with analysts about his plan to focus GE on its three main businesses: health care, aviation and power generation. GE has since disassembled GE Capital, reinstating it to its former purpose.

Read more: General Electric to slice up its empire

The options are increasingly limited and investor confidence has been pummeled. Unless GE can convince another billionaire like Warren Buffett to bail them out again, many analysts are surmising the company will only survive if broken apart. One can interpret what Immelt said in his departure letter with new eyes, given the current state of affairs, "We were a classic conglomerate. Now people are calling us a 125-year-old start-up."