1. Yellen Said Her Vote to Free AIG Was Based on Firm’s Changes

    Yellen Said Her Vote to Free AIG Was Based on Firm’s Changes

    Federal Reserve Chair Janet Yellen said freeing American International Group Inc. from the tight scrutiny tied to its too-big-to-fail label is an example of the process working properly -- proving that a systemically important financial institution can make itself less risky...

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    1. AIG has largely sold off or wound down its capital markets businesses, and has become a smaller firm that poses less of a threat.
    2. I am concerned that by picking institutions from among similarly situated competitors within the same industry and labeling one systemically important and not the other, we may adversely affect the competitive environment in unfair and arbitrary ways.
    3. AIG remains a large, complex, highly interconnected global organization.
    4. AIG did become smaller as a result of those tragic events, not because it did so on a planned or conscious basis, but simply because its business model blew up.
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