The government is close to announcing its plans to end the bailout of American International Group (AIG), returning the company to independence and recovering taxpayer funds.

The Treasury is planning to begin converting its $49 billion preferred stake into common stock for sales, Bloomberg News said without naming its sources. The plan could be announced this week.

AIG is currently working on selling two international units, AIA and American Life Insurance Co., that would let the company repay its credit line with the Federal Reserve.

The company wants to "repay the taxpayers and position AIG, over time, as a strong, independent company worthy of investor confidence," said Mark Herr, AIG spokesman. "We have been in discussions with the U.S. Treasury, the Federal Reserve Bank of New York and trustees of the AIG Trust over the terms of the government's exit from AIG."

AIG currently has a $182.3 billion lifeline from the public sector, including a Treasury investment worth as much as $69.8 billion.

The company, once the world's largest insurer, had to turn to the federal government as problems related to its security-guaranteeing business mounted. As the value of securities, including credit default swaps, fell, AIG losses mounted up and it had to post more and more collateral.

These impacted the company's creditworthiness, forcing it to post yet more collateral.

Eventually, the Federal Reserve stepped in to aid the company in September 2008. The bailout has been revised three times since then.

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dhggifg

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September 28 2010 at 9:52 AM Report abuse rate up rate down Reply
scottee

when is Obama and all of congress going to announce their exit strategy? we need to vote out all career politicians every election, every time, starting in November. they are part of the problem, not the solution.

September 27 2010 at 7:41 PM Report abuse rate up rate down Reply