U.S. Says A.I.G. Is No Longer ‘Too Big to Fail’ 9 Years After Bailout

A.I.G. was one of four nonbank institutions classified as systemically important. Under Dodd-Frank, banks with more than $50 billion in assets are automatically subject to similar levels of heightened regulation.

The Financial Stability Oversight Council, a group of regulators led by Treasury Secretary Steven Mnuchin, voted 6 to 3 to release A.I.G. from the designation. A two-thirds majority of the council’s voting members is required to remove the label.

Among those supporting the change were Mr. Mnuchin and Janet Yellen, chairwoman of the Federal Reserve. Three regulators who were appointed by President Barack Obama voted against relieving A.I.G. of the systemically important designation.

Mr. Mnuchin said in a statement that the removal of A.I.G.’s “too big to fail” label “demonstrates our commitment to act decisively to remove any designation if a company does not pose a threat to financial stability.”

The government’s action is the latest step by the Trump administration to relax the oversight of major companies. President Trump and his advisers have argued that excessive regulation is stifling the economy, though critics argue that the broad regulatory rollback will set the stage for future problems.

After Friday’s vote, Prudential Financial, an insurance company, is the only nonbank to carry the “systemically important” label.

The financial arm of General Electric won the removal of the designation last summer after shedding billions of dollars in assets. The insurer MetLife won a case in Federal District Court last spring to have its “too-big-to-fail” label deleted. The Treasury Department under Mr. Obama appealed the MetLife ruling, and that case is still pending, although it has been postponed until the Treasury Department completes a report examining the designation process. That report is expected next month.

Brian Duperreault, A.I.G.’s president and chief executive, said in a statement: “The council’s decision reflects the substantial and successful de-risking that A.I.G.’s employees have achieved since 2008.”

In a statement, Prudential called on Friday for the government to “rescind our designation” as systemically important, saying the current situation creates “an unbalanced playing field.”

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Source: New York Times



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