Last week IBM announced that IBM Global Finance would be making $2 billion to help get individual projects going in areas covered by the US government’s stimulus package. That’s health, smart electric grids, transport and broadband networks. At a lunch today, John Callies, the general manager of IGF explained the rationale to myself and a group of other analysts.

The simple fact is that the credit facilities that would normally be available to launch the much desired projects are frozen up, to some degree or just too expensive, because the banks are now so risk averse. Most projects that will (or may) qualify for government money require upfront investment for planning and design work. IBM is thus offering itself as oil for the wheel.

As far as I can tell from Mr Callies comments, IBM is offering bridging finance. It’s a practical act rather than an altruistic one. It will help the US Government and it will help IBM. IBM will provide financing on the same terms as it always has done. The level of risk assumed will be no greater than in other financing deals IBM Global Finance makes and IBM will carry out the usual due dilligence. It will actively market the availability of this kind of finance to the sectors of the economy where it is needed.

The more interesting discussion at lunch was about where the risks lay in the areas on which  President Obama and the Democrats have chosen to focus. The health sector is a mixed bag. Many businesses in that sector are poorly run. Mr Callies thought maybe 10 percent. Particularly risky are businesses run by doctors. The extension of broadband to all areas of the country may also be risky. Estimates suggest that the government is underfunding this by a wide factor (maybe $50 billion is needed but only $7 billion is promised) and, right now, the major carriers (Verizon, AT&T, etc.) are not lining up to attack the problem. This means that smaller less risk-averse companies may step in – but they represent a greater financial risk.

In the government sector itself, the most risky organizations are municipal governments but there are situations where loans may not be risky such as the situation where a municipal government owns a utility (such as a power station).

In general IBM seems to be managing the recession creatively, which may account for its recent positive quarterly results. In a presentation later in the day, Robert LeBlanc noted that IBM’s sales pipeline has actually increased year-on-year, but it consists in the main of different opportunities. Among customers, there’s a strong focus on fast payback and IBM now finds itself engaging with CFOs and line-of-business executives more frequently than it used to.