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ITEM 1A / RISK FACTORS.....................................................................................................................................................................................to promulgate regulations implementing the law, an ongoing process anticipated to continue over the next few years.We cannot predict with certainty the requirements of the regulations ultimately adopted or how or whetherDodd-Frank and such regulations will affect our businesses, results of operations or cash flows, or require us to raiseadditional capital.We are regulated by the Board of Governors of the Federal Reserve System (FRB) and subject to its examination,supervision and enforcement authority and reporting requirements as a savings and loan holding company (SLHC).The FRB, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation haveproposed revised minimum leverage and risk-based capital requirements that would apply to all bank holdingcompanies and SLHCs, as well as to insured depository institutions, such as AIG Federal Savings Bank. As a resultof our regulation by the FRB as an SLHC:• The FRB exercises general supervisory authority over us.• The FRB, as a prudential matter, may limit our ability to pay dividends and purchase shares of AIG CommonStock.• The FRB is required to impose minimum leverage and risk-based capital requirements on us that are not less thanthose applicable to insured depository institutions.In addition, under Dodd-Frank we may separately become subject to the examination, enforcement and supervisoryauthority of the FRB as a nonbank systemically important financial institution (SIFI). In October 2012, we received anotice that we are under consideration by the Financial Stability Oversight Council (Council) for a proposeddetermination that we are a SIFI. The notice stated that we will be reviewed in Stage 3 of the SIFI determinationprocess described in the Council’s interpretive guidance for nonbank financial company determinations. If we aredesignated as a SIFI:• We would become subject to stress tests to determine whether, on a consolidated basis, we have the capitalnecessary to absorb losses due to adverse economic conditions.• We would be subject to stricter prudential standards, including stricter requirements and limitations relating torisk-based capital, leverage, liquidity and credit exposure, as well as overall risk management requirements,management interlock prohibitions and a requirement to maintain a plan for rapid and orderly dissolution in theevent of severe financial distress.• We would become subject to a new early remediation regime process to be administered by the FRB.• If we are designated as a SIFI and determined to be a ‘‘grave threat’’ to U.S. financial stability:• We would be required to maintain a debt-to-equity ratio of no more than 15:1.• The FRB may:• limit our ability to merge with, acquire, consolidate with, or become affiliated with another company;• restrict our ability to offer specified financial products;• require us to terminate specified activities;• impose conditions on how we conduct our activities; or• with approval of the Council, and a determination that the foregoing actions are inadequate to mitigate athreat to U.S. financial stability, require us to sell or otherwise transfer assets or off-balance-sheet items tounaffiliated entities.In addition, the regulations applicable to SIFIs and to SLHCs, when all have been adopted as final rules, may differmaterially from each other.See Item 1. Business – Regulation for further discussion of this potential regulation.Further, if we continue to control AIG Federal Savings Bank or another insured depository institution, as of July 21,2014, we will be required to conform to the ‘‘Volcker Rule’’, which prohibits ‘‘proprietary trading’’ and the sponsoringor investing in ‘‘covered funds’’. The term ‘‘covered funds’’ includes hedge, private equity or similar funds and, incertain cases, issuers of asset backed securities if such securities have equity-like characteristics. These prohibitionscould have a substantial impact on our investment portfolios as they are currently managed. The Volcker Rule, as..................................................................................................................................................................................................................................40 AIG 2012 Form 10-K