American International Group Inc. (AIG) shares valued at $18 billion were sold by the U.S. government, converting a four-year bailout into a profit for taxpayers.
The U.S. sold about 553.8 million shares at $32.50 apiece, the Treasury Department said yesterday in a statement. The New York-based insurer bought $5 billion of the stock. The U.S. has recovered its full $182.3 billion commitment under the rescue with a profit of about $12.4 billion and still holds about 22 percent of the insurer’s shares for future sale, Treasury said.
“To stabilize and then restructure the company with a very substantial positive gain for the American taxpayer is a significant accomplishment,” Treasury Secretary Timothy Geithner said in the statement. “We need to continue the critical task of implementing Wall Street reform so that the American economy is never put in this position again.”
With the Treasury stake below 50 percent, the Federal Reserve will become the company’s regulator, the insurer said in a preliminary prospectus supplement. AIG may face capital requirements and limits on its ability to repurchase stock or pay a dividend, under Fed oversight, according to the document…
The U.S. needs to average about $28.73 a share on the sales to break even on the equity stake it acquired as part of a 2008 bailout, excluding unpaid dividends and fees, according to the Government Accountability Office. The first two offerings were priced at $29 a share, and the second two at $30.50.
Interesting how a lot of economics doesn’t fit ideology.