Future perfect

26 January 2010 By Lauren Silva

Tim Geithner’s role in the $180 bln bailout remains under scrutiny. Looking ahead, though, AIG still owes U.S. taxpayers some $124 bln. The company is making progress on some asset sales. But to repay its rescuers in full, everything has to go very well and for a long time.

This content is for Subscribers only

Context News

The U.S. House Oversight Committee is holding a hearing on Jan. 27 examining the federal assistance received by American International Group . Treasury Secretary Timothy Geithner is scheduled to testify.

AIG, initially bailed out in September 2008, owed the U.S. government some $124 billion at Dec. 1. AIG has a balance of $17 billion under a loan extended by the New York Federal Reserve. The New York Fed also owns a $9 billion preferred interest in American Life Insurance (Alico) and a $16 billion preferred stake in American International Assurance.

The U.S. Treasury invested $41.6 billion in AIG preferred stock through its Troubled Asset Relief Program. The Treasury has also provided a commitment of up to $30 billion of additional TARP equity, of which AIG has drawn $3.2 billion.

The New York Fed made loans totaling about $44 billion to Maiden Lane II and III, two vehicles created to take securities off AIG's books. Maiden Lane II purchased $19.5 billion in residential mortgagebacked securities from AIG, marked at about $16.9 billion as of September. The New York Fed bought $24.4 billion in collateralized debt obligations from Maiden Lane III, which were marked at $20.2 billion in September.

AIG is in discussions to sell Alico to MetLife for between $14 billion and $15 billion, according to Reuters. The Federal Reserve Bank of New York would get $9 billion of the proceeds because of its preferred interest in the business.

AIG has decided against a sale of International Lease Finance Corporation, its aircraftleasing unit, after deciding it would not reap a big enough profit from selling the asset, the Financial Times reported, citing people close to the situation.

House Oversight Committee release.

AIG government investment page.

Fed and Maiden Lane data.

Email a friend

Please complete the form below.

Required fields *