The Treasury Department said on Wednesday it will sell $6 billion worth of American International Group stock and struck another deal for the insurer to pay down $8.5 billion more in obligations, taking a major step forward in an election year to unwind the unpopular crisis-era bailout.
AIG said the agreement with the government would allow it to pay down what it owed in a special purpose vehicle, AIA Aurora, and free up the company’s collateral against that, including interests in aircraft lessor International Lease Finance Corp and Asian insurer AIA Group Ltd.
The special purpose vehicle was set up in December 2009 in exchange for a reduction in the debt that AIG owed the New York Federal Reserve at the time. The Treasury’s original interest in the vehicle was $16 billion.
The stake sale is expected reduce the government’s ownership in AIG to about 70 percent from 77 percent, a source with knowledge of the situation said. Once the company repays Treasury for the special vehicle interest, the value of the government’s stake would total about $41.8 billion.
The announcements come as President Barack Obama, a Democrat, fights to win a second term in office and withstands attacks from Republicans for wasting taxpayer money.
This says, among other things, that the DoJ inquiry into AIG is at an end. Some of us believe we’re still in the crisis era.
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