|By Jim Puzzanghera, Los Angeles Times|
The sale, which priced Monday at
Taxpayers will no longer be majority shareholders of the company. But the sale also will reduce to about
Combined with the
The government's profit likely will be more as the
"Taking action to stabilize AIG during the financial crisis was something the government should never have had to do, but we had no better option at the time to protect the American economy from the damage that would have been caused by the company's collapse," Treasury Secretary
He added that "to stabilize and then restructure the company with a very substantial positive gain for the American taxpayer is a significant accomplishment."
AIG Chief Executive
"We are close to achieving what most outside AIG thought unimaginable," he said. "The people of AIG never lost faith, kept working, and are grateful for being given the chance to make good on this goal."
But the profit earned on the government's investments doesn't offset the harm the AIG bailout caused in creating an expectation that companies could engage in risky behavior and be rescued by taxpayers, said
In addition, taxpayer money to AIG helped bail out some large banks, which were able to recover all the money owed to them for credit default swaps they had purchased from the insurance company.
"While it's certainly good news, it does not detract from the loss of faith in government that the generous terms of the bailout of AIG's counter parties generated, and the lasting impact on our financial system from the moral hazard that accompanied it," Barofsky said of the profit announcement.
With AIG close to bankruptcy in
The bailout provoked outrage, particularly after it became known in early 2009 that some of the AIG employees who made the risky bets that brought the company to the brink of failure were in line for large bonuses.
AIG did not use all the money and its fortunes have improved as it began selling off some assets and restructuring the company. Its stock price is up nearly 44% this year.
As the government began unwinding its stake, the
"The principles behind exiting investments like the ones in AIG or in
He added, "I think that it's safe to say that the president is pleased with the progress being made as we wind down these investments and recover taxpayer money."
(c)2012 the Los Angeles Times
Visit the Los Angeles Times at www.latimes.com
Distributed by MCT Information Services
|Source:||McClatchy-Tribune Information Services|