TARP is 70% repaid after AIG makes $6.9-billion payment, Treasury Department says
AIG made the repayment Tuesday after selling its holdings in MetLife last week. About $59 billion in Troubled Asset Relief Program money still is invested in AIG.
AIG received about $125 billion in a complex, multi-step bailout from the Treasury and Federal Reserve starting in the fall of 2008. The government owns 92% of AIG after a stock-conversion deal completed in January that was part of an effort to recapitalize the insurance company and unwind the federal stake.
The Fed has about $39 billion invested in AIG. The Congressional Budget Office estimated in November that the government would lose $14 billion on the AIG bailout. But after the stock-conversion deal and a rise in AIG's stock price, the Fed and the Treasury Department have said they did not expect to lose any money.
AIG's repayment brings to $287 billion the total TARP money recovered, the Treasury Department said. Although Congress put $700 billion into the fund, the department disbursed only $411 billion.
“We’re optimistic that as we continue to wind down TARP, our temporary investments in private companies will ultimately result in little or no cost to taxpayers taken as a whole,” said Tim Massad, the Treasury official who oversees TARP.
The Congressional Budget Office estimated in November that TARP would lose $25 billion. The White House has estimated a $48-billion loss. But with potential profit from the AIG stock, which will be sold over time, the projected loss drops to $28 billion.
For taxpayers to break even on the 1.655 billion shares of AIG common stock they now own, they would need a price of $28.72 a share. Tuesday's closing price for AIG stock was $37.31.
-- Jim Puzzanghera
Photo: The AIG logo in New York. Credit: Associated Press.