By Jim Puzzanghera, Los Angeles Times –
WASHINGTON— The U.S. government could end up pocketing $15.1 billion in profit from the bailout of insurance giant American International Group Inc., according to a new estimate by the Government Accountability Office.
The report came as the Treasury Department on Monday continued to wind down its stake in AIG, announcing that it has agreed to sell $5.8 billion worth of shares to reduce the government’s ownership stake to 61 percent, from 70 percent.
The sale, which would produce about $750 million more than originally estimated, would reduce the Treasury Department’s investment in AIG to about $31 billion, with the Federal Reserve holding another $9 billion.
The remaining government stake in AIG is down significantly from the $125 billion in taxpayer money pumped into the company to keep it from collapsing in 2008.
Treasury Department officials have said they hope to recover all the bailout money given to AIG. And on Monday, the GAO reported that AIG’s improved financial health has brightened the outlook on one of the most unpopular bailouts from the financial crisis.
“When all the assistance is considered, the amount the federal government ultimately takes in could exceed the total support extended to AIG by more than $15.1 billion,” the government watchdog agency said.
The estimate was dependent on the time of the Treasury Department’s future sales of AIG stock and the company’s share price. The GAO said the profit projection did not factor in the government’s costs to subsidize AIG over the last few years, which were not calculated.
