GE Capital loses its ‘too-big-tofail’ label

Company requested move as it bids to shed assets

GE Capital won approval to have its “too-big-to-fail” designation removed after its decision to shed billions in assets.

The Financial Stability Oversight Council voted Tuesday to remove the label, which had subjected GE Capital to additional scrutiny from the Federal Reserve, including certain financial controls. GE requested the move.

The panel’s unanimous decision, revealed Wednesday, reflects a determination that a collapse of GE Capital would no longer represent a systemic threat to the U.S. financial system.

GE Capital has announced the sale of $180 billion in assets since April 2015 and closed deals on about $156 billion. The company’s goal is to shed about $200 billion in assets.

The removal of the too-big-tofail label — officially called a nonbank Systemically Important Financial Institution (SIFI) — comes three months after the request from GE Capital.

The designation came with several requirements, including regulatory reports and capital requirements.

Treasury Secretary Jacob Lew said the decision illustrates that the designation is “a two-way process.”

“The Council will remove a designation when that company no longer poses risks to U.S. financial stability,” Lew said in a statement. “The Council follows the facts: When it identifies a company that could threaten financial stability, it acts; when those risks change, the Council also acts.”

GE Capital’s “fundamental strategic changes” — namely, its sizable decline — sparked the move, Lew said.

GE shares closed up more than 2% Wednesday at $30.55.