AIG has paid off the Federal Reserve Bank of New York but U.S. taxpayers are still on the hook for $94 billion, officials said.
The New York Fed received $47 billion from AIG Friday and terminated the credit line it provided the insurance giant in its September 2008 bailout, The Wall Street Journal reported. Of that amount, $20 billion came from the U.S. Treasury Department, which separately exchanged $49 billion in preferred shares in AIG for common shares representing a 92.1 percent ownership stake it intends to sell down the road.
Treasury will reap a profit if it can sell its AIG shares above $28.70, the Journal said. The stock was at $54 Friday.
The current bailout total outstanding is down from $120 billion earlier, the Journal said.
The repayment by AIG “concludes an important effort by the Federal Reserve to stabilize the financial system in order to protect the U.S. economy,” said New York Fed President William Dudley.
The government is “optimistic that taxpayers will get back every dollar of their investment in AIG,” said Timothy Geithner, secretary of the Treasury.
Of the money AIG repaid Friday, $27 billion came from proceeds of its recent asset sales.
“Today truly marks a new beginning,” AIG Chief Executive Officer Robert Benmosche said. “We recognize that we have to stand on our own and meet the expectations of the marketplace.”
AIG is still a large and diversified insurance company after selling most of its overseas life insurance businesses to repay taxpayers, Benmosche said.
“Our performance has improved, we’ve pulled out of the crisis, and you will see AIG continue to grow as it did before,” Benmosche said.
Source : UPI.com
