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

Company requested move as it bids to shed assets

- Nathan Bomey @NathanBome­y

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The panel’s unanimous decision, revealed Wednesday, reflects a determinat­ion that a collapse of GE Capital would no longer represent a systemic threat to the U.S. financial system.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

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