The Financial Stability Oversight Council voted to rescind its designation of General Electric Co. as a systemically important financial institution, the Treasury Department announced Wednesday.
Council members voted unanimously that GE Capital no longer met the standards for such determinations, following “significant divestitures,” a corporate reorganization and a new funding model.
“GE Capital has made fundamental strategic changes that have resulted in a company that is significantly smaller and safer, with more stable funding,” Treasury Secretary Jacob Lew, the council chairman, said in a statement.
Mr. Lew added that the reversal “clearly demonstrates” that an FSOC designation “is a two-way process … When it identifies a company that could threaten financial stability, it acts; when those risks change, the council also acts.”
GE was designated a non-bank systemically important financial institution in 2013. In April 2015, GE announced it was selling its lending business, and that it would seek to have the SIFI designation reversed, on the grounds that it “substantially reduced its risk profile” and interconnectedness to the financial system. In March, it announced it was selling GE Asset Management to State Street.
Since April 2015, GE Capital has signed agreements to sell $180 billion of businesses and has closed $156 billion of those transactions. It also plans to largely finish selling a total of $200 billion of GE Capital businesses by the end of 2016. GE Capital Chairman and CEO Keith Sherin said in a statement that “we will continue to re-evaluate our capital requirements to reflect our reduced risk profile and right size our organization as we go forward.”
