GE Capital asks U.S. government to lift 'too big to fail' designation

By Lisa Lambert

WASHINGTON (Reuters) - General Electric Co's GE Capital financing arm on Thursday asked the U.S. government to stop designating it as a "systemically important financial institution," a label for companies considered "too big to fail," now that it has less influence on the U.S. economy.

GE Capital Chief Executive Officer Keith Sherin said in a statement that the unit had shrunk to the point where it no longer meets the criteria for the designation, which can trigger possible requirements for stricter oversight and holding more capital.

The application came the day after a federal judge struck down the designation of MetLife Inc, but GE Capital said the two events were unrelated. The company had said in October that it hoped to apply to the Financial Stability Oversight Council for "de-designation" in the first quarter.

The 2010 Dodd-Frank Wall Street reform law authorized regulators to designate non-bank companies as "systemically important," largely in response to the $182 billion U.S. government bailout that insurer American International Group Inc received during the 2008 financial crisis.

Only a few non-banks have been deemed "to big to fail," and the label has prompted most to consider reorganizing to pre-empt possible increased regulation.

Shares of General Electric were up 0.3 percent at $31.91 in morning trading. Long an industrial company, it has been working to reduce GE Capital's size and said last April that it would focus on technology and manufacturing.

GE Capital, which received the "systemically important" label in 2013, said it had more than halved its assets to $265 billion from $549 billion at the end of 2012.

The unit said it had ended all consumer lending in the United States, reduced real estate debt by more than 75 percent, eliminated its real estate equity and cut outstanding commercial paper by almost 90 percent.

"Our plan to change our business model, shrink the company and reduce our risk profile has been successful," Sherin said

Like the designation, the Financial Stability Oversight Council, which includes the Treasury secretary and Federal Reserve chair, is part of the Dodd-Frank law.

MetLife, the largest U.S. life insurer, sued after it was designated systemically important in 2014. Earlier this year, it said the "regulatory environment" and potentially large capital requirements were causing it to consider spinning off its retail business.

Meanwhile, billionaire investor Carl Icahn has pressured AIG to split into smaller companies to shed its designation.

AIG CEO Pete Hancock said on Thursday the MetLife court decision created an opportunity for the company to seek de-designation, but it was "reserving judgment."

(Reporting by Lisa Lambert; Editing by Lisa Von Ahn)