The US Treasury is selling its remaining stake in insurer American International Group Inc, bringing an end to government ownership of the company about four years after a $182 billion bailout.
The sale will close the chapter on one of the most politically contentious government rescues of the global
financial crisis and turn a profit for taxpayers, which was once thought to be inconceivable.
At one point, the government estimated that it would never recover all of the bailout money, but as AIG restructured and returned to viability, it was able to repay the entire rescue fund plus generate a profit for U.S. Taxpayers. "No taxpayer should be pleased that the government had to rescue this company, but all taxpayers should be pleased with today's announcement, ending the largest of the government's financial industry bail-outs with a profit to the Treasury Department," Jim Millstein, the Treasury's former chief restructuring officer, said in a statement. AIG was rescued just before it would have been forced to file for bankruptcy protection in September 2008 as losses on risky derivatives mounted. It was bailed out as the world's financial system stood at the brink of disaster, shortly after Lehman Brothers filed for bankruptcy and Merrill Lynch sold itself to Bank of America Corp. AIG was one of the Treasury Department's most hotly contested bailouts. U.S. lawmakers began calling for Treasury Secretary Timothy Geithner's resignation after it was revealed that AIG paid $165 million in retention bonuses to employees of the derivatives unit that has been blamed for the company's financial distress at that time.
It prompted Republican lawmaker Charles Grassley to call for AIG executives to resign or commit suicide, though the Iowa senator eventually backtracked from those comments. The company also funneled over $90 billion of taxpayer money - more than half the funds the government used to rescue AIG - to various European and Wall Street banks, including Goldman Sachs, Deutsche Bank and Barclays Plc.
BENMOSCHE GETS CREDIT
Robert Benmosche, the former CEO of MetLife, took over as CEO of AIG in August 2009, replacing Edward Liddy, who had been installed by the U.S. government. He will ultimately get the lion's share of the credit for turning the company around and preventing a fire sale of its assets. Benmosche salvaged some of the company's businesses, defended the company's employees against their detractors and figured out a path forward that would let the company both repay