US removes GE Capital from ‘too big to fail’ list

New York (AFP) – US regulators removed General Electric’s finance division from its list of systemically important institutions following large asset sales, the Treasury Department said Wednesday.

GE Capital Global Holdings had been designated in 2013 by a Treasury-led federal advisory panel as requiring much tougher regulatory scrutiny because of its importance to the overall financial system. The designation is commonly known as “too big to fail”.

But since that time, GE Capital has sold off huge holdings. GE Capital had signed deals to divest $166 billion in financial assets, just $40 billion short of its target, GE said in its first-quarter earnings report in April.

GE Capital had been classified as requiring tougher oversight based on factors that included its reliance on short-term wholesale funding and its leading position in a number of markets, the Treasury Department said.

The removal of the  designation by the Financial Stability Oversight Council shows the classification “is a two-way process,” said US Treasury Secretary Jacob Lew. “The Council will remove a designation when that company no longer poses risks to US financial stability.”

GE shares rose 2.0 percent to $30.54 in opening trade.