AIG made the payment today with proceeds from the sale of remaining assets in Maiden Lane II, the vehicle created in 2008 to buy mortgage-linked assets, said the person, who asked not to be identified because there wasn’t a public announcement. That means the government has recovered $331 billion of the $414 billion in Troubled Asset Relief Program funds that were disbursed, the person said.
A rebounding economy and climbing stock markets are allowing companies to unwind bailouts from 2008 and 2009 designed to prevent a collapse of the banking system and protect jobs. AIG, once the world’s largest insurer, was rescued in 2008 in a bailout that swelled to $182.3 billion.
The Treasury sold $6 billion in AIG shares earlier this month, reducing its stake in the New York-based insurer to about 70 percent. AIG purchased $3 billion of the shares. The sale was the second for the department since it converted a preferred stake into 92 percent of AIG common shares in January 2011. The government cut that holding to 77 percent in a May offering.
AIG declined less than 1 percent to $28.08 today in New York and has gained 21 percent this year. The government needs to average at least $28.72 on its share sales to recoup taxpayer funds. It sold AIG shares for $29 apiece in both offerings.
AIG announced a plan March 7 to repay $8.5 billion in obligations to Treasury. Along with the Maiden Lane income, the insurer will use proceeds from selling shares of Hong Kong-based insurer AIA Group Ltd. and escrowed cash from the sale of a unit to MetLife Inc. in 2010, AIG said in its statement. Mark Herr, a spokesman for AIG, declined to comment.
The U.S. government also still owns a majority stake in Ally Financial Inc., after divesting holdings in banks including Citigroup Inc. (C) and cutting its investment in General Motors Co. (GM).