Business, Economics and Jobs

US government could make $15B profit from AIG bailout: GAO report


A view of insurance company AIG in London, England, on Mar. 26, 2009.


Dan Kitwood

The US government’s $182 billion bailout of insurer American International Group Inc. in 2008 was the largest-ever rescue of a single company, but it may end up being a profitable move, according to a new report by the Government Accountability Office, Dow Jones Newswires reported.

The government "could receive total returns of approximately $15.1 billion in excess of the assistance provided," the GAO report said, according to Dow Jones Newswires.

"We remain hopeful that taxpayers will ultimately recover every single dollar invested in the company, which is something few would have expected during the depths of the financial crisis," Tim Massad, the assistant secretary for financial stability, said on Sunday, according to CBS News.

According to the Financial Times:

GAO’s forecast is based on the Treasury being able to shed its roughly 1 billion shares of common stock in AIG at the March 30 closing price of $30.83 and on the Federal Reserve Bank of New York recouping the full value of its holdings in the Maiden Lane investment vehicles that were created as part of the rescue.

Treasury announced today that it would take advantage of the high demand for AIG shares and sell 188.5 million shares of AIG common stock for about $5.8 billion, Reuters reported. This will reduce its ownership stake in AIG from 70 percent to 61 percent.

This is the third time the government has sold AIG shares, Dow Jones Newswires reported. The government collected a total of $11.8 billion from offerings in May 2011 and March 2012.