Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Treasury: AIG and GE Capital Potential Threats to U.S. Economy

The Treasury's Financial Stability Oversight Council announced today that AIG (NYSE: AIG  ) and General Electric's (NYSE: GE  ) GE Capital have been designated as the first two nonbank financial companies to pose a potential threat to U.S. financial stability.

"These designations will help protect the financial system and broader economy from the types of risks that contributed to the financial crisis," said Treasury Secretary and FSOC Chairperson Jacob Lew in a statement today. "The Council will continue to review additional companies in the designations process, to address remaining threats to financial stability."

In making its decision, the council didn't examine the actual financial stability of either company, but rather the potential widespread economic ramifications from any "material financial distress."

For AIG (link opens a PDF), the FSOC pointed to its size, interconnectedness, and relative liquidity as warning signs for a potential larger economic effect.

For GE Capital (link opens a PDF), its connection with financial intermediaries via its role as a significant global economic player pointed to potential trouble.

Although this latest designation has no direct effect on either corporation's financial standing or investment rating, both will now be subject to supervision by the Board of Governors, as well as "enhanced prudential standards."

Read/Post Comments (1) | Recommend This Article (5)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On July 10, 2013, at 7:56 PM, jbrt wrote:

    And they somehow did it without " examining the financial stability of either company " .... how did they do it ? ... Flip a Coin , Heads or Tails ?

Add your comment.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2531256, ~/Articles/ArticleHandler.aspx, 9/29/2016 6:28:12 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,143.45 -195.79 -1.07%
S&P 500 2,151.13 -20.24 -0.93%
NASD 5,269.15 -49.39 -0.93%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/29/2016 4:00 PM
AIG $58.40 Down -1.10 -1.85%
American Internati… CAPS Rating: ****
GE $29.53 Down -0.37 -1.24%
General Electric CAPS Rating: ****