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Home>U.S. Rescinds Federal Oversight of AIG -- 3rd Update

U.S. Rescinds Federal Oversight of AIG -- 3rd Update

U.S. Rescinds Federal Oversight of AIG -- 3rd 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 move is one of the most tangible steps yet in the Trump administration's push to re-evaluate financial regulations, which has included a top-to-bottom review of rules put in place in response to the crisis. Friday's 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.

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 action came earlier than many analysts expected. Although the Trump administration has recommended dozens of changes to financial rules, it has taken action incrementally, in part because of the slow pace of installing personnel at key regulators.

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 practical impact of Friday's action was limited because many of the Federal Reserve's 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.

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