GE and other manufacturers back exemption in financial regulation bill

By Jia Lynn Yang

A last-minute fight has emerged over a proposed amendment to the Senate’s financial regulation bill that would limit the government’s power to address high-risk financial practices at companies if their main business is manufacturing. The amendment, which the Senate might vote on early this week, could make it difficult for federal regulators to address threats to the global financial system posed by such companies as the industrial giant General Electric, which extends tens of billions of dollars a year in customer loans through a subsidiary. In recent days, GE and other manufacturers have ramped up their efforts to draw attention to how the Senate legislation affects industrial companies. GE has been discussing its concerns with other manufacturers, trade associations, lawmakers and their staff, a company spokesman said. GE spokesman Russell Wilkerson said that the company is ready for GE Capital to face stricter regulation but that the parent company should not fall under the authority of the oversight council because GE is primarily commercial. If the Federal Reserve began regulating GE’s non-banking ventures — by adding capital requirements or limiting risk — the firm’s business costs could rise significantly, he said. GE is not lobbying for Vitter’s amendment, Wilkerson said, but is seeking to educate lawmakers. Karen Petrou, managing partner of Federal Financial Analytics, offered a similar concern. “It’s an ugly fate,” she said. “The framework is not designed for non-financial companies.”