GE’s Financing Arm Now Not ‘Too Big to Fail’

Not all that long ago GE and Finance seemed a tenuous partnership, as a drastic restructuring in the wake of the financial crisis brought risk down and reach down as well.  The past year (and then some), according to The Wall Street Journal, has seen General Electric whittle away at the financial operations.

The peak had seen $660 billion in assets on the balance sheet tied to finance and financial activities.  Deals in place have already streamlined operations considerably, with $156 billion in transactions closed.

As of Wednesday the refashioning had been notable enough so that the US Financial Stability Oversight Council made the decision, via vote, to remove the firm’s label as a “systemically important” financial operation, with stricter oversight of activities.  Now, GE is allowed to borrow as much as $20 billion for stock buybacks.

This has been the first removal of the “systemically important” financial risk designation since its introduction six years ago.

However, noted the Journal, the GE case has qualities that are not applicable to other companies due to the size and focus of the finance arm.

The Journal noted that GE Capital had been a high flier, growing to be one of the biggest lenders in the United States.

Under the restructuring plan, aircraft and related items will still be core products for the firm.  The ability to take on debt may help improve the firm’s estimation by regulators and investors.