BUSINESS

AIG CEO Robert Benmosche: 'Too Big To Fail Has Been Solved'

Robert Benmosche, chief executive officer of American International Group Inc. (AIG), speaks at the Standard & Poor's 29th An
Robert Benmosche, chief executive officer of American International Group Inc. (AIG), speaks at the Standard & Poor's 29th Annual Insurance Conference in New York, U.S., on Wednesday, June 5, 2013. Standard & Poor?s Ratings Services Annual Insurance Conference brings together company executives and investment/credit professionals to share perspectives and analysis of current trends and issues in the insurance industry. Photographer: Peter Foley/Bloomberg via Getty Images

Americans shouldn’t be worried about the nation’s biggest financial institutions sinking the economy any more, according to Robert Benmosche, the CEO of bailed-out insurance giant AIG.

“I believe 'too big to fail' has been solved,” Benmosche told the Wall Street Journal in a wide-ranging interview published Friday. He said that's because regulators and the financial firms themselves have put controls in place to prevent bankers and traders from taking the same types of risks they took in the lead-up to the financial crisis.

Despite Benmosche’s confidence, a variety of factors indicate that the problem isn’t over yet. The country's largest banks are bigger than they were before the crisis. Some senators, including Sen. Elizabeth Warren (D-Mass.), are so concerned that banks are still receiving government subsidies because of the perception that the government won’t let them fail that they're urging the Treasury Department to study the issue, according to Bloomberg.

Even Treasury Secretary Jack Lew acknowledged in July that the belief remains prevalent when he said, "If we get to the end of this year and we cannot, with an honest, straight face, say that we have ended too-big-to-fail, we are going to have to look at other options.”

Benmosche’s comments are interesting given that his firm was one of the major beneficiaries of the "too big to fail" mentality during the crisis. The government bailed out AIG to the tune of $182 billion at the height of the crash in September 2008, as deteriorating mortgage-backed securities threatened to take the firm down, and the economy with it.

But Benmosche wasn’t heading AIG during the bailout, and under his leadership the company has since paid back taxpayers' money. For his troubles, Benmosche got a 24 percent pay boost, pushing his take to $13 million this year, according to a separate Bloomberg report.

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