General Electric (GE) is formally asking the government to remove heightened regulations from its investment arm, arguing it has shrunk operations enough so that it no longer poses a threat to the financial system.
In a first, the corporation formally asked financial regulators Wednesday if it would no longer consider GE Capital a “systemically significant financial institution” (SIFI), which subjects it to heightened oversight and stricter rules from the government.
The request comes one day after the insurance company MetLife won a court battle against the government over whether it should be considered a SIFI.
The company argues that since receiving that designation in July 2013, it has taken steps to make it significantly less risky and less interconnected to the overall financial system. As a result, GE argues the firm no longer should be considered a critical piece of the financial system and no longer needs a closer government eye on it.
“Our submission details the complete transformation of GE Capital. Our plan to change our business model, shrink the Company and reduce our risk profile has been successful,” said GE Capital Chairman and CEO Keith Sherin.
In a statement, a Treasury spokesperson said the government "welcomes the opportunity to evaluate developments at any designated nonbank financial company and their potential effect on financial stability."
The spokesperson added that regulators review the designation of each company every year, and invite staff from the impacted companies to meet with them.
Under the Dodd-Frank financial reform law, the government was given the ability to identify financial firms that could pose a risk to the overall financial system should they falter, and as a result deserve closer scrutiny. Which firms qualify as “systemically significant” is determined by the Financial Stability Oversight Council, a panel also created by Dodd-Frank that consists of the top financial regulators from across the government.
GE Capital was one of just a handful of nonbanks to receive the title. The firm had indicated last year that it wanted to apply for removal of that designation sometime in the first quarter of 2016.
In its request, the firm argued that it had drastically reduced its assets, as well as its short-term funding, and had significantly simplified its operations. In addition, GE Capital said its business going forward would align with GE’s overall industrial operations.
This post updated at 1:09 p.m.