By Jim Puzzanghera, Los Angeles Times –
WASHINGTON — The government’s sale of American International Group Inc. stock will generate an additional $2.7 billion to boost the profit to U.S. taxpayers to $15.1 billion on the insurance giant’s bailout, the Treasury Department said Tuesday.
Underwriters of the Treasury’s AIG stock offering this week exercised their option to buy additional shares, bringing the total amount of sale proceeds to $20.7 billion.
The sale, which will be completed this week, will end the government’s majority ownership of the company, reducing the government stake to 15.9 percent from 53.4 percent, the Treasury Department said.
AIG still owes the Treasury about $2.6 billion from the bailout. But this week’s stock sale, combined with a $17.7 billion profit made by the Federal Reserve Bank of New York on its portion of the bailout, means taxpayers have fully recovered the approximately $130 billion used to rescue AIG starting in 2008.
The Fed and the Treasury Department pledged more than $182 billion to keep AIG afloat after it nearly went bankrupt in September 2008. AIG did not tap all that money, but many analysts predicted that the U.S. would never come close to recovering the bailout funds.
This week’s sale locks in at least a $15.1 billion profit, with the figure likely to rise when the U.S. sells the rest of its stake in AIG.
The company’s stock closed Tuesday at $33.45. The stock in the Treasury offering priced at $32.50 a share.
