GE Capital officially requested Thursday that it be taken off of financial regulators’ list of firms that are as risky to the economy as megabanks, arguing that it has changed its business to be smaller and less intertwined with other financial businesses.
“Our plan to change our business model, shrink the Company and reduce our risk profile has been successful,” GE Capital head Keith Sherin said in a statement issued Thursday alongside a request filed with regulators.
The company is petitioning the Financial Stability Oversight Council to remove its designation as a “systemically important financial institution,” a label that means that the government will regulate it as if it were a big bank, with greater supervision and capital requirements.
The Council, a creation of President Obama’s 2010 financial reform law meant to sniff out potential economy-wide risks outside the banking system, first labeled GE Capital a potential systemic threat in 2013. In April of last year, the company effectively announced that it would break itself up in response.
In the release, GE Capital claimed that it has “completely transformed itself,” reducing its assets by over half to $265 billion and dramatically scaling down or exiting its some of its lending businesses. It has moved forward with sales of the two chartered banks it owns, including one to Goldman Sachs. The firm “believes it poses no threat to U.S. financial stability,” it said.
GE Capital’s request comes one day after MetLife, another firm the Council had labeled systemically important, had a federal court reverse the Council’s decision.
The Council, however, has not yet reversed a designation, although it has said that such a maneuver is possible and has clarified the process by which decisions are made.
Although the Council has not weighed in on GE Capital’s efforts to downsize and simplify its business, the Federal Reserve took notice of the development in designing the regulations that it would apply to the business, creating a off-ramp should it be de-designated.
