AIG, originally considered to be the
TARP recipient least likely to succeed, has sent taxpayers another significant installment
on its debt. The Department of the
Treasury announced on Thursday that it had received an additional $1.5 billion
from AIG. This pays in full Treasury’s
preferred equity investment in AIG, more than one year ahead of schedule.
AIG received a total of approximately
$182 billion from Treasury and the Federal Reserve Bank of New York (FRBNY) in
2008 as it faced collapse in the wake of the Lehman Brothers bankruptcy and the
freezing of credit markets. With the
recent payment the government still has an outstanding investment in AIG of $45
billion consisting of $35.7 billion owed to Treasury and secured by 1.248
billion shares of AIG common stock and a Federal Reserve Bank of New York loan
to Maiden Lane III, an AIG holding, of $9 billion. The Treasury holdings constitute 70 percent
of the outstanding common stock of AIG and the Maiden Lane loan is collateralized
by assets with a current value well in excess of the outstanding loan value.
This month along Treasury has recouped
more than $14.6 billion on its emergency investment in AIG. It sold $6 billion in AIG common stock and
received an earlier payment of $8.6 billion on the preferred equity interests.
“In the dark days of the financial crisis,
when commitments to AIG totaled $182 billion, few would have believed that we’d
already be able to reduce that amount by more than 75 percent, or that we may
be able to recover every single dollar invested in the company,” said Assistant
Secretary for Financial Stability Tim Massad. “This demonstrates the
significant progress that AIG and the government have made in restructuring the
company’s business so that it can repay taxpayers.”
Treasury continues to wind down
TARP, the Troubled Asset Relief Program. More than 80 percent ($333 billion) of the
$414 billion funds disbursed for TARP have already been recovered to date
through repayments and other income.