GE Capital Sheds 'Too Big to Fail' Government Label -- Update

By Ryan Tracy

WASHINGTON -- U.S. regulators rescinded stricter oversight of General Electric Co.'s finance arm, GE Capital, after saying the company had made changes that significantly reduced its threat to U.S. financial stability.

The U.S. Financial Stability Oversight Council said it had voted this week to remove the company's "systemically important" tag. Treasury Secretary Jacob Lew said the change shows that designation is a "two-way process."

The head of GE Capital, Keith Sherin, said the decision is a result of the transformation of GE Capital into a "smaller, safer financial services company."

Since deciding to wind down its finance arm, GE Capital has signed agreements for the sale of about $180 billion of businesses and has closed about $156 billion of those transactions.

General Electric may now be able to add more debt to its balance sheet as Nelson Peltz's Trian Fund called for when the activist investor took a $2.5 billion stake in the conglomerate last year. Executives have been waiting to get out from under Fed oversight to explore such moves.

"We very may well decide to add additional leverage to the company, and we talked about something like $20 billion of potential capacity over time, which gives us a lot more flexibility around how we think about M&A as well," CFO Jeff Bornstein said last week.

Write to Ryan Tracy at ryan.tracy@wsj.com

(END) Dow Jones Newswires

June 29, 2016 10:00 ET (14:00 GMT)

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