U.S. TREASURY DEPARTMENT 

OFFICE OF PUBLIC AFFAIRS

FOR IMMEDIATE RELEASE: June 29, 2016

CONTACT: Rob Friedlander, Treasury Public Affairs (202) 622-2960

FINANCIAL STABILITY OVERSIGHT COUNCIL ANNOUNCES RESCISSION OF 

NONBANK FINANCIAL COMPANY DESIGNATION

Council votes to rescind designation of GE Capital

WASHINGTON – The Financial Stability Oversight Council (Council) today announced that it 

has voted to rescind its determination that material financial distress at GE Capital Global 

Holdings, LLC (GE Capital) could pose a threat to U.S. financial stability and that GE Capital

should be subject to supervision by the Board of Governors of the Federal Reserve System and 

enhanced prudential standards. The Council unanimously determined that GE Capital no longer 

meets the standards for a determination, with one member recused.

The Council designated GE Capital in July 2013 and explained to the company the potential 

risks that the Council had identified. Since the Council’s determination, the company has 

executed significant divestitures, transformed its funding model, and implemented a corporate 

reorganization. As a result, the company is a much less significant participant in U.S. financial 

markets and the economy. The Council concluded that these and other changes at GE Capital 

since the Council’s determination have significantly reduced the potential for GE Capital’s 

material financial distress to threaten U.S. financial stability. The public explanation of the basis 

for the Council’s rescission is available here.

“Today’s decision clearly demonstrates that the Council’s designation of nonbank financial 

companies is a two-way process. The Council will remove a designation when that company no 

longer poses risks to U.S. financial stability,” said Treasury Secretary Jacob J. Lew. “The 

Council follows the facts: When it identifies a company that could threaten financial stability, it 

acts; when those risks change, the Council also acts.
“One of the key lessons from the financial crisis is that the distress of large, interconnected 

financial firms can threaten the entire system – making the Council’s authority to designate 

nonbank financial companies for supervision and enhanced prudential standards so important.

“Since its creation, the Council has designated four nonbank financial companies that could 

threaten U.S. financial stability. In each case, the Council conducted a rigorous, data-driven 

analysis, engaged extensively with the company, and provided a detailed explanation of the 

Council’s concerns to the company. The Council has also conducted numerous annual reviews 

of its designations.

“The Council’s rescission of GE Capital’s designation is the result of a methodical analysis of 

risks that is in keeping with the law and the lessons of the financial crisis. The Council 

designated GE Capital in 2013 after identifying a number of key concerns, including the 

company’s reliance on short-term wholesale funding and its leading position in a number of 

funding markets. Since then, GE Capital has made fundamental strategic changes that have 

resulted in a company that is significantly smaller and safer, with more stable funding. After a 

rigorous review and engagement with the company over the last year, the Council determined 

that based on these changes, the designation is no longer warranted.”

The Dodd-Frank Act requires the Council to review each nonbank financial company 

determination at least annually and rescind a determination if the Council, by a vote of two-thirds 

of the voting members, including an affirmative vote by the Chairperson, determines that the 

company no longer meets the statutory standards for a determination. 

Beginning in early 2015, GE Capital began meeting periodically with staff of Council members 

and member agencies regarding strategic actions the company intended to take and the effect 

those actions could have in reducing the potential risks GE Capital could pose to financial 

stability. On March 18, 2016, the Council notified GE Capital that the Council was conducting 

its annual reevaluation of the determination regarding the company. The company was invited to 

meet with staff and to submit materials for consideration by the Council. On March 31, 2016, 

GE Capital made a written submission to the Council requesting that the Council rescind its 

determination, and in April and May 2016, staff of Council members and member agencies met 

with the company and engaged in follow-up discussions. Staff of Council members and member 

agencies also consulted with several of the company’s regulators: the Federal Reserve, the 

Federal Deposit Insurance Corporation, and the U.K. Prudential Regulation Authority.

On Tuesday, June 28, 2016, the Council voted to rescind its determination regarding GE Capital

and provided the company with a detailed statement of the basis for the Council’s decision. The 

public explanation of the basis for the Council’s rescission of the determination is intended to 

provide the public with an understanding of the Council’s analysis while protecting sensitive, 

confidential information submitted by GE Capital and its regulators to the Council.

During its reevaluation of the determination regarding GE Capital, the Council carefully 

considered a broad range of information available through public and regulatory sources, as well 

as information provided by the company. The Council’s rescission of the determination was
based on extensive quantitative and qualitative analyses of GE Capital, taking into account the 

company’s businesses and activities. 

Further information about the Council, including the explanation of the basis for the Council’s 

rescission of its determination regarding GE Capital and the Council’s procedures for annual 

reevaluations generally, is available on the Council’s website at www.fsoc.gov. 

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