In 2008, as the financial meltdown was unraveling, the U.S. government stepped in to rescue some of the economy’s biggest names. AIG was among those, as the insurer was also affected by the plummeting mortgage market. Now, four years later, the government through the treasury has decided to reduce the bailout it gave AIG by selling company shares worth $6 billion.
Yesterday, the U.S. Treasury released a statement announcing a $6 billion sale of American International Group (AIG) shares. As the economy is looking better, the government is trying to reduce the vulnerability given by owning such high stakes of AIG. If the sale is successful, the U.S. Treasury will be able to reduce its stake in AIG from 77 percent to 77 percent. While that doesn’t sound much, a gradual repayment of the bailout is more successful.
As President Barack Obama is preparing for November’s presidential elections, we should expect other similar stock sales operated by the Treasury over the following months. It’s obvious that as November approaches, Republicans will put their minds to make some back of the envelope calculations to show exactly how much of the taxpayers’ money went into saving banks and companies. They will draw the line to see exactly how much of that amount was restored to the Treasury in four years.
If Obama fails to put pressure over this issue, his chances to a second bid will surely drop significantly, as voters’ main preoccupations these days are the economy and ways to boost it.
Half of the shares will be acquired by AIG, as the company announced after it had reached a deal with the U.S. Treasury to pay back the bailout with something called a “special purpose vehicle”. The deal regarding the vehicle was signed three years ago as AIG was looking for ways to reduce the amount it owed the New York Federal Reserve.
AIG Chief Executive Robert Benmosche said: “The bottom line is this” the people of AIG have achieved another significant milestone in our progress toward our goal that American taxpayers recoup their entire investment in AIG at a profit”.
Bankers agreed to sell AIG shares at $29 per piece, but sources familiar to the matter add that negotiations are still possible.
I can’t tell you how often I’ve heard from people who say, “I’ve played by the rules. I’ve never missed a mortgage payment even though my home is underwater. Where’s my bailout?” It’s been absolutely crazy that there’s been help for those who don’t pay, but not for those who do pay. Now there is help check 123 Refinance