The American International Group, Inc. (NYSE:AIG) revealed today that the federal government is considering  the company as “too big to fail”, and it expects the possibility of an increased regulatory oversight.

According to AIG, the Financial Stability Council sent a notice informing the insurance company that it is considered to be delegated as a “systematically important financial institution” under the Dodd-Frank Wall Street Reform and Protection Act.

American International Group

The notice stated that American International Group, Inc. (NYSE:AIG) is under the third stage review of the Council for nonbank financial company determination.

The Financial Stability Council has the authority to determine which financial and nonfinancial institutions are too big, and could damage the financial stability of the United States in case of financial difficulties.

Last September, the Treasury Department completed the sale  of its American International Group, Inc. (NYSE:AIG) holdings worth $20.7 billion, lowering its stake in the company to 15.9 percent from 92 percent. The Federal government prevented the collapse of the insurance company, by providing $182 billion in bailout money.

The Treasury Department recovered $197.4 billion from the sales of its AIG holdings. The Federal government still owns 234 million shares in the insurance company. This means the taxpayers benefited from the government’s decision to save AIG.

In his previous statement, Treasury Secretary Timothy Geithner said, “Keeping AIG afloat was something the government should never have had to do, but we had no better option at the time to protect the American economy from the damage that would have been caused by the company’s collapse”

Since the government is no longer a majority stakeholder, the Federal Reserve will serve as the main regulator for the insurance company, if it’s designated as a “systematically important financial institution.”

Earlier in September, analysts from Wells Fargo Securities noted that American International Group, Inc. (NYSE:AIG) continues to progress in meeting its goals, particularly the payment of its financial obligation to the Treasury Department, while reducing the Treasury’s stake in the company.

American International Group, Inc. (NYSE:AIG) is one of the largest insurance companies, serving customers in more than 130 countries around the world. It is the leading provider of life insurance and retirement services in the United States.

The stock value of  American International Group, Inc. (NYSE:AIG) is up by 0.84 percent to $33.53 per share during the midday trading at the New York Stock Exchange on Tuesday.