Network News

X My Profile
View More Activity
2.7%  Q1 GDP    4.57%  avg. 30-year mortgage     9.5%  Unemployment

GAO: AIG May Never Pay Back Taxpayer Billions

Been holding your breath waiting for government-owned insurance giant AIG to pay back the $120.7 billion taxpayer bailout money?

You may want to exhale.

In a report issued Monday from the Government Accountability Office, AIG is making "some progress" to reorganize and get back on the path to paying back the taxpayers, but "the ultimate success of AIG's restructuring and repayment efforts remains uncertain."

Quick recap on AIG: It was a large, respected and sound insurance giant composed of many parts bought up over the years. One of those parts was AIG FP, the financial products division, headquartered in London. FP dealt in exotic financial engineering instruments; chiefly credit default swaps. AIG suffered a liquidity crisis when it was downgraded during the financial crisis last year, as the global markets melted down following the massive losses in housing values.

Basically, AIG sold more insurance on financial products than it could back up. So the U.S. government, fearful that a collapse of AIG could bring down the entire financial system one day after Lehman Brothers collapsed, stepped in with aid. Taxpayers now own 80 percent of AIG.

The GAO report said taxpayers remain so exposed in the wobbly AIG that the end-game "could result in the Federal Reserve and Treasury not being repaid in full."

Meanwhile Monday, Rep. Edolphus Towns (D-N.Y.), chairman of the House Oversight committee, said his panel will take a look at an AIG restructuring plan put forth by former company chief executive Hank Greenberg.

That news has sent shares of AIG shooting up 24 percent in trading today.

-- Frank Ahrens
Sign up to get The Ticker on Twitter

By Frank Ahrens  |  September 21, 2009; 3:45 PM ET
Categories:  The Ticker  | Tags: AIG, Hank Greenberg  
Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   Del.icio.us   StumbleUpon   Technorati   Google Buzz   Previous: Obama: We Need More College Graduates
Next: Markets Open Slightly Up After Yesterday's Sell-Off

Comments

what about the $12 BILLION handout that Government Sachs received via AIG bailout passthrough? and liberals think the rage is all about race.

Posted by: millionea7 | September 22, 2009 2:25 PM | Report abuse

The comments to this entry are closed.

 
 
RSS Feed
Subscribe to The Post

© 2010 The Washington Post Company