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It's been a busy week for American International Group Inc. (NYSE:AIG). So far:
Those banks also reportedly being interviewed for the Alico underwriting job this week include UBS (NYSE:UBS), Deutsche Bank, Citigroup Inc. (NYSE:C), Credit Suisse Group AG (NYSE:CS) and Goldman Sachs Group Inc. (NYSE:GS), according to Reuters. So far the insurers asset sales have grossed $9.8 billion, and there are still several other ongoing auctions taking place including:
For the latest on all of AIG's auctions check out The Deal's Pipeline (subscription required) Although valuations may be improving and AIG may net more for its assets, the main question still remains whether it really can pay off the financial aid that prompted the sales in the first place. Trading Markets reported that at least one expert thinks not: AIG is such a central part of the financial system, they can keep the money as long as they want to and I don't think the government cares," said Joseph Pastore, co-chairman of the securities and financial institutions compliance and defense group at Fox Rothschild LLP. However, the company still maintains it will repay it's loan. At the moment the insurer owes over $38 billion to the Federal Reserve and $182.5 billion to the U.S. government in bailout money and $42 billion from aid from the U.S. Treasury's Troubled Asset Relief Program. Even if AIG never pays off the aid, the controlled breakup of the firm mitigates its systemic risk to the financial system. Perhaps that was the bailout's intent. But while ending the risk is a huge benefit to the American public, it offers cold comfort to taxpayers stuck with the bill at the end of the day. - Maria Woehr Follow me on Twitter @newsgirlmw or join our Facebook Group.
CategoriesComments
From: Maria,
Hi Mac Skiba: Bloomberg has the number I have too: "The company’s bailout includes at $60 billion credit line, a Treasury Department investment of as much as $70 billion, and $52.5 billion to buy mortgage-linked assets owned or backed by the insurer. AIG agreed to turn over a stake of almost 80 percent to the U.S. in exchange for the rescue." Thanks.
Posted on:
September 9, 2009 5:08 PM
From: Maria,
Hey, Point taken-- But that's only if AIG doesn't dig into the rest of the $70 billion credit line, right? It might need that money to support businesses it has decided to keep because of stalled sales and just used funds of one of its sales to support its P&C biz. Do you think it will need those funds? I'd love to hear your thoughts on this.
Posted on:
September 9, 2009 5:20 PM
From: Gitangsu's Insurance Guide,
Hi, I'm actually concerned with so many giants facing such situations and opting for bailouts. Isn't there any other option?
Posted on:
September 10, 2009 9:53 AM
From: Nora's Insurance Guide,
I never thought that AIG owes the government with that huge amount.
Posted on:
September 12, 2009 1:17 PM
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F.Y.I :
AIG currently owes the government about $86.8 billion. If it successfully spins off AIA and Alico, that burden is reduced to $61.8 billion. And $42.8 billion of that sum carries no interest or dividend payment.
Your article grossly misstates the amount of money AIG owes the government.