New York Regulator Says AIG Securities Lending Losses Manageable

March 5, 2009

The securities lending unit of American International Group Inc. was being successfully wound down and had manageable losses if not for the firm’s massive credit default swap exposure, New York Insurance Superintendent Eric Dinallo said Thursday.

Dinallo told lawmakers that AIG’s financial products unit, which had written about $440 billion in CDS, should have been subject to more and better regulation.

“Without the crisis caused by Financial Products, there is no reason to believe there would have been a run on the securities lending program,” Dinallo told the Senate Banking Committee in prepared remarks. “We would have continued to work with AIG to unwind its program and any losses would have been manageable.”

(Reporting by Karey Wutkowski, editing by Gerald E. McCormick)

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