GE Capital asks U.S. government to lift 'too big to fail' designation
By Lisa Lambert
WASHINGTON (Reuters) - Lender GE Capital asked the U.S. government on Thursday to stop designating it as "too big to fail," saying it had shrunk to the point where it would not pose a major threat to the nation's financial stability if it experiences distress.
Chief Executive Officer Keith Sherin said in a statement that the General Electric Co (GE.N: Quote) unit no longer met the criteria for a "systemically important financial institution," a label that can trigger requirements for stricter oversight and more capital.
The application came the day after a federal judge struck down the designation of insurer MetLife Inc (MET.N: Quote), but GE Capital said the two events were unrelated. The company had said in October that it hoped to apply to the Financial Stability Oversight Council, which includes the Treasury secretary and Federal Reserve chair, for "de-designation" in the first quarter.
The 2010 Dodd-Frank Wall Street reform law authorized regulators to designate non-bank financial companies as systemically important, largely in response to the near-collapse of insurer American International Group Inc (AIG.N: Quote) and the $182 billion U.S. government bailout it received during the 2008 economic meltdown.
Only four non-banks have been deemed too big to fail, and the label has prompted most to consider reorganizing to pre-empt any increased regulation. GE Capital is the first to apply to have the designation removed.
Shares of General Electric were up 0.4 percent at $31.96 in afternoon trading. The industrial conglomerate has been working to reduce GE Capital's size and said last April that it would focus on technology and manufacturing.
GE Capital, which received the systemically important label in 2013, said it had more than halved its assets to $265 billion from $549 billion at the end of 2012.
The unit said it had ended all consumer lending in the United States, reduced real estate debt by more than 75 percent, eliminated its real estate equity and cut outstanding commercial paper by almost 90 percent. Continued...