The U.S. Treasury moved to reduce its stake in AIG to below 50 percent on Sunday as it continued to keep its promise to distance itself from the controversial 2008 bailout. The sale could net the government as much as $20.7 billion if investors are feeling spendy, says The New York Times, and the Treasury is expected to turn a profit on its AIG shares to boot. When all's said and done, the government will reduce its holdings in the insurance company from 53 percent to as little as 15 percent. This is a far cry from the 92 percent the government originally took possession of as part of the $182 billion bailout package in the fall of 2008.
The fallout from this fire sale could go either way for the Obama administration. On one hand, it's a huge step in the right direction as the Obama administration tries to distance itself from the controversial bailout, and the fact that the government actually made money off of the deal can't hurt. But as The Wall Street Journal points out, "it could also renew complaints that Treasury still hasn't outlined a concrete strategy for exiting the large investments in mortgage investors Fannie Mae, Freddie Mac and lender Ally Financial Inc., showing there are still large messes from the financial crisis yet to be cleaned up."
Either way, it's time for things to get real again for AIG. Now that the government no longer owns a majority stake, the company should expect to be regulated by the Federal Reserve as a savings-and-loan holding company. In other words, this time around they'll have to play by the rules.
This article is from the archive of our partner The Wire.
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