The independent overseer of the Troubled Asset Relief Program said in a new report today that it is essential going forward that American International Group have a federal consolidated regulator.
The comments by Christy L. Romero, special inspector general for the TARP program, were made in the Office’s quarterly report.
She said in the report that if AIG decides to sell its thrift, which brings with it regulation by the Federal Reserve Board, then it certainly should be designated as systemically significant, which would also mandate Fed regulation.
The SIGTARP report notes that AIG confirmed Oct. 2 in a regulatory filing that it is under consideration as a so-called SIFI. Romero said in the report that this is a “positive step.”
And, in a comment following the report, a spokesman for AIG said it agreed that AIG should be federally regulated.
Romero said in the report that AIG should have come under federal regulation when the government’s stake in the company dropped below 50 percent in September because it owns a saving and loan, and is therefore subject to consolidated federal regulation by the Federal Reserve Board as a savings and loan holding company.
However, she noted that Robert Benmosche, president and CEO “plans to sell the [company’s] thrift.”
Should that sale happen, she said, there would once again be no banking regulator over AIG’s financial business, which continues outside the bank.
“Taxpayers still on the hook for billions of dollars for their TARP investment in AIG deserve to have strong regulation of AIG, whether AIG keeps or sells the bank,” Romero said in the report.