American International Group Inc. (AIG) shares valued at $18 billion were sold by the U.S. government, converting a four-year bailout into a profit for taxpayers.
The U.S. sold about 553.8 million shares at $32.50 apiece, the Treasury Department said yesterday in a statement. The New York-based insurer bought $5 billion of the stock. The U.S. has recovered its full $182.3 billion commitment under the rescue with a profit of about $12.4 billion and still holds about 22 percent of the insurer’s shares for future sale, Treasury said. Every dollar made on those sales will be profit to taxpayers.
“To stabilize and then restructure the company with a very substantial positive gain for the American taxpayer is a significant accomplishment,” Treasury Secretary Timothy Geithner said in the statement. “We need to continue the critical task of implementing Wall Street reform so that the American economy is never put in this position again.”
With the Treasury stake below 50 percent, the Federal Reserve will become the company’s regulator, the insurer said in a preliminary prospectus supplement. AIG may face capital requirements and limits on its ability to repurchase stock or pay a dividend, under Fed oversight, according to the document…
The U.S. needs to average about $28.73 a share on the sales to break even on the equity stake it acquired as part of a 2008 bailout, excluding unpaid dividends and fees, according to the Government Accountability Office. The first two offerings were priced at $29 a share, and the second two at $30.50. And yesterday’s sale was at $32.50 per share.
On ethical grounds, I opposed the bailout of banks and financial institutions. The potential crash IMHO would not have affected the American economy structurally. I was confident it would break even or be profitable, regardless. In contrast to the auto bailout where inaction would have pushed millions more into unemployment and have done structural damage to the heartland of our manufacturing economy.
Most of both classes of bailout have achieved what was the intent. We are coming back slowly and surely from the Bush crisis. Hopefully Americans won’t be gullible enough to vote the clowns back into office who supported the silliness and voodoo economics that initiated the crisis – almost pressing our nation into a repeat of the Great Depression.
We were fortunate to have a treasury secretary and president with sufficient economics education to institute reforms modern enough to get past the Hooverites in the Republican Party. Fortunate enough to keep from crushing a traditional core American industry. Smart enough to structure the financial bailout so that each segment repaired has returned a profit to the US Treasury.
If you have an attention span longer than reality TV allows for, you might recall that Republicans fought for the financial bailout – to rescue their buddies. And their terms wouldn’t have included a profit to taxpayers. Just as strong, they opposed the auto bailout because – after all – that was focused on saving a manufacturing industry and jobs for millions of working people. Not important to the list of Republican priorities.