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Home>U.S. Rescinds Federal Oversight of AIG -- Update

U.S. Rescinds Federal Oversight of AIG -- Update

U.S. Rescinds Federal Oversight of AIG -- Update

09/30/2017

 By Leslie Scism and Ryan Tracy 

WASHINGTON -- U.S. officials voted Friday to remove federal oversight of American International Group Inc., an insurance company now about half the size it was when it was on the brink of collapse and became a poster child of the global financial crisis.

The Financial Stability Oversight Council, a group of senior financial regulators, voted 6-3 to rescind the global insurer's designation as a "systemically important financial institution," indicating they no longer view AIG as a threat to the broader economy.

The move frees the insurance company of stricter oversight by the federal government, such as tighter capital rules, federal approval for large mergers and placement of government examiners at the firm. Many of the rules for insurance companies have yet to be written.

The council applied the label to AIG in July 2013 and previously had affirmed its findings annually. This year, regulators appointed by President Donald Trump reversed course, pushed along by new leaders at AIG who were more aggressive about disputing the systemically important tag.

"This action demonstrates our commitment to act decisively to remove any designation if a company does not pose a threat to financial stability," Treasury Secretary Steven Mnuchin said in a statement.

Two Obama-era appointees, Federal Reserve Chairwoman Janet Yellen and Roy Woodall, the council's insurance expert, joined four Trump appointees in approving the action. Three Obama appointees opposed the move. Securities and Exchange Commission Chairman Jay Clayton recused himself.

Ms. Yellen declined to comment through a spokesman.

AIG "has changed dramatically since the start of the financial crisis," said National Credit Union Administration Chairman Mark McWatters, a council member who voted in favor of removing the label. "It's time to let them go back to traditional insurance regulators."

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