AIG may be able to repay the U.S. after all, Moody's now says
Filed under: Company News, Economy, American International Group, INC.
Just how much taxpayers will recoup of the $700 billion set aside last fall to bolster companies hard hit by the credit crisis has been a matter of debate for more than a year. And because American International Group (AIG), the deeply troubled insurer that's 80%-owned by the U.S. government, has received such a big bailout, it has frequently been in the center of that debate.Surprisingly, however, Moody's Investors Service (MCO) now says AIG may be able to pay back much more of that government aid than first thought. In fact, the credit-rating firm said in a report Tuesday that AIG will probably be able to repay all of the more than $180 billion it has received from taxpayers as well as buy back the government's stake in the company.
That's sharp reversal from just a few months ago, when Moody's said that while partial repayment "is a real possibility," it was unlikely AIG would ever be able to fully repay the bailout funds it received.
And it's at odds with a congressional report issued in September by the nonpartisan Government Accountability Office, which found it was "unclear" whether AIG would ever be healthy enough to return taxpayers' investment.
Another report, released last month by the Treasury Department's special inspector general for the Troubled Asset Relief Program, or TARP, came to a similar conclusion. It found that AIG's woes were one of the main reasons the government was "extremely unlikely" to see the money it spent on bailouts repaid in full.
"Encouraging" Sign
What changed? For starters, AIG seems to have stopped the hemorrhaging when it comes to its quarterly results. Two straight profitable quarters, the first since 2007, have improved its prospects.
"AIG is far from healthy, but the rate of deterioration of its underlying business units has slowed," wrote Rob Haines, an analyst with independent debt research firm CreditSights in a Nov. 6 note to clients. "It was encouraging to see another quarter that did not include any unexpected surprises."
And Robert Benmosche, AIG's new CEO, is rebuilding some of its relatively sturdy insurance businesses that were previously slated to be sold.
"We believe that the slower approach to restructuring could help AIG to generate more favorable values from its business portfolio than would be the case under rushed asset sales," Moody's said in its report, which isn't publicly available.
The report sent AIG's shares up $1.65, or 4.6 percent, to $37.83 in mid-afternoon trading. It rose as high as $39.35 within minutes of the opening bell on the news.
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Reader Comments (Page 1 of 2)
11-10-2009 @ 4:57PM
Mike said...
"The report sent AIG's shares up $1.65, or 4.6 percent, to $37.83 in mid-afternoon trading. It rose as high as $39.35 within minutes of the opening bell on the news."
Ponder...
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11-10-2009 @ 5:47PM
Ralph said...
Hmm -- is Moody's one of the "rating" services that rated the secruities these folks were peddling that got them in trouble in 2008?
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11-10-2009 @ 6:00PM
cf said...
They could start paying back sooner if they would take back all the bonuses they handed out a few months ago.
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11-11-2009 @ 9:22PM
ken thomas said...
I have ocean front property in Kansas for sale too.
If you belive this.
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11-10-2009 @ 6:40PM
George said...
The banks are payiing back TARP money, now AIG is looking to repay. You mean to tell me these dirty rotten crooks (UAW speak) are going to pay it back and the Auto companies and the UAW are not? Hmmmm. Who are the real crooks then?
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11-10-2009 @ 9:11PM
ruthsgardens said...
The UAW represents american workers under contract to supply a labor force to the autogroups.They are not liable or responsible for a companies debt. You people need to get that through your head.Should you lose your pensions and benefits because the company you work for went under or needed a bailout?Congress and the presidents will not address the trade agreements that is killing our autogroups and steel industries.They needed the help.The banks always line up on election day with their hands out, especially when a democratic president is elected.Isn't it funny that recessions always start on election day?
11-11-2009 @ 2:19AM
Bill said...
ruthsgardens -
To say that the recession started on election day was meant to be a joke I hope. The economy had starting dwindling long before the 2008 election.
11-11-2009 @ 2:24AM
jim said...
Well spoken ya Moron!!!
11-10-2009 @ 7:51PM
tolchocks said...
Good for them.
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11-10-2009 @ 8:03PM
Chuck said...
Now if only all republicans would pay back the country what they took and owe. The national debt would go away.
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11-10-2009 @ 8:59PM
Jim said...
hey Chuck-LBJ's War on Poverty programs, started in 1964, have cost the taxpayers 13 trillion, and there's more poor people than in 1964. You're probably too simple to know that LBJ wasnt a republican.
11-10-2009 @ 10:58PM
Nancy said...
Hey Chuck, How long have the democrats been in control of our Congress?
11-10-2009 @ 8:40PM
tat said...
if you have insurance with this company..all you have is a card. if you have a wreck they will back drop you. then sue you for the full balance for the year. evan what you already paid. CROOKS
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11-11-2009 @ 12:39AM
richard said...
You are right. I had AIG auto insurance here in Israel. I was involved in an auto accident in Sept,1999. I never received a penny from them and they kept my money that I paid for the whole year. I paid it the month before.
AIG is a company of crooks! They should be investigated and people should not buy their insurance from them. Their motto should be, "you pay, we don't".
11-10-2009 @ 8:42PM
kluji said...
Anything to keep the stock market afloat. Tell yah what, instead of talking about it, start acting and PAY IT BACK! Action not words are what we need! Moodys? LMAO. They had companies rated triple A that vanished overnight. LMAO. What a crock!
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11-10-2009 @ 8:45PM
Kevin said...
I cannot understand why "we the people" continue to put up with this crap! AIG and the likes are the reason for this mess.
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11-10-2009 @ 8:58PM
dan said...
How can Moody's be trusted at all after their role in this economic disaster? Their self serving ratings are the biggest reason for this disaster. No one went to prison or was even called to task.
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11-10-2009 @ 9:37PM
Don said...
Maybe Goldman realizes, with the heat on to audit the fed,
oh yes, maybe we can make AIG appear to be in good shape and able to pay back the government all of the money AIG had to borrowin order to pay claims on CDO's @ 100 cents on a dollar to ........... , well of course, Goldman Sachs.
The king's of the Bankster criminals, "Doing God's work"
The f......ing audacity !
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11-10-2009 @ 10:34PM
Mary said...
They should be able to pay some back. Didn't they just get another sum of money in bailout. Pretty good paying back government with governments own money. Correction out money
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11-10-2009 @ 10:50PM
Paul said...
BANKS ARE NOTHING BUT THIEVES. Research what is called " THE RULE OF72 " WHICH TAKES INTO CONSIDERATION COMPOUNDING AND RELOANING THE PROFITS ON A MONTHLY BASIS AT THE SAME RATE and you will know just how thieving the BANKS have become. Take 72 and divide it by the intrest % rate a bank charges you for a credit card or whatever. And that's how many years it takes for a bank to doubble it's money. Example 72 divided by 29.99 % intrest charged by the bank = 2.4 years it takes a bank to doubble it's money at 29.99%intrest charged it's customer. Example 72 divided by 21 % intrest charged by the bank = 3.4 years it takes a bank to doubble it's money if the bank charges you 21 % intrest. Example 72 divided by 15 % intrest charged by the bank = 4.8 years it takes the bank to doubble it's money if the bank charges you 15 % intrest. Example 72 divided by 9.9% intrest charged by the bank = 7.2 years it takes the bank to doubble it's money if the bank charges you 9.9% intrest on an account.NOW THEN--- Example, if a bank takes $1,000 from you when you buy a CD and that bank pays you 2% for that CD which most banks are paying now. then by "THE RULE OF 72" then 72 divided by 2% intrest the bank is paying you on your CD=36 , so 36 is the number of years you will have to leave your $1,000 dollars in the bank before it becomes two thousand dollars. 36 years , and don't forget you have to pay FEDERAL AND STATE INCOME TAX ON THAT 1,000 DOLLARS .
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