GE 2015 Annual Report Download - page 148

RISK FACTORS
120 GE 2015 FORM 10-K
Regulatory - We are subject to a wide variety of laws, regulations and government policies that may change in significant
ways.
Our businesses are subject to regulation under a wide variety of U.S. federal and state and non-U.S. laws, regulations and policies.
There can be no assurance that laws, regulations and policies will not be changed in ways that will require us to modify our business
models and objectives or affect our returns on investments by restricting existing activities and products, subjecting them to escalating
costs or prohibiting them outright. In particular, substantial revisions that U.S. and non-U.S. governments are undertaking or
considering in areas such as the regulation and supervision of bank and non-bank financial institutions, consumer lending, foreign
exchange intervention in response to currency volatility, trade controls, the over-the-counter derivatives market and tax laws and
regulations may have an effect on *(¶V GE &DSLWDO¶V or other regulated VXEVLGLDULHV¶ structure, operations, sales, liquidity, capital
requirements, effective tax rate and performance. For example, efforts by public and private sectors to control the growth of healthcare
costs may lead to lower reimbursements and increased utilization controls related to the use of our products by healthcare providers.
Continued government scrutiny, including reviews of the U.S. Food and Drug Administration (U.S. FDA) medical device pre-market
authorization and post-market surveillance processes, may impact the requirements for marketing our products and slow our ability to
introduce new products, resulting in an adverse impact on our business. Furthermore, we have been, and expect to continue,
participating in U.S. and international governmental programs, which require us to comply with strict governmental regulations. Inability
to comply with these regulations could adversely affect our status in these projects and adversely affect our results of operations,
financial position and cash flows.
Dodd-Frank - Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, we are subject to prudential oversight
by the Federal Reserve, as a result of GE Capital¶V designation as a nonbank systemically important financial institution
(nonbank SIFI), which subjects us to increased and evolving regulatory requirements.
GE Capital is a nonbank SIFI and as a result is subject to Federal Reserve Board (FRB) supervision. On July 20, 2015 the FRB
published a final order that applies enhanced prudential standards to GE Capital as a nonbank SIFI. The final order staggers the
application of the enhanced prudential standards with the first set of standards becoming applicable on January 1, 2016 and the second
set becoming applicable on January 1, 2018. Under the standards applicable on January 1, 2016 GE Capital became subject to the
)5%¶V capital adequacy framework using the standardized approach to calculate risk-weighted assets, as well as to the maintenance of
a 90% liquidity coverage ratio until December 31, 2016 and a 100% ratio thereafter. If GE Capital is still a nonbank SIFI on January
1, 2018 the second set of enhanced prudential standards will apply. These standards would include stress testing and capital planning
requirements under the )5%¶V more formal comprehensive capital analysis and review (CCAR) regulations, enhanced leverage ratio
requirements, enhanced governance requirements, daily liquidity calculations, additional reporting requirements and a market terms
requirement for transactions between GE and GE Capital. GE Capital plans to file an application with the FSOC in early 2016 to
terminate the )62&¶V designation of GE Capital as a nonbank SIFI, but the timeline for the FSOC to act on the application will be
uncertain and a favorable FSOC decision is not assured. Until the FSOC approves the termination of GE &DSLWDO¶V designation as a
nonbank SIFI, GE Capital will remain subject to regulatory requirements and, depending on the timing of favorable FSOC action, may
need to delay planned cost reductions and potential capital distributions.
Legal proceedings - We are subject to legal proceedings and legal compliance risks.
We are subject to a variety of legal proceedings and legal compliance risks in virtually every part of the world, including the matters
described in the Legal Proceedings section. We, our representatives, and the industries in which we operate are subject to continuing
scrutiny by regulators and other governmental authorities, which may, in certain circumstances, lead to enforcement actions, changes
in business practices, fines and penalties or the assertion of private litigation claims and damages. Since closing our acquisition of
$OVWRP¶V Thermal, Renewables and Grid businesses in November 2015, we are also subject to legal proceedings and legal compliance
risks in connection with legacy matters involving those businesses that were previously outside our control and that we are now
independently assessing. In addition to commercial disputes arising in the ordinary course of business, there are Alstom legacy matters
in a number of jurisdictions that include alleged anti-competitive activities or improper payments. Although the alleged conduct predated
our acquisition of the relevant Alstom businesses, we may nevertheless be held liable for fines, judgments or settlements in connection
with currently pending or future proceedings. Additionally, we and our subsidiaries are subject to remedial actions to clean up
contaminated sites as required by federal and state laws, such as the dredging of a stretch of the upper Hudson River in New York
State that we completed in 2015 and anticipated remediation for a stretch of the Housatonic River in Massachusetts, as described in
the Environmental Matters section. While we believe that we have adopted appropriate risk management and compliance programs,
the global and diverse nature of our operations and the current enforcement environment mean that legal and compliance risks will
continue to exist with respect to our continuing and discontinued operations, and additional legal proceedings and other contingencies,
the outcome of which cannot be predicted with certainty, will arise from time to time.
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