Insurance company AIG and commercial finance firm GE Capital have become the first non-banking firms to be designated “systematically important” by the US Treasury, meaning they will be subject to greater government oversight and have to meet tougher capital requirements (release).
The Financial Stability Oversight Council gives the status to firms considered large enough that their failure could destabilise the financial system – but does not mean they are facing any kind of financial distress.
A statement from AIG said that it “did not contest this designation and welcomes it”, while GE Capital said it had “been prepared for this”, has “strong capital and liquidity positions, and we are already supervised by the Fed”.
AIG has already been subject to a $182bn federal bailout, and the Council’s report said the firm’s life insurance and retirement investment products have "features that could make them vulnerable to rapid and early withdrawals by policyholders".
After years of meticulous research and pain-staking calculations, U.S. regulators have determined that AIG is indeed too big to fail.— Pedro da Costa (@pdacosta) July 10, 2013