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.
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.