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AIG shares soar on hopes for easing of bailout terms

Speculators are stoking another big run in American International Group shares today, on word that former Chief Executive Hank Greenberg’s ideas for restructuring the U.S. rescue of the firm will get another hearing.

From Bloomberg News:

Rep. Edolphus Towns may start talks with Treasury Department and Federal Reserve officials about the plan from . . . Greenberg, said a Towns aide.

Greenberg visited Towns, the New York Democrat who leads the House Committee on Oversight and Government Reform Committee, on Thursday, according to the staffer, who declined to be identified because the meeting was private.

"I’ve directed the committee staff to take a look at Hank Greenberg’s proposal to restructure the debt, because I think it is something to which we should give serious consideration," Towns said today in an e-mailed statement. Congress should help AIG recover "and that means looking at a number of options, including restructuring the federal loans."

AIG shares were up $7.50, or 19%, to $47.41 at about 12:10 p.m. PDT. The stock has rocketed from less than $10 in early July, and hit a recent closing high of $50.23 on Aug. 28, as speculators have pounced on it.

Since the company’s U.S. rescue a year ago AIG’s shareholders have been left to wonder what, if anything, will be left for them after the company eventually repays a bailout package worth as much as $182 billion, including loans. The bailout left Uncle Sam with an 80% stake in the insurer.

Greenberg’s workout proposal includes cutting the government’s stake in the company, reducing the interest rate on federal loans and giving the firm more time to repay debt, the Towns aide told Bloomberg.

New AIG CEO Robert Benmosche helped fuel last month’s 245% surge in AIG shares after saying he would seek advice from Greenberg.

Towns says he’s interested in getting the best return he can on the government’s controlling stake.

From Bloomberg:

Towns, 75, said regulators have pressured AIG to liquidate the company at "fire-sale" prices. "What’s the rush if we can get a better return on our money a few years down the road and save a major company and thousands of jobs?" he said.

Separately, the Associated Press reports that a Government Accountability Office report found "some progress in AIG's ability to repay the federal assistance." But the report concluded that "the ultimate success of AIG's restructuring and repayment efforts remains uncertain."

-- Tom Petruno

 
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