WASHINGTON — GE Capital has formally asked the Financial Stability Oversight Council to review and rescind its designation as a systemically important financial institution, setting in motion a highly anticipated process that has not yet been tried by a designated firm.

In a press statement accompanying the application, which was submitted to the interagency council on Thursday, GE Capital Chairman and Chief Executive Keith Sherin said that the firm has substantially reduced the financial holdings that form the basis of the FSOC's 2013 designation.

"Our submission details the complete transformation of GE Capital. Our plan to change our business model, shrink the company and reduce our risk profile has been successful," Sherin said. "We have completed over 80% of our projected asset reductions; exited leveraged lending and U.S. consumer lending; exited nearly all middle market lending; reduced real estate debt by more than 75% and real estate equity by 100%; and reduced outstanding commercial paper almost 90%."

The firm, one of only four nonbanks to be designated as systemically risky by the interagency council, announced last April that it would actively reduce its financial holdings specifically to shed its SIFI designation. In that time, the company has successfully negotiated the sale of its online deposits to Goldman Sachs — a deal that was approved by the Fed in March — and spun off its credit card subsidiary Synchrony Financial last July.

GE Capital, which accepted billions in bailouts during the financial crisis and was one of the first nonbanks to be designated as a SIFI, said in its application that it is a "smaller, simpler company" than it was a few years ago, holding roughly $265 billion in assets as opposed to more than $549 billion in 2012. Of those remaining assets, it says, $77 billion are in cash or cash-like investments, $35 billion are in investments "related to run-off insurance activities," and of the remaining assets only roughly $50 billion are located inside the U.S.

The application comes a day after a federal court struck down the FSOC's most recent designation of the insurance giant MetLife, a surprise victory for the company that could lead other designated firms — namely American International Group and Prudential — to follow suit. Neither AIG nor Prudential was willing to comment on the ruling, but AIG's chief executive, Peter Hancock, said on CNBC Thursday morning that the MetLife ruling "certainly opens that opportunity" to de-designate, "but we want to reserve judgment" until after the ruling is unsealed and the appeals process has played out.

A source close to GE Capital said that Thursday's application coming after Wednesday's court ruling was coincidental.

Critics of the FSOC in Congress and elsewhere have criticized the council as being unnecessarily vague in explaining what exactly a company would have to do to shed a designation once it has been assigned, and how the council approaches GE Capital's application will draw significant scrutiny. The stakes are somewhat heightened since the Fed has laid out a set of capital and supervisory rules that GE Capital would have to comply with by Jan. 1, 2018, unless it sheds its designation. The Fed has not yet published enhanced prudential rules for the insurance SIFIs.

FSOC in late 2014 revised its internal guidance for nonbank SIFI designation, including how the de-designation process would proceed. The revised guidance envisions an annual reconsideration of designated nonbank SIFIs, as well as a deeper dive into the status of designated nonbanks every five years. Treasury Secretary Jack Lew, who chairs FSOC, said during testimony before the House Financial Services Committee March 22 that the despite lawmakers' concerns, there is a process for rescinding designation.

"There is an annual review and if a company sheds risk and comes in for review on an annual basis — that is the way to get de-designated and we look forward to seeing applications that reflect that kind of change," Lew said.

A Treasury spokesman said Thursday that FSOC's designation authority is a "critical tool" of Dodd-Frank and that the council "welcomes" the opportunity to review GE's designation, but that decision should not call into question the validity of the designation authority or the FSOC's designation process.

"Before the financial crisis, some of the largest, riskiest nonbank financial companies were not subject to adequate oversight," the spokesman said. "Congress passed Wall Street Reform and created the Council to make the system safer and stronger by closing those regulatory gaps and fostering accountability for the stability of the financial system as a whole. The Council will continue to act within its authority to protect the U.S. economy."

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