Published: Wednesday, 22 Jul 2009 | 9:12 AM ET

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General Electric has received approval to stop issuing short-term commercial paper backed by a U.S. government program set up to keep markets operating during the worst of last fall's credit crisis.

The largest U.S. conglomerate said Wednesday it will stop issuing the short-term debt backed by the Temporary Liquidity Guarantee Program, and the Federal Deposit Insurance Corp would lower its available limit under the program to $75 billion from $126 billion.

"They have already gotten the benefit out of the program and this indicates a sign of confidence from the company about its funding needs for next year,'' said Steven Winoker, senior analyst at Bernstein Research. "Why subject yourself to the negative image of ... a government program, as well as the uncertainty of whether the program will be extended?''

The TLGP program is due to expire in October.

The news comes as GE Capital's smaller rival CIT Group

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[CIT  Loading...      ()   ] flirts with bankruptcy and GE management faces the threat the Obama administration's proposed overhaul of the U.S. financial regulatory system could force it to spin off the finance arm, which has businesses ranging from investing in commercial real estate to financing sales of heavy equipment made by its parent.

The Fairfield, Connecticut-based company, which has seen its results weighed down by troubles at GE Capital for more than a year, has issued about $51 billion of long-term debt under the TLGP program, spokeswoman Anne Eisele said. Since November, it has issued about $12 billion in nongovernment backed debt.

"This is a clear indication by the FDIC,'' said Nick Heymann, analyst with Sterne Agee & Leach, on Reuters Television. "If there was any question about the fact their current program ... will be extended, it is now no longer going to be extended.''

GE

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[GE  Loading...      ()   ] (GE is the parent company of CNBC & CNBC.com) has already raised all the money it anticipates needing from debt investors for the year and is about 45 percent of the way toward its 2010 target. Chief Executive Jeff Immelt told investors Friday the company expects to meet all its 2010 debt funding needs by the end of this year.

It also said it has reduced its commercial paper balance from more than $100 billion in 2008 to $50 billion at the end of the second quarter of 2009—six months earlier than it had expected—and increased its cash balance to more than $50 billion.

The TLGP is set to expire in the fall, and an investor meeting to review the financial condition of GE Capital is scheduled for Tuesday.

"Today's plan to exit from TLGP affirms the strength of GE Capital's funding and liquidity position, including reduced reliance on government funding programs and our ability to access nonguaranteed debt markets,'' GE Treasurer Kathryn Cassidy said in a statement.

GE said that as a result of the FDIC decision to clear GE Capital's exit from the program, it will no longer issue government-guaranteed short-term debt and will be able to issue nonguaranteed long-term debt with maturities of up to three years.

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