Treasury sells AIG stake for $22.7B profit

AP

WASHINGTON (AP) — The U.S. Treasury Department said Tuesday that it has sold all its remaining shares of American International Group (AIG), moving to wrap up the government's biggest bailout of the 2008 financial crisis.

Treasury said it received $32.50 per share for its 234.2 million remaining shares, which represented a 16% ownership stake in the giant insurance company.

On Sunday, AIG said it will sell up to 90% of its airplane leasing unit to a Chinese investor group for $5.3 billion. It said it planned to use the proceeds to help repay the government for the bailout.

With this sale, Treasury said the government has received $22.7 billion more than the $182 billion bailout it provided to support AIG. It was the largest government bailout package, including both loans and federal guarantees.

AIG, based in New York City, nearly collapsed at the height of the financial crisis. The company suffered massive losses from financial instruments whose value was based on mortgage securities.

AIG became a symbol for excessive risk on Wall Street. It was criticized by some members of Congress for spending $440,000 on spa treatments for executives only days after it was bailed out and for millions of dollars in bonuses it provided executives.

In November, a federal judge dismissed a $25 billion lawsuit arising from the government rescue of AIG. Starr International Group, run by former AIG CEO Maurice "Hank" Greenberg, had accused the Federal Reserve Bank of New York of taking valuable assets from AIG shareholders without their consent or fair compensation.

AIG stock has traded between $22.19 and a high of $37.67 the past 52 weeks.

Proceeds from the final stock sale are expected to total approximately $7.6 billion.

Treasury said with the stock sale it has realized a positive return of $5 billion, while the Federal Reserve received a positive return of $17.7 billion.

Treasury conducted six public offerings of AIG stock the past 19 months, selling a total of 1.66 billion shares of the company. At the start of the sales, Treasury had owned 92% of AIG's outstanding common stock.

Since the financial crisis, AIG has undergone a significant restructuring that cut the size of the company nearly in half, aimed at focusing on its core insurance operations.

The AIG stock sale was the latest step in an effort by the government to wind down the Troubled Asset Relief Program, or TARP.

With the AIG stock sales, the government has gotten back $380 billion, or more than 90% of the $418 billion it disbursed through TARP.