GE 2014 Annual Report Download - page 137

GE 2014 FORM 10-K 117
RISK FACTORS
event the provision is not extended after 2014, the current U.S. tax imposed on active financial services income earned
outside the United States would increase, making it more difficult for U.S. financial services companies to compete in global
markets. If this provision is not extended, we expect our effective tax rate to increase significantly after 2015. In addition,
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, including as a result of GECC’s designation as a nonbank systemically important
financial institution (nonbank SIFI), which subjects us to increased and evolving regulatory requirements.
GECC is a regulated savings and loan holding company and in 2011 became subject to Federal Reserve Board (FRB)
supervision under the DFA. In 2013, the U.S. Financial Stability Oversight Council (FSOC) designated GECC as a nonbank
SIFI under the DFA. As a result of this change in supervision and designation, stricter prudential regulatory standards and
supervision apply to GECC. On November 25, 2014 the FRB proposed for comment enhanced prudential standards that
would apply to GECC as a nonbank SIFI. This proposal would, among other items, require GECC to comply with rules on
capital and liquidity adequacy that apply to large bank holding companies, market terms requirements for intercompany
transactions and enhanced risk management and governance requirements. In addition, while GECC’s capital adequacy as a
savings and loan holding company, including planned capital distributions such as dividend payments, is currently subject to
review by the FRB, the proposed standards would apply stress testing and capital planning requirements to GECC under the
FRB’s more formal comprehensive capital analysis and review (CCAR) regulations. The comment period for the proposed
standards closed on February 2, 2015, and the exact application of the proposed standards will not be known until after the
final rule is published. For additional information, see the Regulations and Supervision and Liquidity and Borrowings sections
of this Form 10-K Report.
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. 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, fines and penalties or the
assertion of private litigation claims and damages. Additionally, we and our subsidiaries are involved in a number of
remediation actions to clean up hazardous wastes as required by federal and state laws. These include the dredging of
polychlorinated biphenyls from a 40-mile stretch of the upper Hudson River in New York State, as described in the
Environmental Matters section of this Form 10-K Report. We are also subject to certain other legal proceedings described in
the Legal Proceedings section of this Form 10-K Report. While we believe that we have adopted appropriate risk management
and compliance programs, the global and diverse nature of our operations, including operations of businesses we have
recently acquired, means that legal and compliance risks will continue to exist and additional legal proceedings and other
contingencies, the outcome of which cannot be predicted with certainty, will arise from time to time.