AIG Reportedly Hatches Plan To Repay Taxpayers

Two years after it received at least $180 billion in bailouts, of which $120 billion is still outstanding, American International Group has reportedly hatched a new plan to repay taxpayers and free itself from the government's clutches. According to the Wall Street Journal, the insurer plans to convert the government's 79.8 percent stake in the company into shares that the government can sell on the open market.

The solution isn't ideal. Before the shares can be sold, they must be converted from preferred to common stock, a move that would increase the government's stake in the company to 90 percent, the Journal notes. The whole process would take several years and would only be feasible if AIG continues to recover. The company's position is now certainly stronger than it was two years ago -- the Journal reports that its debt, which back then traded at 30 or 40 cents on the dollar, is now trading at 80 or 90 cents.

"We'll make sure taxpayers get paid back in full, and they will," AIG CEO Robert Benmosche told the New York Times last month, when the first hints of this plan were announced.

Since then, the company has tried and failed to sell its Taiwan business Nan Shan when, as the New York Times reported, Taiwanese regulators objected to one of the potential buyers' ties to China. Before it can launch the stock conversion plan, AIG would need to repay the Federal Reserve Bank of New York, which is owed $49 billion.

More than financial troubles have plagued AIG. Two of its top executives differed on the insurer's asset sale plans. After a dramatic standoff with the company chairman Harvey Golub, in which Benmosche threatened to quit if Golub didn't, the CEO finally forced his colleague to resign in July.

Last August, the outspoken Benmosche took over for Edward Liddy, who had served as CEO for less than a year. Benmosche's tenure at AIG began with a two-week vacation, and he's repeatedly blasted populist attacks against his company. He also reportedly pushed for a time-sharing agreement that would allow him to use the company jet for personal matters,

Comments

[Doing the right thing]

02:09 PM on 09/18/2010

Government, don't fall for it; AIG will always have something up their sleeve. Wall Street will always have manipulation on their side also.

[Linda from Deerfield]

08:41 AM on 09/15/2010

Why is this our problem? It wasn't the Treasury that took over AIG -- it was the Federal Reserve.

[ChasG]

05:39 AM on 09/16/2010

The Rederal Reserve made a secured loan to AIG of about $85 billion, that was separate and apart from the $70 billion TARP money AIG received from the Treasury in exchange for preferred stock in AIG (works much as a loan does since it pays a stated rate of interest).  Baopth have been partially repaid.  It is expected that this will be repaid with full interest.  If General Motors is able to sell new common stock and repay it's TARP loan with interest, the entire bailout will turn out to have been a profitable rescue by the US Treasury, reducing, not increasing, the deficit.

[Scent]

08:18 AM on 09/15/2010

So the bottomline is this:

The stock the public bought below value will be converted into shares that can be traded and sold at a higher price that AIG will then use to buy itself out of debt to us. - Meaning that we will not get anything but the money we gave them while everything that money made in profit will go to the ones buying the shares.

How is it they are not in jail an rotting their nuts off?

[rbchilds]

07:55 AM on 09/15/2010

The last time AIG hatched a plan it was the Golden Egg from the American People. What is in store this time, taking over the Treasury?

[hermitlife]

01:04 AM on 09/15/2010

ok, so pay up now.

[vgirl1]

11:37 PM on 09/14/2010

SMOKE AND MIRRORS WHILE THEIR CHIEF EXECS CONTINUE TO RAKE IN HUGE BONUSES AND SALARIES.

NOT BUYING IN AIG !!!!!!!!!!!!!!!!!!!!!!!!

[McKeaton]

11:54 PM on 09/14/2010

Indeed , it's time for bonuses for another criminal CEO....let's inflate our "books"...Wake up America!

[McKeaton]

12:00 AM on 09/15/2010

Let's nationalize the FED. RES. and its progenitures(TBTF) , make them all state employees...and invest the profits in our children too, not only theirs.

[shelby35]

06:14 AM on 09/15/2010

The Fed is government institution. You have no inkling how it works.

[xilduq]

09:51 PM on 09/14/2010

hmm, i think i'll "hatch a plan" to pay my taxes

[Mr Hankey]

09:35 PM on 09/14/2010

Hmmm....so if the government's stake in AIG becomes 90 percent, why can't we put a salary/compensation cap on their Bankster CEOs?

If not, I want my money back.

[jazgr8]

09:16 PM on 09/14/2010

AIG should not even exist today and its bailout by the US Treasury with TARP was likely the least well-executed of all of the bailouts. Taxpayers gave AIG a huge bailout so that they in turn could pay back all of their creditors 100% on the dollar. Those creditors were really a relatively small group of banks and other financial companies both in the US and abroad who knew they were taking risks in their deals and yet they got 100% of their money from AIG because our Treasury Department allowed it.

That said, like it or not it's a done deal and water under the proverbial bridge. The focus now should be how to get the taxpayer's money back and that unfortunately depends on AIG being successful. The more successful, the more successfully and faster we get paid back.

So, hold your nose and root for AIG folks because the truth is, right now, they are you. And, once and if they repay their bailout money, demand that the Treasury make it with 20% interest!

[therealist2000]

08:49 PM on 09/14/2010

AIG like Goldman Sachs is a filth pit and the American public should
not rest until we get our pound of flesh from them & close down the filthy dump.

[shelby35]

06:14 AM on 09/15/2010

What would satisfy you? I am for justified retribution but really what are your demands?

[Susan Bosworth]

03:43 PM on 09/27/2010

First and foremost - no more rewarding, no more bonuses and every book is open for the American public to see. And when we find something that even smacks of illegal - we react and take care of it.

I know, I'm a dreamer. But when I see a woman I used to call my friend work at AIG FP get a 100% of her salary bonus and then when the bonuses were taken away they doubled her salary to make up for it (and she's a SECRETARY by the way) and says to me outright "We have homes and families, we DESERVE that bonus because the way people like you treat us", I want the pound of flesh too.

[olddognewtrick]

08:49 PM on 09/14/2010

Guess how they plan to pay the money back? Judgement day loans. That's right bring in your life insurance policy and they will loan you some dough...and by the time they collect...who gives a schnitzel...

[AmericanDream RIP]

08:34 PM on 09/14/2010

AIG reportedly hatches a plan to repay taxpayers !!!! Hooray !!!! Free loss-of-equity insurance to all homeowners for years 2005 through 2010 and a bonus check to all families forced into bankruptcy as a result of the housing crash. Checks to be issued immediately !!! Hooray !!!!!

[Valley Vixon]

08:09 PM on 09/14/2010

So the plan is to sell stocks that AIG doesn't actually own.
Americans invest in the stock. By actually buying what they already own. AIG would give the money to the government, who would give it to China and investors pay taxes on the purchase but how is AIG going to create value for this stock? They are already selling what they don't own because they can't generate income.
Of course the AIG brain trust could sell all the stocks to China , they would pay AIG, who would pay government , who would then give the money to China and a large unprofitable American vested company would be come Chinese.
Both ways it means BONUSES!!!!!
Just close the damn company and stop putting a band aid on a corpse.

[Duppy]

07:20 PM on 09/14/2010

Oh oh. Hatching a deal so they are free to pay out big bonuses again. Watch out America. They will be asking for another bailout soon.

[Harpro208]

06:54 PM on 09/14/2010

If past behavior is any indicator, the taxpayer is going to get a royal s@rewing under the false flag of an AIG loan repayment plan.. Don't know how. Pass the Vaseline please. BOHICA