Center for American Progress

AIG is no longer too big to fail and taxpayers deserve to know why
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AIG is no longer too big to fail and taxpayers deserve to know why

Author Gregg Gelzinis explains why the decision to de-designate AIG as systemically important erodes the credibility of the FSOC under the leadership of Treasury Secretary Steven Mnuchin.

This month, the Financial Stability Oversight Council (FSOC) voted to remove the systemically important financial institution (SIFI) label from American International Group, which means AIG will no longer be subject to enhanced regulation and oversight by the Federal Reserve. While the Center for American Progress strongly believes that material stress at AIG would threaten financial stability, reasonable policy observers can disagree on the substance of the FSOC’s decision. But no reasonable observer should think that the process surrounding the decision was acceptable.

There are several troubling elements to this decision that erode the credibility of FSOC under the leadership of Treasury Secretary Steven Mnuchin. First, the council’s own transparency policy calls for public notice of meetings no less than seven days in advance of the meeting. The Sept. 29 meeting at which AIG was de-designated was publicly announced at 4:00 P.M. on Sept. 28, less than 24 hours prior to the meeting. This meeting was not called to address some imminent threat to financial stability or an emergency in the markets. Mnuchin owes an explanation to the public as to why the transparency policy was violated in this instance.

The above excerpt was originally published in The Hill. Click here to view the full article.

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Gregg Gelzinis

Associate Director