General Electric Capital (GER) could skirt strict new financial regulations if lawmakers adopt a measure relaxing proposed restrictions on companies’ finance arms. 

Rep. Jim Himes (D-CT), has proposed allowing companies to continue “lending to customers of the industrial parent,” according to an outline of the amendment.

“The Himes amendment would both ensure compliance with these new holding company regulations and preserve the lending functions that are critical to key industries,” said the outline.

“It would save the fundamental business practice of GE Capital” in lending to its customers to finance its business, said Karen Petrou, president of Federal Financial Analytics. 

As of September 30, GE Capital had $658 billion in assets.  If it were a stand-alone financial firm it would be the seventh-largest behind Morgan Stanley (MS) and ahead of MetLife (MET).  Both are bank-holding companies and would be subject to new regulatory standards under Treasury’s proposal.

Under Treasury and Congressional proposals, GE Capital would likely be classified as an “intermediate holding company,” and would be forced to restrict lending to customers to boost sales at its industrial counterparts.  The proposals would eliminate “most lending to both an industrial parent and its customers by its financial affiliate,” according to an outline of the Himes amendment. 

Himes’ proposal would allow the finance arm to lend to the industrial parent “as long as in arms-length transactions.” Since the Congressman has only circulated an outline, the definition of “arms-length” is unclear, but it appears to mirror current law, which allows financing and commerce to mix.

Some analysts said they like the amendment’s chances. It is “hard to believe Congress is going to force manufacturers to get rid of their finance arms,” said Bert Ely, president of bank consulting firm Ely & Company.

GE Capital declined to comment. Rep. Himes did not return requests to clarify the details of his amendment.