AIG T.A.R.P. REPAID, TAX-PAYERS WIN
The federal government has now fully recouped its investment of $182 billion in AIG and has made $15.1 billion so far on the payback, with interest, for the T.A.R.P. bailout.
In a late press release yesterday (Tuesday, Sept. 11), The U.S. Treasury announced that an additional $83.1 million shares of AIG stock will increase the value of the total transaction. This will reduce the Treasury Department’s holding of AIG common stock to 15.9 %, down from approximately 52%. (The shares are being sold at $32.50 a share.)
According to S&P, the total return to the U.S. government, if all shares are sold, will be $20.7 billion.
Standard & Poor’s responded by changing its “outlook” on the AIG holding company to “negative” from “stable” because of the reduction in federal investment in AIG, but kept its ‘A-‘ long-term counterparty credit rating.
“We are close to achieving what most people outside AIG thought unimaginable. The people of AIG never lost faith, kept working, and are grateful for being given the chance to make good on this goal,” said Robert Benmosche, AIG president and CEO. “This offering, Treasury’s largest to date, makes America whole on its investments in AIG plus a profit,” Benmosche adds.
According to Benmosche, the Treasury and the Federal Reserve’s combined $182 billion commitment made to stabilize AIG during the financial crisis “is now fully recovered.”
Future sales of Treasury’s remaining AIG common stock holdings will provide an additional return to taxpayers, Benmosche says. Simultaneously, AIG said it would purchase up to $5 billion of that stock.
