US government could earn $15.1 bn from AIG bailout
09 May 2012
The United States government could make a profit of $15.1 billion from the bailout of insurance giant American Insurance Group Inc (AIG) during the global financial crisis, the Government Accountability Office (GAO) said Monday in its latest report.
The gains have come through the sale of AIG shares, which the treasury acquired as well as the troubled mortgage securities which the federal reserves obtained during the unprecedented financial meltdown in 2008.
''Based on the composition of the remaining federal assistance to AIG, the repayment and recovery progress thus far on all assistance, the government could receive total returns of approximately $15.1 billion in excess of the assistance provided, including interest, dividends, and fees,'' GAO, the congressional watchdog agency said.
Since September 2008, the treasury and the federal reserves injected over $180 billion in a complicated, multi-step bailout to save the ailing insurer in one of the government's largest investments in the private sector. The treasury shelled out around $125 billion for picking a 92-per cent stake in AIG.
The actual size of the gain could depend on the long-term financial health of the insurer and treasury's timing of the stake sale.
The study also said that the gains estimated do not reflect the subsidy costs associated with the financial aid.
