12/02/2009 04:01 pm ET Updated May 25, 2011

AIG May Soon Lose Crown as Biggest Bailout Debtor

by Sharona Coutts and Paul Kiel, ProPublica

AIG is coming close to losing its crown as the biggest debtor in the bailout. The company announced today that it has completed two deals that, together, shaved $25 billion off its tab to the Federal Reserve Bank of New York (PDF), bringing the combined total it owes the Fed and the Treasury to about $62 billion. That's only about $2 billion more than what Fannie Mae, the company that's received the biggest government bailout next to AIG, still owes taxpayers.

Fannie has said that it expects its bailout total to continue to mount, as it takes losses from the slumping housing market and its role in the administration's loan modification program.

AIG has shifted two of its prized subsidiaries – ALICO and AIA – into new arrangements, called special purpose vehicles. The move will eventually take the subsidiaries off AIG’s books. The Fed wrote down the $25 billion in exchange for a stake in both new vehicles. The idea is to prep the subsidiaries to be sold off, or to go through public offerings on the stock market.