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,