"AIG is now free to pursue a bunch of other options to help maximize the return" for taxpayers, Geithner told reporters at a briefing.
Earlier Wednesday, Prudential backed out of its $35.5 billion offer to acquire AIG's AIA Group after failing to renegotiate a lower price for the deal.
AIG had planned to use proceeds of the deal to start repaying the U.S. taxpayers who had bailed it out to the tune of $132 billion.
Geithner praised AIG's management team and board for making "impressive" progress on the restructuring.