The American International Group is no longer under the classification of “too big to fail.” This comes after federal regulators voted for the move. This means that the company is no longer under the tough government oversight. This vote was passed on Friday. Nine years ago, AIG was rescued by the American government from a financial meltdown. This case acted as an example of how the financial industry can suffer from recklessness. With the prospects of a near collapse, the insurance company has sold some of its businesses and has also revamped its operations significantly. At the same time, the company has managed to pay the $182 billion that was offered to the company as a bailout by the federal government. The government recommended an investigation to prevent such crisis in the future. This led to the rise of the Dodd-Frank law of 2010. With this law, regulators were given the power to designate some nonbank financial institutions as systematically important. This meant that such institutions could not be allowed to fail because of the havoc that they would send to the financial market. Regulators are given powers and jurisdiction to regularly intensive supervision. On their part, these companies have fought this move with some like AIG arguing that they are no longer big enough to be given this classification.
AIG fell into this classification alongside other three institutions. Under the Dodd-Frank classification, banks that had assets over $50 billion were subjected to the same level of scrutiny. The vote to remove AIG from the designation was conducted by the Financial Stability Oversight Council. This process was led by Treasury Secretary Steven Mnuchin, and the council passed the decision in a 6-3 vote. For an institution to be removed from the oversight, a two-thirds majority is required. The three votes against the move came from regulators who had been appointed by the Obama administration. Some of the people who supported the deregulation include Federal Reserve chairwoman Janet Yellen and Treasury Secretary Mr. Mnuchin. Mr. Mnuchin later released a statement saying that the decision portrayed the decision by the federal government to set free an institution that no longer poses threats to financial stability. At the same time, experts say that this is a move by the Trump administration to relax financial oversight on major companies. This is a move that has been criticized by opponents who argue that it could pose future problems.