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Government could profit on AIG bailout: GAO

Posted On: May. 7, 2012 12:00 AM CST

Government could profit on AIG bailout: GAO

WASHINGTON—The federal government ultimately could recoup more than $15 billion in profit from the financial assistance it provided American International Group Inc., the Government Accountability Office said in a report issued Monday.

In “Government's Exposure to AIG Lessen as Equity Investments Are Sold,” the GAO said that as of March 22, the federal government's remaining assistance to AIG totaled $46.3 billion. That was down from $92.5 billion in March 2011 and $154.7 billion in December 2010. The government initially took a nearly 80% ownership stake in AIG in 2008 when the New York-based insurer appeared near collapse. Federal assistance to AIG totaled more than $180 billion.

“Several indicators show that as of March 2012, the government's remaining outstanding assistance to AIG has continued to be reduced, mostly because of repayments on the (Federal Reserve Bank of New York) loan to Maiden Lane II; repayment of AIA Aurora L.L.C., a special purpose vehicle; and sales of Treasury's common stock in AIG,” the GAO said.

“When all the assistance is considered, the amount the federal government ultimately takes in could exceed the total support extended to AIG by more than $15.1 billion,” said the GAO. The report noted, however, that the repayment of the remaining assistance “continues to depend on AIG's long-term health, the timing of Treasury's sale and the share price of AIG stock, among other things.”

The Treasury Department announced Sunday that it intended to sell about $5 billion in AIG stock at a public offering price of $30.50 per share.