July 8, 2013

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Basis of the Financial Stability Oversight Council’s 

Final Determination Regarding General Electric Capital Corporation, Inc.

Introduction

Pursuant to section 113 of the Dodd-Frank Wall Street Reform and Consumer Protection Act 

(Dodd-Frank Act), the Financial Stability Oversight Council (Council) has made a final 

determination that material financial distress at General Electric Capital Corporation, Inc.

(GECC) could pose a threat to U.S. financial stability and that GECC should be subject to 

supervision by the Board of Governors of the Federal Reserve System (Board of Governors) and 

enhanced prudential standards.

In reaching this determination, the Council carefully considered a broad range of information in 

light of the statutory factors set forth in section 113(a)(2) of the Dodd-Frank Act, both separately 

and in conjunction with each other. The Council has considered information available through 

existing public and regulatory sources, as well as information provided by GECC. The Council 

also consulted with GECC’s primary financial regulatory agency, the Board of Governors.

On June 3, 2013, the Council made a proposed determination under section 113 of the DoddFrank Act that material financial distress at GECC could pose a threat to U.S. financial stability 

and that GECC should be subject to Board of Governors supervision and enhanced prudential 

standards. The Council provided GECC with an explanation of the basis for the Council’s 

proposed determination. On June 28, 2013, the Council received a letter from GECC stating that 

GECC would not request a hearing to contest the proposed determination. 

Based on the Council’s evaluation of all the facts of record in light of the factors that the Council 

is required to consider under section 113 of the Dodd-Frank Act and the Council’s interpretive 

guidance regarding nonbank financial company determinations (Interpretive Guidance),

1 the 

Council has voted to make a final determination that material financial distress at GECC could 

pose a threat to U.S. financial stability and that GECC will be supervised by the Board of 

Governors and subject to enhanced prudential standards.

The Council’s final determination does not constitute a conclusion that GECC is experiencing 

material financial distress. Rather, consistent with the statutory standard for determinations by 

the Council under section 113 of the Dodd-Frank Act, the Council has determined that material 

financial distress at the company, if it were to occur, could pose a threat to U.S. financial 

stability.

Summary

Because GECC is a significant participant in the global economy and financial markets and is 

interconnected to financial intermediaries through its financing activities and its funding model, 

as well as other factors described herein, material financial distress at GECC could cause an 

 1 12 C.F.R. part 1310, app. A (2013).
July 8, 2013

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impairment of financial intermediation or of financial market functioning that would be 

sufficiently severe to inflict significant damage to the broader economy.

A wholly owned subsidiary of the General Electric Company (GE Company), GECC is a savings 

and loan holding company (SLHC) and one of the largest holding companies in the United States

by assets, with $539 billion in total consolidated assets as of December 31, 2012.2 GECC is a 

significant source of credit to the U.S. economy, providing financing to both commercial and 

consumer customers. In 2012, GECC had outstanding credit to more than 243,000 commercial 

customers and 201,000 small businesses, as well as credit extended to 57 million consumers in 

the United States.

3

GECC is a significant participant in the global economy and financial markets and is 

interconnected with financial intermediaries through its financing activities and its funding 

model, as well as through other activities in which GECC engages. These activities include 

activities in wholesale short-term funding markets, which link GECC to other large financial 

institutions that are significant financial intermediaries and with the financial markets more 

broadly. For example, GECC is a significant issuer of commercial paper (CP) in the United 

States. Large global banks and large nonbank financial companies have significant exposure to 

GECC, including through the purchase of GECC’s CP and long-term debt and the provision of 

backup lines of credit to GECC. Money market mutual funds (MMFs) and asset managers are 

purchasers of CP issued by GECC. Material financial distress at GECC could trigger a run on 

MMFs more generally and lead to a broader withdrawal of investments from the CP market and 

other short-term funding markets. Because MMFs and the short-term funding markets serve as 

important sources of funding for financial firms, a withdrawal of investments from those markets 

could impair the ability of financial and other firms to fund their operations. In addition to the 

impairment to the economy that could arise from the failure of GECC, a reduction in funding for 

several large financial institutions resulting from material financial distress at GECC could 

impair financial intermediation or financial market functioning, significantly impairing the 

broader economy. 

GECC holds a large portfolio of on-balance sheet assets comparable to those of the largest U.S. 

bank holding companies (BHCs).

4

 If GECC were unable to access funding markets, GECC 

could either reduce its provision of credit or be forced to sell assets quickly to fund its operations 

and meet its obligations. If GECC had to rapidly liquidate assets, the impact could drive down 

asset prices and cause balance sheet losses for other large financial firms on a scale similar to 

those that could be caused by asset sales by some of the largest U.S. BHCs. The resulting capital 

losses across financial firms, particularly during a time of general economic distress, could 

exacerbate the stresses on the financial system and economy by forcing other firms to sell assets 

and draw on their credit lines to meet liquidity pressures. If GECC were unable to access 

funding markets, there could be a reduction in credit availability, which could lead to a broader 

reduction in economic activity. 

 2 GECC Annual Report on Form 10-K for the year ended December 31, 2012, p. 15. 3 Id at p. 4. 4 Based on data provided by GECC and other large BHCs to the Board of Governors on the Y-9C report as of the 

fourth quarter 2012.
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GECC also provides credit to a wide range of middle-market companies that are significant 

components of the broader economy. Material financial distress at GECC that limits its ability to 

continue to provide credit to middle-market companies, particularly if it occurred during a period 

of overall stress in the financial services industry or in a weak economic environment, could 

have an adverse effect on middle-market borrowers.

According to 2012 financial disclosures, 52 percent of GECC’s assets were based, and 43 

percent of its revenues were generated, outside of the United States.5 The challenges associated 

with a rapid resolution of a company of GECC’s size, complexity and international operations

could exacerbate the other factors described herein and thus increase the risk that the company’s 

material financial stress could pose a threat to the financial stability of the United States.

The Council has considered potential mitigants that could reduce the potential for material 

financial distress at GECC to be transmitted to other financial firms and markets, including

diversification of GECC’s funding sources, signified in part by a reduction in CP issuance since 

2008, and an improved capital position and liquidity base. The Council also considered the 

potential support that GECC’s parent could provide GECC in the future, depending on GE 

Company’s financial condition at such time. While these and other mitigants may reduce the 

extent to which material financial distress at GECC may be likely to occur, they do not appear to 

significantly reduce the potential that material financial distress at GECC, if it did occur, could 

be transmitted to other companies and markets to a sufficient degree that it could pose a threat to 

U.S. financial stability. 

Based on the Council’s evaluation of all the facts of record in light of the statutory factors that it 

is required to consider under the Dodd-Frank Act, the Council has concluded that material 

financial distress at GECC could cause an impairment of financial intermediation or of financial 

market functioning that would be sufficiently severe to inflict significant damage on the broader 

economy. Therefore, the Council has made a final determination that material financial distress 

at GECC could pose a threat to U.S. financial stability and that GECC should be subject to Board 

of Governors supervision and enhanced prudential standards.

Determination that GECC is Predominantly Engaged in Financial Activities

The Council is authorized to determine that a “nonbank financial company” will be subject to

supervision by the Board of Governors and enhanced prudential standards.6

 A company is a 

nonbank financial company, and thus eligible for a determination by the Council, if it is 

predominantly engaged in financial activities, subject to certain exceptions.

7

 For purposes of 

Title I of the Dodd-Frank Act, a company is “predominantly engaged in financial activities” if at 

least 85 percent of the company’s and its subsidiaries’ annual gross revenues are derived from, or

at least 85 percent of the company’s and its subsidiaries’ consolidated assets are related to, 

“activities that are financial in nature” as defined in section 4(k) of the Bank Holding Company 

 5 GECC Annual Report on Form 10-K for the year ended December 31, 2012, p. 28. 6 See Dodd-Frank Act section 113, 12 U.S.C. § 5323. 7 Dodd-Frank Act section 102(a)(4), 12 U.S.C. § 5311(a)(4). 
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Act (BHC Act).8

 GECC is a nonbank financial company and thus is eligible for a final 

determination by the Council.

Based on GECC’s income statement for year-end 2012, more than 85 percent of GECC’s 

revenues are derived from activities that are financial in nature. In addition, based on GECC’s 

consolidated balance sheet as of year-end 2012, more than 85 percent of GECC’s assets are 

related to activities that are financial in nature. These activities include insurance, lending, 

underwriting and dealing, investing and trading activities, and merchant banking activities. 

The Statutory Standard and the Legal Framework for a Final Determination

Under section 113 of the Dodd-Frank Act, the Council may determine that a nonbank financial

company will be supervised by the Board of Governors and be subject to prudential standards if

the Council determines that (1) material financial distress at the nonbank financial company

could pose a threat to the financial stability of the United States (the First Determination 

Standard) or (2) the nature, scope, size, scale, concentration, interconnectedness, or mix of the

activities of the nonbank financial company could pose a threat to the financial stability of the

United States (the Second Determination Standard).

The Council may subject a nonbank financial company to Board of Governors supervision and 

prudential standards if either the First or Second Determination Standard is met. The Council 

evaluated GECC under the First Determination Standard. 

In considering whether to make a determination that a nonbank financial company shall be 

supervised by the Board of Governors and be subject to enhanced prudential standards, section 

113 of the Dodd-Frank Act requires the Council to consider the following 10 statutory 

considerations:9

1. the extent of the leverage of the company;

2. the extent and nature of the off-balance-sheet exposures of the company;

3. the extent and nature of the transactions and relationships of the company with 

other significant nonbank financial companies and significant bank holding 

companies;

4. the importance of the company as a source of credit for households, businesses, 

and State and local governments and as a source of liquidity for the United States 

financial system;

5. the importance of the company as a source of credit for low-income, minority, or 

underserved communities, and the impact that the failure of such company would 

have on the availability of credit in such communities;

6. the extent to which assets are managed rather than owned by the company, and the

 8 Dodd-Frank Act section 102(a)(6), 12 U.S.C. § 5311(a)(6). The Board of Governors’ Regulation PP describes 

activities that are financial in nature as defined in section 4(k) of the BHC Act and establishes the requirements for 

determining if a company is predominantly engaged in financial activities for purposes of Title I of the Dodd-Frank 

Act. See 78 Fed. Reg. 20756 (April 5, 2013) (to be codified at 12 C.F.R. part 242). 9 The Council may also consider any other risk-related factors that it deems appropriate.
July 8, 2013

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extent to which ownership of assets under management is diffuse;

7. the nature, scope, size, scale, concentration, interconnectedness, and mix of the 

activities of the company;

8. the degree to which the company is already regulated by 1 or more primary 

financial regulatory agencies;

9. the amount and nature of the financial assets of the company; and

10. the amount and types of the liabilities of the company, including the degree of 

reliance on short-term funding.

10

 

In considering whether material financial distress at GECC could pose a threat to U.S. financial 

stability, the Council considered each of the statutory considerations in section 113 of the DoddFrank Act, including the nature, scope, size, scale, concentration, interconnectedness, and mix of 

the activities of GECC. While the Council considered GECC’s activities in evaluating GECC 

under the First Determination Standard, the Council did not consider whether the nature, scope, 

size, scale, concentration, interconnectedness, or mix of GECC’s activities, absent material 

financial distress at GECC, could pose a threat to U.S. financial stability. 

As noted in the Council’s Interpretive Guidance, the Council will consider a “threat to the 

financial stability of the United States” to exist “if there would be an impairment of financial 

intermediation or of financial market functioning that would be sufficiently severe to inflict 

significant damage on the broader economy.” The Interpretive Guidance also states that 

“material financial distress” exists “when a nonbank financial company is in imminent danger of 

insolvency or defaulting on its financial obligations.”

In addition, the Interpretive Guidance states that for purposes of considering whether material 

financial distress at a nonbank financial company could pose a threat to U.S. financial stability, 

the Council intends to assess the impact of the company’s material financial distress “in the 

context of a period of overall stress in the financial services industry and in a weak 

macroeconomic environment.”

Analysis of Potential Effects of Material Financial Distress at GECC

Consideration of Transmission Channels

Consistent with the Dodd-Frank Act and the Interpretive Guidance, the Council evaluated the 

extent to which material financial distress at GECC could be transmitted to other financial firms 

and markets and thereby pose a threat to U.S. financial stability through the following three 

transmission channels: (1) the exposures of creditors, counterparties, investors, and other market 

participants to GECC; (2) the liquidation of assets by GECC, which could trigger a fall in asset 

prices and thereby could significantly disrupt trading or funding in key markets or cause 

significant losses or funding problems for other firms with similar holdings; and (3) the inability 

or unwillingness of GECC to provide a critical function or service relied upon by market 

participants and for which there are no ready substitutes. In evaluating whether material 

financial distress at GECC could be transmitted to other firms and markets through the 

 10 See Dodd-Frank Act section 113(a)(2), 12 U.S.C. § 5323(a)(2). 
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transmission channels to a degree that could cause a broader impairment of financial 

intermediation or of financial market functioning, the Council has considered the statutory 

factors set forth in section 113 of the Dodd-Frank Act. 

Exposure Channel

A nonbank financial company’s creditors, counterparties, investors, or other market participants 

have exposure to the nonbank financial company that is significant enough to materially impair 

those creditors, counterparties, investors, or other market participants and thereby pose a threat 

to U.S. financial stability.

In evaluating the potential threat that material financial distress at GECC could pose to U.S. 

financial stability through the exposure channel, the Council has considered the exposures of 

GECC’s creditors, counterparties, investors, and other market participants to GECC.

11 GECC is

highly dependent on wholesale funding, including through its use of wholesale short-term 

funding, particularly CP, and use of long-term debt and securitization debt, which exposes other 

large financial institutions to GECC. GECC also has off-balance-sheet exposures to other large 

financial institutions through its derivatives activities and maintenance of credit lines with other 

large financial institutions. In addition, there is approximately $77 billion12 in gross notional 

credit default swaps outstanding for which GECC is the reference entity. 

The on- and off-balance sheet exposures of large financial institutions to GECC expose those 

companies to material financial distress at GECC, which could serve as a mechanism by which 

material financial distress at GECC could be transmitted to those firms and to financial markets 

more broadly. For example, if GECC were to experience material financial distress and default 

on its obligations, its default could cause losses to large financial institutions with exposure to 

GECC, which could impair the ability of those firms, as well as GECC, to serve as financial 

intermediaries. In addition to the impairment from material financial distress at GECC, 

simultaneous losses to several large financial intermediaries could impair financial 

intermediation or financial market functioning that could be sufficiently severe to significantly 

impair the broader economy. The aggregate exposures of large financial institutions to GECC 

could lead to contagion effects and serve as a mechanism by which material financial distress at 

GECC could be transmitted to financial markets more broadly. 

 11 The Council has considered the extent of GECC’s leverage (Dodd-Frank Act section 113(a)(2)(A), 12 U.S.C. § 

5323(a)(2)(A)); the extent and nature of its off-balance sheet exposures (Dodd-Frank Act section 113(a)(2)(B), 12 

U.S.C. § 5323(a)(2)(B)); the extent and nature of GECC’s transactions and relationships with other significant 

nonbank financial companies and significant bank holding companies (Dodd-Frank Act section 113(a)(2)(C), 12 

U.S.C. § 5323(a)(2)(C)); the amount and nature of the financial assets of GECC (Dodd-Frank Act section 

113(a)(2)(I), 12 U.S.C. § 5323(a)(2)(I)); the amount and types of GECC’s liabilities, including the degree of 

GECC’s reliance on short-term funding (Dodd-Frank Act section 113(a)(2)(J), 12 U.S.C. § 5323(a)(2)(J)); and the 

nature, scope, size, scale, concentration, interconnectedness, and mix of the activities of GECC (Dodd-Frank Act 

section 113(a)(2)(G), 12 U.S.C. § 5323(a)(2)(G)).

12 See Depository Trust & Clearing Corporation, Table 6 as of December 29, 2012, 

http://www.dtcc.com/products/derivserv/data/index.php.
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The Council considered GECC’s indirect interconnections to other large financial institutions in 

evaluating the potential for material financial distress at GECC to pose a threat to U.S. financial 

stability. In the event of material financial distress at GECC, particularly during times of 

economic stress, investors might assume that other large financial institutions have exposure to 

GECC. This could cause a loss of investor confidence in those institutions and lead investors 

and counterparties to reduce their exposure to those institutions generally. It may also result in 

an increase in the cost of credit or a decrease in credit availability. A simultaneous reduction in 

credit or a significant sale of assets by several large financial institutions could impair financial 

intermediation or financial market functioning. Any of these effects could significantly impair 

the broader economy.

The Council has considered the exposure of MMFs, a significant source of funding for the 

financial system, to GECC in evaluating the potential for material financial distress at GECC to 

pose a threat to U.S. financial stability. Significant purchasers of GECC’s CP include MMFs

and asset managers. If GECC were to experience material financial distress, numerous MMFs 

could be at risk of “breaking the buck,” which could lead to a run on MMFs and a broader 

withdrawal of investments from the CP market and other short-term funding markets generally. 

This would affect pension funds, municipalities, consumers, and others that rely on the liquidity 

of MMFs and pose substantial risks to the broader economy. Moreover, because large, global 

banks fund themselves in part through short-term funding markets, a withdrawal of funding from 

those markets could impair those firms’ ability to serve as financial intermediaries, thereby 

transmitting financial distress to other firms and financial markets more broadly. Material 

financial distress at GECC could pose a threat to U.S. financial stability even if the purchasers of 

GECC’s CP were not MMFs. Investors in CP markets may quickly withdraw their investments 

from the CP market and other short-term funding markets if a large CP issuer, such as GECC, 

were to fail to meet its CP obligations. 

Asset Liquidation Channel

A nonbank financial company holds assets that, if liquidated quickly, would cause a fall in asset 

prices and thereby significantly disrupt trading or funding in key markets or cause significant 

losses or funding problems for other firms with similar holdings.

In evaluating the potential threat that material financial distress at GECC could pose to U.S. 

financial stability through the asset liquidation channel, the Council has considered the extent to 

which GECC holds financial assets that, if liquidated quickly, could significantly disrupt 

financial markets or the broader economy.13 

 13 The Council has considered the extent of GECC’s leverage (Dodd-Frank Act section 113(a)(2)(A), 12 U.S.C. § 

5323(a)(2)(A)); the extent to which assets are managed rather than owned by the company, and the extent to which

ownership of assets under management is diffuse (Dodd-Frank Act section 113(a)(2)(F), 12 U.S.C. § 

5323(a)(2)(F)); the amount and nature of the financial assets of GECC (Dodd-Frank Act section 113(a)(2)(I), 12 

U.S.C. § 5323(a)(2)(I)); the amount and types of GECC’s liabilities, including the degree of GECC’s reliance on 

short-term funding (Dodd-Frank Act section 113(a)(2)(J), 12 U.S.C. § 5323(a)(2)(J)); and the nature, scope, size, 

scale, concentration, interconnectedness, and mix of the activities of GECC (Dodd-Frank Act section 113(a)(2)(G), 

12 U.S.C. § 5323(a)(2)(G)).
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The Council has considered the potential effects on other large financial firms of GECC’s asset 

fire sales based on the size, leverage, asset composition, and the liquidity of GECC’s assets. As 

of the fourth quarter of 2012, GECC had $539 billion in total consolidated assets, the majority of 

which are owned by GECC.14 GECC owns diverse assets, including equity and debt investments 

that it could sell if it were to experience material financial distress. GECC also securitizes 

financial assets and arranges other forms of asset-backed financing as a source of funding for the 

commercial and consumer assets that it originates.15 GECC holds a large portfolio of assets 

comparable to those of the largest U.S. BHCs. If GECC were to experience material financial 

distress and could no longer access the wholesale funding markets, GECC could be forced to sell 

assets quickly to fund its operations and meet its obligations. A rapid liquidation of GECC’s 

assets could depress the value of similar assets held broadly in the economy, including by other 

large financial firms. The result could lead those companies and other owners of these assets to 

sell assets at fire-sale prices and become subject to financial distress themselves. This could 

result in reduced credit availability, potentially constraining economic growth more broadly. 

Furthermore, GECC’s significant reliance on wholesale funding renders its operations vulnerable 

to distress in the wholesale funding markets, which could result in a reduction in credit GECC 

provides or in GECC having to sell assets. 

Critical Function or Service Channel

A nonbank financial company is no longer able or willing to provide a critical function or 

service that is relied upon by market participants and for which there are no ready substitutes.

In evaluating the potential threat that material financial distress at GECC could pose to U.S. 

financial stability through the critical function or service channel, the Council has considered the 

extent to which GECC provides a critical function or service that is relied upon by market 

participants and for which there are no ready substitutes, the Council has considered public and 

regulatory data and information provided by GECC.16

As discussed above, GECC is a significant source of credit to the U.S. economy, providing 

financing to both commercial and consumer customers. GECC is an important participant in the 

areas of (1) middle market commercial lending and leasing, (2) consumer revolving credit, and 

(3) aviation financing. GECC operates in competitive markets where existing substitutes likely 

could replace GECC’s capacity under normal economic conditions given sufficient time and 

 14 It does not appear that GECC engages in third-party asset management activities. 15 As of December 31, 2012, GECC had $30 billion of securitizations outstanding (consolidated non-recourse 

borrowings), representing approximately 8 percent of its overall funding. GECC Annual Report on Form 10-K for 

the year ended December 31, 2012, p. 90.

16 The Council has considered the importance of GECC as a source of credit for households, businesses, and State

and local governments and as a source of liquidity for the United States financial system (Dodd-Frank Act section 

113(a)(2)(D), 12 U.S.C. § 5323(a)(2)(D)); the importance of GECC as a source of credit for low-income, minority, 

or underserved communities, and the impact that the failure of such company would have on the availability of 

credit in such communities (Dodd-Frank Act section 113(a)(2)(E), 12 U.S.C. § 5323(a)(2)(E)); and the nature, 

scope, size, scale, concentration, interconnectedness, and mix of the activities of GECC (Dodd-Frank Act section 

113(a)(2)(G), 12 U.S.C. § 5323(a)(2)(G)). 
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resources. However, given the breadth of GECC’s role in providing credit, it is less certain that 

competitors could, in a more adverse economic environment, quickly replace GECC’s market 

share in some of the submarkets in which GECC is a key credit provider. Based on all the facts 

of record, the Council has determined that material financial distress at GECC that limited its 

ability to continue to provide credit in these markets, particularly during a period of financial 

distress, could have an adverse effect on borrowers in those markets.

However, GECC does not appear to be an important source of credit for low-income, minority, 

or underserved communities. Therefore, it is unlikely that material financial distress at GECC 

would have a significant impact on the availability of credit in those communities.

Existing Supervision and Regulation

In considering whether to make a final determination that GECC could pose a threat to U.S. 

financial stability and should be subject to Board of Governors supervision and enhanced 

prudential standards, the Council has considered the degree to which GECC is already regulated 

by one or more primary financial regulatory agencies, as required by section 113 of the DoddFrank Act.17

GECC is subject to consolidated supervision by the Board of Governors as a grandfathered 

unitary SLHC that is permitted to engage in commercial activities. The Board of Governors

became the appropriate federal banking agency for GECC on July 21, 2011, when authority over 

SLHCs was transferred to the Board of Governors from the Office of Thrift Supervision.

The Board of Governors has asserted its intention, to the greatest extent possible taking into 

account any unique characteristics of SLHCs and the requirements of the Home Owners’ Loan 

Act, to assess the condition, performance, and activities of SLHCs on a consolidated risk-based 

basis in a manner that is consistent with the Board of Governors’ established risk-based approach 

regarding BHC supervision. Absent a determination by the Council regarding GECC, however, 

GECC would not be subject to the enhanced prudential standards required under sections 165 

and 166 of the Dodd-Frank Act because these standards do not apply to SLHCs unless the Board 

of Governors separately applies these requirements to SLHCs. Furthermore, it is possible that in 

the future, certain companies may no longer be subject to the Board of Governors’ authority if 

they successfully deregister as SLHCs. For example, if GECC were to deregister as an SLHC, 

even though its subsidiaries would remain subject to other regulatory regimes, the Board of 

Governors would no longer act as its consolidated supervisor.

A final determination by the Council under section 113 of the Dodd-Frank Act will allow the 

Board of Governors to apply a number of new requirements to GECC. These include enhanced 

prudential standards required by sections 165 and 166 of the Dodd-Frank Act, which, among 

other things, will require the company to: (1) meet enhanced liquidity and capital standards; 

(2) undergo and report periodic stress tests; (3) adopt enhanced risk-management processes; 

(4) submit a resolution plan providing for its rapid and orderly resolution in the event of its 

material financial distress or failure; and (5) provide for the early remediation of financial 

 17 See Dodd-Frank Act section 113(a)(2)(H), 12 U.S.C. § 5323(a)(2)(H). 
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distress at the company. The enhanced prudential standards required by section 165 of the 

Dodd-Frank Act are in addition to the authority that the Board of Governors now has to 

supervise and regulate SLHCs under the Home Owners’ Loan Act and are for the purpose of 

“prevent[ing] or mitigat[ing] risks to the financial stability of the United States that could arise 

from the material financial distress, failure, or ongoing activities of large, interconnected 

financial institutions.” In addition, the Board of Governors would have additional authorities 

with respect to the review of any proposals by GECC to expand its size or scope. 

GECC’s U.S. depository institution subsidiaries are federally regulated. The Federal Deposit 

Insurance Corporation (FDIC) regulates GE Capital Bank (GECB), and the Office of the 

Comptroller of the Currency (OCC) regulates GE Capital Retail Bank (GECRB). GECC has a 

substantial number of prudentially regulated foreign subsidiaries primarily engaged in financial 

activities. GECC’s non-U.S. operations are subject to regulation in their respective jurisdictions.

In the United States, GECC’s lending activities are subject to a variety of federal and state 

regulations including, at the federal level, the Consumer Credit Protection Act, the Equal Credit 

Opportunity Act, the Truth in Lending Act, and certain regulations issued by the Federal Trade 

Commission. Its insurance activities in the United States are regulated by various state insurance 

commissioners, and its insurance activities abroad are regulated by non-U.S. regulatory 

authorities.

Resolvability 

In considering whether to make a final determination that material financial distress at GECC 

could pose a threat to U.S. financial stability and that the company should be subject to Board of 

Governors supervision and enhanced prudential standards, the Council has considered whether 

the threat that material financial distress at GECC could pose to U.S. financial stability could be 

mitigated or aggravated by its complexity, the opacity of its operations, or its difficulty to

resolve, consistent with the Interpretive Guidance. The Council has evaluated GECC’s 

resolvability in light of all the facts of record. “Resolvability” refers to the ease or difficulty of 

successfully separating and liquidating, or otherwise disposing of, the company if it should fail. 

GECC is a complex and interconnected organization with many legal entities and operations in 

numerous states and countries, presenting challenges to a rapid and orderly resolution. These

interstate and cross-border complexities, given the absence of a global resolution framework,

increase the risk that material financial distress at GECC, if it were to occur, could pose a threat 

to the financial stability of the United States and significantly decrease the likelihood of 

preserving its franchise value in a recovery or resolution scenario.

A number of other factors could further complicate a resolution, including intercompany funding 

and shared service arrangements. Based on all the facts of record, including information 

provided by GECC, the Council has determined that GECC’s resolvability could aggravate the

potential for GECC’s material financial distress to pose a threat to U.S. financial stability.
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As noted above, a Council determination regarding GECC under section 113 of the Dodd-Frank 

Act will allow the Board of Governors to apply a number of new requirements to GECC, 

including a requirement that GECC submit a resolution plan providing for its rapid and orderly 

resolution in the event of its material financial distress or failure. While a company’s resolution 

can be complicated by its complexity, the opacity of its operations, or other exacerbating factors, 

the Council believes that no firm should be protected from its own failure, and these statutory 

tools enable regulators to facilitate the orderly liquidation of a company.

Evaluation of Statutory Considerations

The following discussion describes and summarizes the Council’s consideration of each of the 

statutory considerations in evaluating whether material financial distress at GECC could be 

transmitted through one or more of the transmission channels to other financial firms and 

markets to such a degree that there would be an impairment of financial intermediation or of 

financial market functioning sufficiently severe to inflict significant damage on the broader 

economy.

The Council has considered the extent of the leverage of a nonbank financial company. 

GECC’s relatively low leverage ratio of total consolidated assets to total equity and its capital 

position could serve as mitigants to the potential transmission of material financial distress at 

GECC to other firms and markets via the exposure channel. While GECC’s efforts to strengthen 

its capital position could reduce the extent to which the negative effects of material financial 

distress at GECC could be transmitted to other firms and markets, GECC’s strengthened capital 

position does not appear to be sufficient to eliminate the potential that material financial distress 

at GECC could be transmitted to other companies and markets. In addition, in evaluating the 

potential for material financial distress at GECC to be transmitted to financial firms and markets 

via the asset liquidation channel, the Council considered the potential effects on other large 

financial firms of GECC’s asset fire sales based on the size, leverage, asset composition, and the 

liquidity of GECC’s assets. GECC is not as leveraged as some other large financial companies, 

which could, all things equal, reduce the amount of assets that GECC may be required to sell at 

fire sale prices. However, because GECC holds assets similar to those of large banks, the fire 

sale of those assets could impose losses on those banks. 

The Council also has considered the extent and nature of GECC’s off-balance-sheet exposures. 

The Council has considered the extent to which GECC has on-balance-sheet exposures (CP, 

unsecured long-term debt, and securitization debt) and off-balance-sheet exposures (derivatives 

and credit lines) to other large financial institutions and the significance of those institutions in 

financial markets. The on- and off-balance sheet exposures of other large financial institutions to 

GECC expose those financial institutions to material financial distress at GECC, if it should 

occur. 

The Council has considered the extent and nature of the transactions and relationships of 

GECC with other significant nonbank financial companies and significant bank holding 
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companies.

18 GECC engages in various transactions with other large financial institutions, 

including derivatives transactions. GECC maintained committed lines of credit of approximately 

$50 billion with numerous large financial institutions as a source of liquidity.19 The Council has 

considered the holdings of GECC’s outstanding CP and long-term debt by other significant 

nonbank financial companies and significant bank holdings companies and the role of those 

companies in financial markets. The exposures of large financial institutions to GECC could 

serve as a mechanism by which material financial distress at GECC could be transmitted to those 

firms and to financial markets more broadly.

The Council also has considered the importance of GECC as a source of credit for households, 

businesses, and State and local governments and as a source of liquidity for the United States

financial system. GECC provides credit to households, businesses, and state and local 

governments primarily through its commercial and consumer lending activities. In particular, 

GECC participates in (1) middle market commercial lending and leasing, (2) consumer revolving 

credit and (3) aviation financing. Based on the facts of record, GECC does not appear to be a 

provider of significant trading liquidity to the U.S. financial system. 

The Council has considered the importance of GECC as a source of credit for low-income, 

minority, or underserved communities, and the impact that the failure of such company would 

have on the availability of credit in such communities. The Council has considered the extent 

to which GECC provides some credit to low-income, minority and underserved community 

market segments, including through its subsidiary depository institutions. GECRB and GECB

are subject to the Community Reinvestment Act (CRA). Both of these institutions meet their 

CRA obligations by engaging in community development activities. However, based on the 

facts of record, GECC does not appear to be an important source of credit for low-income, 

minority, or underserved communities; therefore, it is unlikely that material financial distress at 

GECC would have a significant impact on the availability of credit in those communities.

The Council has considered the extent to which GECC’s assets are managed rather than owned 

by the company and its subsidiaries, and the extent to which ownership of assets under 

management is diffuse. The relevance of this consideration to GECC is limited because it does 

not appear that GECC engages in third-party asset management. As of the fourth quarter of 

2012, GECC had $539 billion in total consolidated assets, the majority of which are owned by 

GECC. 

 18 The Dodd-Frank Act directs the Board of Governors to adopt a rule to define “significant nonbank financial 

company” and “significant bank holding company.” Dodd-Frank Act section 102(a)(7), 12 U.S.C. § 5311(a)(7). On 

April 3, 2013, the Board of Governors approved a final rule defining these terms (78 Fed. Reg. 20756 (April 5, 

2013), to be codified at 12 C.F.R. part 242). The rule defines a “significant nonbank financial company” as (1) any 

nonbank financial company supervised by the Board of Governors; and (2) any other nonbank financial company 

that had $50 billion or more in total consolidated assets as of the end of its most recently completed fiscal year. The 

rule defines a “significant bank holding company” as “any bank holding company or company that is, or is treated in 

the United States as, a bank holding company, that had $50 billion or more in total consolidated assets as of the end 

of the most recently completed calendar year.” 19 GECC Annual Report on Form 10-K for the year ended December 31, 2012, p. 42.
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The Council has considered the nature, scope, size, scale, concentration, interconnectedness, 

and mix of the activities of GECC. GECC’s funding model, including its reliance on wholesale, 

short-term funding, could transmit material financial distress at GECC to the broader economy. 

For example, GECC has approximately $43 billion of CP outstanding.20 Material financial 

distress at GECC also could lead investors to conclude that other CP issuers were also in distress, 

leading them to decrease CP investments generally, which could impair financial market 

functioning and financial intermediation. Additionally, the Council has considered the extent to 

which other financial firms and markets are interconnected with GECC, including through the 

purchase of GECC’s CP and long-term debt and the provision of backup lines of credit to GECC. 

The interconnections between GECC and other financial firms, including large global banks, 

large nonbank financial companies, and MMFs, expose those banks and financial companies to 

material financial distress at GECC, which could serve as a mechanism by which material 

financial distress at GECC could be transmitted to those firms and to financial markets more 

broadly. 

The Council has considered the degree to which GECC is already regulated by one or more

primary financial regulatory agencies. As discussed above, GECC is subject to consolidated 

supervision by the Board of Governors as a grandfathered unitary SLHC that is permitted to 

engage in commercial activities. GECC’s U.S. depository institution subsidiaries are federally 

regulated. The FDIC regulates GECB, and the OCC regulates GECRB. In addition, GECC has 

certain prudentially regulated foreign subsidiaries primarily engaged in financial activities. 

GECC’s non-U.S. operations also are subject to regulation in their respective jurisdictions. Its 

insurance activities in the United States are regulated by various state insurance authorities, and 

its insurance activities outside the United States are regulated by non-U.S. regulatory authorities.

The Council also has considered the amount and nature of the financial assets of the company. 

GECC owns diverse assets, including equity and debt investments that it could sell if it were to 

experience material financial distress. GECC also securitizes financial assets and arranges other 

forms of asset-backed financing as a source of funding for the commercial and consumer assets 

that it originates. As of December 31, 2012, GECC had $30 billion of securitizations 

outstanding (consolidated non-recourse borrowings), representing approximately 8 percent of its 

overall funding.21 A potential collapse of securitization markets could affect GECC’s ability to 

use this funding source. 

The Council has considered the amount and types of GECC’s liabilities, including the degree of

GECC’s reliance on short-term funding. GECC’s total liabilities as of December 31, 2012, 

totaled $457 billion, and are largely composed of the following:

• $43 billion of commercial paper;

• $9 billion of other short-term borrowings;

• $44 billion of current portion of long-term debt;

• $225 billion of long-term unsecured debt; 

 20 GECC Annual Report on Form 10-K for the year ended December 31, 2012, p. 90. 21 Id.
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• $30 billion of non-recourse asset-backed securities and collateralized borrowings; and

• $46 billion of worldwide deposits.22

The Council has considered the extent to which GECC is interconnected with large BHCs and 

nonbank financial companies through its reliance on wholesale funding, including its CP and its 

unsecured long-term debt. In addition, large banks have exposure to GECC through the 

provision of backup lines of credit to GECC. In addition, the Council has considered the 

exposure of MMFs to GECC through the purchase of GECC’s CP. A default by GECC on its 

debt could cause certain funds to “break the buck” (depending on their holdings at the time) and 

trigger a run on MMFs. This could lead investors to decrease investments in CP and other shortterm funding markets generally, which could impair the provision of credit by other financial 

institutions that obtain funding in those markets, as well as financial market functioning and 

financial intermediation more broadly.

Conclusion

The Council has made a final determination that material financial distress at GECC could pose a 

threat to the financial stability of the United States and that GECC should be supervised by the 

Board of Governors and be subject to enhanced prudential standards.

 22 GECC Annual Report on Form 10-K for the year ended December 31, 2012, pp. 59 and 90.