Snap Fact #190
President Obama's AIG Bailout Settlement Plan Results In A Revived Company + A Net Gain to U.S. Taxpayers Of $Billions in Profit!
There appears to be a significant positive change in the scenario of the U.S. bailout of AIG (American International Group). After much gnashing of teeth and criticism of the President from both the left and the right, the GAO now forecasts that the government could end up with a $15.1-billion, profit from the bailout of this insurance giant. It is possible that this estimate of profit is quite conservative and the U.S. taxpayers may be in for an even bigger windfall.
As you recall, the government made a commitment of approximately $180-billon in TARP loans to AIG during the financial crises of 2008 to avoid the collapse of the entire global financial system. AIG was the single largest beneficiary of government help from the TARP bailout and became a symbol of greed and excessive risk-taking on Wall Street.
The unpopularity of the AIG bailout with the American public became exacerbated when a news release in 2009 indicated that AIG was awarding $165-million in bonuses to some of its executives. President Obama was outraged and instructed Treasury Secretary Geithner to seek every legal avenue to block these bonuses. Unfortunately, the bonuses could not be rescinded because of airtight contracts that were made with the executives in 2008. In spite of this, the newly installed CEO of AIG, Edward M. Liddy, told Congress that he had asked employees who received more than $100,000 in bonuses to return at least half and that some employees had decided on their own to return all of their bonuses to the company.
The loans to AIG were made during the Bush Administration, but the job of recovering these assets was left to the Obama Administration. By June 30th of 2010, AIG said that it then owed the government a balance of $101.2-billion as a result of repayments from sales of company assets as well as their non-use of some of the funds that had been made available to them.