AIG reaches deal to repay government

The plan announced Thursday could return a sizable profit to taxpayers who footed the bill for AIG's near collapse in September 2008.

New York-based American International Group Inc. was one of the hardest hit financial companies by the credit crisis and received the largest bailout the government doled out. It received a bailout package worth as much as $180 billion from the government, which received an 80 percent stake in the company in return.

The insurance giant was not undone by its traditional business, but instead for dealing in the complex derivatives and securities market that got so many financial companies into trouble.

As part of AIG's exit plan, the US Treasury Department will swap preferred shares it currently holds in AIG for common stock and then sell those shares over time. AIG will also repay loans it received from the Federal Reserve Bank of New York as part of the deal.

As of June 30, AIG still had $132.1 billion in outstanding aid from the government, including $49.1 billion in loans from the Treasury Department. The new shares will give the Treasury a 92.1 percent stake in AIG before it begins selling shares.

The government will receive about 1.66 billion shares of AIG common stock in exchange for the $49.1 billion in loans it provided AIG. Those loans were issued through the government's Troubled Asset Relief Program, which was launched to provide $700 billion to financial companies during the credit crisis; Kazinform cites China Daily.

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