More than four years after rescuing the insurance giant from total collapse, the Treasury Department has finally sold off all its remaining shares in AIG—and even made a little money off the deal. The government is selling 234.2 million shares, raising $7.6 billion in cash and finally ridding itself of the once-troubled company — not to mention finally ridding AIG of its obligations to the Troubled Asset Relief Program, created in heat of the 2008 financials crisis. All told the U.S. pumped more than $182 billion into the company — at one point owning 92 percent of its stock — but came away with a profit of $22.7 billion.
The AIG bailout was one of the most controversial acts carried out by the Treasury Department in 2008. One day after Lehman Brothers filed for bankruptcy in September of that year, it became clear that AIG was in even worse shape, watching its credit rating get downgraded and folding under the weight of shoddy mortgage backed securities. The insurance company's stock dropped 60 percent in one day, prompting the Federal Reserve to step in to save it. Over time, the government ended up on the hook for most of the company's troubled assets, restructuring the bailout several times in order to keep the company afloat. It didn't help matters a few months later, when AIG tried to payout $1.2 billion in executive bonuses, which the newly sworn-in President Obama called "an outrage."
The company is still not as strong as it once was, but thanks to the help of the American taxpayer it is alive. We (eventually) got was owed to us, too, which seemed like a much bigger long shot four years ago. Even Federal Reserve Chairman Ben Bernanke said the bailout made him angrier than any other action the government had to take during the crisis. Wait until he sees the check.
This article is from the archive of our partner The Wire.
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