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On
Friday, the Financial Stability Oversight Council, comprising
the chiefs of U.S. financial regulatory agencies, will discuss
AIG's designation as a "systemically important financial
institution," commonly known as one that is "too big to fail."
In an agenda for the meeting, the council did not say which
institution it will discuss.
However, there are only two non-banks designated as so large and
interconnected that they would ruin the financial system if they
failed - AIG and Prudential Insurance <PRU.N>. The labels
trigger stricter oversight and greater capital requirements.
Trump has ordered a review of the designation process, currently
at the heart of a lawsuit involving MetLife Inc. <MET.N>, which
many expect will lead his administration to rescind the current
designations to try to lighten regulation it considers
burdensome.
In a letter to U.S. Treasury Secretary Steve Mnuchin, Senators
Elizabeth Warren and Sheldon Whitehouse said Icahn has retained
"his massive business interests" while advising Trump on
regulation, including his sizable investment in AIG <AIG.N>.
AIG company received a $182 billion taxpayer bailout during the
2007-09 financial crisis, which prompted Congress to call for
the designations of non-banks in the Dodd-Frank Wall Street
reform law as systemically important.
Icahn owned a 4.95 percent stake in AIG as of March 31.
Concerned about compliance costs, Icahn had publicly pressed AIG
to shrink, and tried to convince the FSOC that AIG no longer
qualified for the label. Recently though, after AIG sold some
assets and appointed a new chief executive, Icahn has not pushed
the issue further.
Senators Warren and Whitehouse also noted Icahn met with one
current FSOC member, Securities and Exchange Commission (SEC)
Chair Jay Clayton, after Clayton was nominated for the position.
"Given Mr. Icahn's recent modification of his position on the
breakup of AIG, and his past interactions with administration
officials, we write to seek assurances that Mr. Icahn has not
provided input on or received information on the pending FSOC
decision on AIG's SIFI status," they said.
The two senators asked about any FSOC measures to ensure
individuals with an interest in its decisions do not
inappropriately influence its members. They also asked if any
members are subject to recusal on AIG because of interactions
with Icahn, and about any staff-level conversations regarding
Icahn's investments.
AIG declined to comment, and the White House and Treasury did
not respond to requests for comment.
(Reporting by Lisa Lambert)
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