October 02, 2017
Statement of Chair Janet L. Yellen on the Financial Stability Oversight Council's decision to rescind the designation of American International Group (AIG) as a systemic nonbank financial company
For immediate release
Statement of Chair Janet L. Yellen on the Financial Stability Oversight Council's decision to rescind the designation of American International Group (AIG) as a systemic nonbank financial company:
The financial crisis showed that the distress of large and systemic nonbank financial companies could imperil the financial stability of the United States, ultimately putting the American economy at risk. The Dodd-Frank Act gave regulators new tools to address this problem and they acted sensibly in the wake of the crisis to designate AIG for additional supervisory measures.
Since the financial crisis, AIG has largely sold off or wound down its capital markets businesses, and has become a smaller firm that poses less of a threat to financial stability. For example, it has reduced its assets by more than $500 billion, wound down its Financial Products division, and sold off its mortgage insurance company. Although AIG's distress could lead to a run by policyholders on a portion of its annuities and other insurance products, the financial system should be able to handle the potential fire sales.
It is important to continue to monitor large nonbank financial firms to ensure that, should they encounter distress, the functioning of the broader economy is not threatened. The possibility of de-designation provides an incentive for designated firms to significantly reduce their systemic footprint.
For media inquiries, call 202-452-2955.