AIG not too big to fail, a victory for CEO Icahn

American International Group Inc is no longer too big to fail. That was the ruling Friday from the Financial Stability Oversight Council, which said AIG, whose collapse in 2008 reverberated throughout the US economy, was no longer a systemically important financial institution.

“This action demonstrates our commitment to act decisively to remove any designation if a company does not pose a threat to financial stability,” Treasury Secretary Steven Mnuchin, a member of the FSOC, said in the statement. The risk council voted 6-3 to make the change, with Federal Reserve Chair Janet Yellen supporting it alongside several of the newer regulators appointed by President Donald Trump.

The decision frees the New York-based insurer from the threat of morestringent capital rules. The firm was at the centre of the crisis, when its investing blunders led to a government bailout of $182.3 billion (Dh669 billion). AIG repaid the rescue, turning away from its infamous derivatives portfolio that contributed to the carnage.

The ruling for AIG was a win for activist investor Carl Icahn, who has pushed for ending the designation since taking a stake in the insurer two years ago, and for Brian Duperreault, who took over as chief executive officer in May.

Icahn announced his departure as a special regulatory adviser to Trump in August after questions were raised about potential conflicts of interest with his business dealings.