GE Unit Asks to Convert Its Bank to S & L

WASHINGTON — General Electric Co.’s giant financial unit has asked for permission to convert its state-chartered credit card bank to a federal savings and loan, the Office of Thrift Supervision said Wednesday.

GE’s application marks the latest foray into banking by financial services companies prohibited from owning federal commercial banks. Any company may own a single savings and loan.

Although Depression-era U.S. laws remain in force separating banking from other financial services, courts and regulators have exploited a variety of loopholes in the statutes to permit some mixing.

Last month, the OTS approved an application from insurance and securities behemoth Travelers Group to operate a thrift and several more major insurers have requests pending.

General Electric Capital Corp. said in its application dated Dec. 23 that a federal thrift charter would allow the bank, GE Capital Consumer Card Co., to offer a wider array of banking services.

If approved, the new thrift would also benefit from the OTS’ ability to preempt various state laws that apply to GE’s Ohio-based bank, the company said in the application.

Thrifts are required to keep most of their assets in mortgage-related lending under the “Qualified Thrift Lender” test, but recent legislation broadened the definition of acceptable assets.

GE said it could meet the thrift-lender test in its credit card bank without restructuring the mix of assets.

The OTS approval process could take a few weeks, or much longer if GE’s application raised novel issues of law or policy for the agency.

Congress this year considered legislation to overhaul U.S. banking laws and eliminate the separate federal charter for savings and loans.

But any company that owned a savings and loan or had an application pending with the OTS would have been allowed to continue operations under a grandfather clause. Also, insurers would have been allowed to own banks under the proposal.

The legislation failed to pass but is expected to come up again next year. GE shares were unchanged at $71.06 on the New York Stock Exchange.