Treasury sells off AIG stocks
The Treasury Department has agreed to sell the last of its remaining shares in American International Group common stock, the agency announced Dec. 11.
The sale of 234,169,156 shares at $32.50 each means the federal government will make a profit of $22.7 billion from bailing out the troubled insurance giant after investments in mortgage-backed securities caused it to flounder in 2008 and 2009 when the housing market collapsed.
Federal Reserve loans of $112.5 billion netted a positive return of $17.7 billion while Treasury stock purchasing of $69.8 billion has netted $22.7 billion, according to Treasury figures. The Government Accountability Office in a May 2012 report (.pdf) calculated that Treasury would have to sell AIG common stock for at least $29.70 on average per share to fully recover its investment. Treasury held about 92 percent of AIG common stock at one point.
The federal bailout of AIG--and other financial companies--was controversial although federal officials in September 2008 calculated that the company's failure would have destabilized the economy.
Since the financial crisis, AIG has been "cut nearly in half as it sold non-core assets and focused on its core insurance operations," Treasury says. The GAO in its May report said the company had stable cash flows throughout 2011 and that nearly all its revenue comes from its Chartis property/casualty and general insurance business and its Sun Financial life insurance and retirement services businesses.
- read the Treasury release