GE opposes Obama's bank separation plan

BOSTON: General Electric objects to elements of US President Barack Obama���s financial-system overhaul that analysts said may force the parent company to cleave away its GE Capital finance unit. ���It���s a proposal,��� General Counsel Brackett Denniston said.

���We���re opposed to it. The financial crisis had nothing to do with the fact that some institutions, many institutions, had banking and non-banking activities.��� GE supports Obama���s plan for a broad regulator to monitor systemic risk, he said.

The proposals released June 17, which contain no reference to GE, would expand federal oversight to ���large, interconnected��� companies whose potential failure one day might threaten the entire financial system. Such changes may force GE Capital to become a bank holding company and separate from the parent, said Adam Steer, an analyst at CreditSights.



���If the proposal was enacted under the current form, we believe GE could be forced to divest its ownership in GE Capital in order to avoid converting��� to a bank-holding company, said Steer, who is based in New York.

GE owns the world���s biggest makers of jet engines, power-plant turbines, locomotives, medical imaging equipment and NBC Universal. GE Capital has an industrial loan bank and a thrift charter in the US. The Obama plan would call for industrial loan banks to come under Fed supervision. ���We don���t intend to voluntarily give up those charters,��� said Denniston, 61.

���A systemic regulator makes a lot of sense because there was a lack of responsibility for the overall system���s health in the regulatory structure.��� The Fairfield, Connecticut-based parent company and GE Capital have remained profitable throughout the credit crisis and the longest recession in half a century.