AIG, the insurance giant at the heart of the financial meltdown, and the recipient of $180 billion of government investment, posted its first profitable quarter since 2007. The company lost nearly $100 billion in 2008 and another $4.4 billion in the first three months of 2009, so it's nice to see an AIG quarterly earnings report that doesn't make your average tax payer apoplectic. It's still going to be a long time before we see the money our government has sunk into this molten lava pool of toxic assets.


CNN Money reports that AIG is in the process selling assets to pay back the government's loans, which currently total $87 billion. This year the company has sold less than $3 billion of assets. Guh.

A recent Michael Lewis article in Vanity Fair elegantly traced AIG's fateful path toward ruin, explaining how the company financial products division got lost in a sea of credit default swaps -- which is basically insurance on risky, complicated investments often backed by mortgages. When the value of the CDS began to dry up, AIG's credit rating was downgraded, and AIG found itself on the hook for hundreds of billions of dollars. The company couldn't post the collateral required to pay back its clients and was in danger of failing in the fall of 2008. The Bush administration and Federal Reserve stepped in, guaranteeing the collateral with an incredible line of credit worth more than $100 billion to ensure the life of the insurance giant.

AIG CEO Edward Liddy has said he expects his company to pay back the government within three to five years. He has also said he expects to retire much sooner than that.

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