Fed asks: How do you regulate a nonbank like GE Capital?

WASHINGTON (MarketWatch) — Like the Reverend Mother in the Sound of Music who asked “how do you solve a problem like Maria,” the Federal Reserve is asking the public how it should regulate a nonbank like GE Capital.

The Fed invited comment Tuesday on its plan to regulate and supervise General Electric Co.’s GE, -0.52%   financing arm.

GE Capital is only one of a handful of nonbanks that have been designated as “systemically important” by the Financial Stability Oversight Council. This designation subjects the firm to greater oversight and stricter capital and leverage standards.

The Fed said that its prudential standards to GE Capital are “generally similar” to those that apply to large bank holding companies.

There are additional independence requirements for GE Capital’s board of directors and restrictions on intercompany transactions between GE Capital and its parent.

Read on.

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