The Federal Reserve Board is on the case.

And the days when insurance company officials can shoot first and aim later are going to end, AIG CEO Robert Benmosche subtly warned the insurance industry Tuesday.

The CEO spoke to Maria Bartiromo, anchor of the CNBC “Newsmakers” program, just 24 hours after the Financial Stability Oversight Council designated AIG as one of the first two insurance companies to be federally regulated.

Benmosche said AIG has been preparing for federal regulation for months, and “we're well on our way.”

“We've been preparing for it, as we've said, over the last year-and-a-half, so it's not even the last few months,” he said. “So this has been a long preparation time and the Fed has been with us now since September of last year” when government ownership of the AIG fell below 50 percent and the Fed began regulating its thrift, which is based in Wilton, Conn.

In his remarks, Benmosche implied that federal oversight is a fait accompli for insurers in general, not just AIG.

“The Fed is going to put in a banking discipline, and that is they want things to be done exactly what your policies are; what your procedures are; how you demonstrate you're following your procedures,” Benmosche said. “So, they're going to bring us to a whole new level of discipline around policies, procedures and auditing what we do and accomplish.”

Benmosche said the difference between banks and insurers is, ”Banks are very particular about reconciling and balancing all the time, especially before they do things; insurance companies have a tendency to do things and reconcile after the fact.”

“The Fed is looking for banking discipline and the insurance industry is what they're going to start moving towards,” Benmosche said, although he did not say how the Fed would go about putting its discipline into effect at other insurers because it has taken federal agencies more than two years after the Dodd-Frank financial services reform law was enacted to get to the point of designating two insurers, nevertheless the entire industry.

MORE BENMOSCHE OBSERVATIONS:

– As far as he is concerned, AIG's deal to sell its airline leasing unit to a Chinese consortium is still on, although the group missed a deadline last week to come up with 10 percent earnest money.

“We're working towards getting to that point [sale of the leasing unit]; we have not terminated, although we have a right to,” Benmosche said. “We're proceeding to work with them and negotiate through this period of time.”

– The CEO said the economy is not growing at an ideal pace. Society is “going through a huge psychological change” because people don't have the confidence in the economy they should have, a confidence driven by the fact that rules are in place to prevent the kind of things that got AIG, and other companies, into big trouble four years ago.

“People are nervous about investing for the long haul, because the investors don't want to wait for the long haul,” he told Bartiromo. “You have regulators who are changing the ground rules who haven't established ground rules yet, so that's a concern for people.” Additionally, heads of businesses are sitting on cash, uncertain as far as what happens next.

To get the economy moving again, Benmosche said regulators and the regulated need to ”come to terms with the fact that, like it or not, we have dramatically improved the financial system in the last four years, and yet nobody—and you've heard me say this before—nobody wants to talk about how much confidence we should all have in companies like AIG.

Special Reports /

AIG's Benmosche on Federal Regulation: 'A Whole New Level of Discipline'

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