American International Group (AIG) is now officially regulated as one of the first two non-banks designated as a systemically important financial institution (SIFI).
The Financial Stability Oversight Council (FSOC) officially announced late Monday that it had so designated AIG and GE Capital as SIFIs in a statement issued by Jacob Lew, Treasury secretary and FSOC chairman.
The statement also said that Prudential Financial had appealed such a designation and that the FSOC will hold a closed hearing to hear Pru’s appeal within 30 days.
However, the designation is in some ways a formality because AIG has been under consolidated supervision of the Federal Reserve Bank of New York as a savings and loan holding company since last August, when it fell below the threshold of having more than 50 percent of its stock owned by the government.
The FSOC designation will bring with it higher standards than mandated for thrift holding companies.
These will include capital standards and other prudential standards, higher liquidity requirements, tighter risk management, concentration limits and a requirement that it create a “living will,” a process for liquidating the company if it faces solvency problems.