GE seeks removal of 'too big to fail' label

[NEW YORK] General Electric requested Thursday that US regulators drop its designation as a systemically important financial institution in light of significant divestitures over the last year.

GE had garnered the so-called "too big to fail" designation in 2013 after the government determined that significant duress at GE Capital, its financial firm, could damage the broader economy.

"Our submission details the complete transformation of GE Capital," said GE Capital chief executive Keith Sherin in a statement.

"We believe GE Capital no longer meets the criteria to be designated as a SIFI and we look forward to working cooperatively and constructively with the Financial Stability Oversight Council through the rescission process."

Compared with 2013, GE Capital said it has reduced its assets from US$549 billion to US$265 billion, trimmed loans to consumers by 95 per cent and significantly scaled back its short-term and securitisation funding.

Following the pending sale of GE Capital's US deposit business to Goldman Sachs, it will no longer own any banks with deposits insured by the Federal Deposit Insurance Corporation.

Congress passed a law in 2010 creating the FSOC, an advisory board of regulators led by the Treasury secretary, in response to the 2008 financial crisis.

The FSOC "welcomes the opportunity to evaluate developments at any designated nonbank financial company and their potential effect on financial stability," a Treasury spokesperson said.

"As Secretary (Jacob) Lew has stated, there is a clear process for de-designation. Each year the council carefully reexamines each of its previous designations, invites each company to meet in person with Council staff, and evaluates whether any changes at the company, or in its regulation or markets, justify a rescission of the designation."

GE announced in April 2015 that it planned to sell most of GE Capital and focus on its industrial businesses more fully. The shift was due in part to tougher regulations on large financial institutions after the 2008 financial crisis.

The GE Capital move comes one day after a US judge ruled that the FSOC should not have classified insurer MetLife as systemically important.

Shares in Dow member GE rose 0.3 per cent to US$31.91 in afternoon trade.


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