WASHINGTON – Bailed-out insurance conglomerate American International Group Inc. is taking a key step toward paying off a bailout that was at one point worth $182 billion – the largest of the financial crisis.
The company says in a public filing Wednesday that it will repay a loan from the Federal Reserve Bank of New York. AIG says that will clear the way for the Treasury to sell off the government’s stake. Treasury’s stake in AIG will temporarily rise from roughly 80 percent to 92 percent, as part of the deal.
During the height of the crisis, the New York Fed provided as much as $91 billion in credit to AIG. As of early December, AIG owed about $21 billion.
Treasury officials would not comment on the government’s planned sales of AIG shares. They said the shares will be sold to maximize taxpayer profits.
“Today’s announcement is a milestone in the government’s long-stated efforts to exit our investments in private companies as soon as practical while protecting taxpayers,” Treasury Acting Assistant Secretary for Financial Stability Tim Massad said in a statement. “When all is said and done, we believe taxpayers will recover every dollar invested in AIG and stand a good chance of making a profit.”
AIG became a symbol for excess risk on Wall Street during the crisis that peaked in late 2008.
For months, the government expected to take massive losses on its investments in AIG. The nonpartisan Congressional Budget Office said last month that the rescue will cost taxpayers $14 billion.
Wednesday’s filing moves the government closer to what Treasury officials expect will be a multibillion-dollar profit.