GE Capital, AIG will not appeal US risk panel systemic tag


GE Capital and American International Group Inc both signaled on Tuesday that they will not appeal a proposal by the new U.S. risk council to designate them as systemically important, a tag that will subject the companies to tougher regulations.

Their decision comes just one day before the end of a 30-day window for the companies to notify regulators on the Financial Stability Oversight Council whether they intended to legally challenge the designation.

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"We have strong capital and liquidity positions and we are already supervised by the Fed. Accordingly, we have decided not to appeal or ask for a hearing," said Russell Wilkerson, a spokesman for GE Capital, the financial services arm of General Electric.

"We have been and will be prepared to meet the requirements for SIFIs (Systemically Important Financial Institutions)."

A spokesman for AIG was less direct in his statement that the company will not appeal, saying AIG "welcomes supervision by the Federal Reserve, and is already working closely with the Federal Reserve Bank of New York."

The Financial Stability Oversight Council is a new panel of regulators created by the 2010 Dodd-Frank reform law.

Chaired by the Treasury Secretary, its membership is comprised of the country's top federal banking and financial market regulators.

The panel looks for systemic risks in the marketplace. It has the power to classify large firms whose failure could threaten financial markets as "SIFIs," a tag that will trigger additional scrutiny by the Federal Reserve.

The FSOC notified GE Capital, AIG and Prudential Financial Inc that it proposed designating them for stricter oversight last month.

The companies disclosed the FSOC's actions because they are publicly traded, but the FSOC itself is not allowed to reveal company identities until the process is completed.

A spokesman for Prudential declined immediate comment on Tuesday about the company's decision whether to accept the proposed designation or to challenge it.

Previously, the company's vice chairman told investors during an earnings call in May that Prudential does not believe the company meets the standards to be deemed a SIFI.

Under the law, a company can request a hearing if it has concerns about the proposed designations.

If a hearing is requested, the FSOC has 30 days to hold one and another 60 days to make a final decision on designations.