Sandbox - AIG

  • 2:15:28 - Carolyn Maloney:  bad regulatory decision?
  • - Liddy: yes
    • all life insurance companies would have been in trouble... asset markets

  • [PDF - 380p
  • Edward Libby testified about operations and business practices at American International Group (AIG) before, during, and after federal intervention.
  • 2:38:50-END
  • 2:40 - Carolyn Maloney:  problem with life insurance? Federal Reserve Funds used for AIG Life Insurance Division?
  • Liddy:  Yes, Regulated and Solvent, Created a hole.  Plugged the Hole with Federal Reserve Funds.  18-20 Billion

AIG Collapse and Rescue, Liddy Testimony

Mrs. BIGGERT. Thank you, Mr. Chairman, and thank you, Mr.
Secretary, for being here.

  • Which regulator dropped the ball with regard to AIG?
  • Which regulator was in charge of regulating AIG FP, which is the AIG division that engaged in the nonexistent risk management of its credit default swaps trading and led to its near collapse?
  • Were State insurance regulators in charge of that, or was it the Federal holding company regulator of the OTS?

Secretary GEITHNER.

  • I do not believe there was any competent authority that was responsible and accountable for the broad consolidated entities of that very complicated global system.
  • Now, you are right to say that the OTS did have some—somewhat broader responsibilities alongside of the States, but I do not believe that their authority extended to the type of comprehensive oversight that obviously would have been—was necessary.  (p24)


  • Who is regulating AIG right now?
  • Earlier this morning, the TARP Special Inspector General issued a pretty damning report about AIG oversight. (p24)


  • AIG
  • Mcraith, Woodall
  • 39:-- Cleaver - what was the problem with AIG?  What happened?
    • 40:00 - Ben Nelson - weren't problems with the Insurance operations - all solvent, because they were regulated by the states.  Problem - Holding company,  Savings and Loan Thrift.  "Not an insurance failure in any sense."
    • 41:30 - Woodall - Not an Insurance Company problem.  Trigger - Financial Products Group.  
    • 41:50  - Cleaver - AIG Board said they wanted to sue Congress for bailing them out.  <Reputational Risk>
    • Ross  - SIFI, IAIS
      • to Woodall - Why aren't you on IAIS?

Ben Nelson - Promises to policyholders need to be kept. Solvency. PBR. Captives

2013 0613 - GOV - The Impact of International Regulatory Standards