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Feds ask AIG for more resolution plan details

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Federal regulators have asked American International Group Inc. and two other companies to provide more information about their resolution plans.

In a joint statement issued Tuesday, the Federal Reserve Board and the Federal Deposit Insurance Corp said that they had “provided feedback to three nonbank financial companies regarding their initial resolution plans and guidance to the firms for their upcoming filings.” The agencies noted that the Dodd-Frank Wall Street Reform and Consumer Protection Act requires that bank holding companies with total consolidated assets of $50 billion or more and nonbank financial companies designated by the Financial Stability Oversight Council as systemically important periodically submit resolution plans to the FDIC and the Federal Reserve.

“Each plan must describe the company’s strategy for rapid and orderly resolution under the U.S. Bankruptcy Code or other applicable insolvency regime in the event of material financial distress or failure of the company,” said the regulators.

AIG, Prudential Financial Inc., and General Electric Capital Corp. filed initial resolution plans in July 2014. The three companies will submit their second versions of their resolution plans by Dec. 31, the agencies said.

“The agencies tailored their feedback to account for each company's unique business, structure, and operations,” said the Fed and the FDIC in their statement. “In addition to the specific guidance given to each company, the letters include some common areas that the firms should address.” These included the need for more detailed information on, and analysis of, obstacles to resolvability, including global cooperation, interconnectedness, and adequate funding and liquidity.

“Further, the agencies instructed the firms to describe in their resolution plans the progress they are making, and the steps remaining, to be more resolvable,” said the statement. “Finally, the agencies directed the firms to strengthen the public portions of the firms’ upcoming resolution plans.”

Representatives for the Fed and the FDIC declined to elaborate on what specific steps AIG has been told to take, and a spokesman for AIG declined to comment.

AIG and Prudential are two of three insurers deemed to be systemically important financial institutions by FSOC. The third — MetLife Inc. — is challenging its designation in court, but no date has been set for argument.