• / Free eNewsletters & Magazine
  • / My Account
Home>U.S. Rescinds Federal Oversight of AIG -- 2nd Update

U.S. Rescinds Federal Oversight of AIG -- 2nd Update

U.S. Rescinds Federal Oversight of AIG -- 2nd 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.

AIG Chief Executive Brian Duperreault said in a statement that the council's "decision reflects the substantial and successful de-risking that AIG's employees have achieved since 2008. The company is committed to continued vigilant risk management and to working closely with our numerous regulators to enable a strong AIG to continue to serve our clients."

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.

©2017 Morningstar Advisor. All right reserved.