American International Group Inc. (AIG) and General Electric Co.’s finance unit were designated systemically important in a vote by U.S. regulators, a ruling the companies had already agreed to accept.
The vote by the Financial Stability Oversight Council subjects AIG and GE Capital to heightened Federal Reserve oversight, the Treasury Department said in a statement today in Washington. The council, or FSOC, proposed the designations of the two companies and Prudential Financial Inc. (PRU) on June 3 and gave the companies 30 days to appeal. AIG and GE Capital said last week they wouldn’t contest the designations, while Prudential said it will.
“The council has taken a decisive step to address threats to U.S. financial stability and create a safer and more resilient financial system,” Treasury Secretary Jacob J. Lew, the council’s chairman, said in the statement. “These designations will help protect the financial system and broader economy from the types of risks that contributed to the financial crisis.”
The council will “continue to review additional companies in the designations process,” Lew said.
The vote completes the first designations of systemically important companies by the council, which was created by the 2010 Dodd-Frank financial overhaul law to prevent another crisis. The panel has 10 voting members and includes Fed Chairman Ben S. Bernanke.
The FSOC determined that “material financial distress” at AIG and GE Capital “could pose a threat to U.S. financial stability,” the Treasury said in the statement. “This does not constitute a determination that the company is currently experiencing material financial distress.”
To contact the reporter on this story: Ian Katz in Washington at email@example.com
To contact the editor responsible for this story: Chris Wellisz at firstname.lastname@example.org