SIGTARP: It’s essential AIG have a regulator

"Taxpayers need to be protected against the potential impact of any future AIG financial distress on the broader economy based on AIG's size, as one of the largest insurance companies in the world, and interconnectedness," she said.

She said SIGTARP recommended that the Treasury (which has an ownership interest in AIG through TARP) and the Federal Reserve (which currently regulates AIG) recommend to the Financial Stability Oversight Council that AIG be designated systemically important under Dodd-Frank [financial services reform law], "which if approved would provide the strongest regulation available."

In a comment to the National Underwriter, James Ankner, an AIG spokesman, said, "At AIG we have always been supportive of regulatory oversight by the Federal Reserve. We expect that oversight to continue."

In a comment letter to the federal regulators earlier this week on the agencies' outline of the metrics it would follow in regulating insurance companies which operate savings and loan holding companies, said the proposed rules are an "important step" in defining the regulatory capital framework intended for U.S. banking organizations, including certain U.S. institutions predominantly engaged in insurance-related activities, like AIG.

It suggested transition rules, asked that the rules be adjusted to reflect the fact that the insurance subsidiaries of insurance companies are already subject to strong state oversight, and that should be reflected in the rules governing consolidation regulation of insurance companies which operate thrifts.

"For these institutions, the proposed rules do not merely represent a change in regulatory capital requirements and supporting infrastructure, but rather an entirely new framework for assessing capital," AIG said in its comment letter. "This is particularly true for those SLHCs predominantly engaged in insurance-related activities that have spent decades investing in infrastructure that supports global regulatory capital frameworks for insurance companies.

It also suggested some changes in the capital and other rules that will be used by regulators to oversee mortgage insurers, including its United Guaranty subsidiary. In that area, it voices deep concerns of the potential consequences of limiting banks from recognizing mortgage insurance for the purpose of evaluating the loan-to-value ratio of a mortgage.