Doubts if AIG can repay aid money
By Marcy Gordon |
June 11, 2010, Friday
|
Print Edition
Print Edition
A watchdog panel says it's still unclear whether United States taxpayers will ever fully recoup the US$182 billion they plowed into American International Group Inc, and the government should have used up all its options before bailing out the crippled insurance titan.
The government could have acted sooner and more aggressively to engineer a privately funded rescue of AIG in September 2008, the Congressional Oversight Panel says in a new report released yesterday.
The bailout had a "poisonous" effect, the report says, because now the markets believe the government will commit taxpayer money to prevent the collapse of major financial institutions and to repay their trading partners.
AIG executives and the Treasury Department have given "optimistic" assessments of the company's value, the report says, noting that the Congressional Budget Office estimates that taxpayers will lose US$36 billion.
A large part of the money needed to repay the government will come from the sale of assets.
"The uncertainty lies in whether AIG's remaining business units will generate sufficient new business to create the necessary shareholder value to repay taxpayers in full," the report says.
The oversight panel was created by Congress to oversee the Treasury Department's US$700 billion financial bailout program that came in at the height of the financial crisis in the fall of 2008. AIG was the largest of the government rescues.
The government could have acted sooner and more aggressively to engineer a privately funded rescue of AIG in September 2008, the Congressional Oversight Panel says in a new report released yesterday.
The bailout had a "poisonous" effect, the report says, because now the markets believe the government will commit taxpayer money to prevent the collapse of major financial institutions and to repay their trading partners.
AIG executives and the Treasury Department have given "optimistic" assessments of the company's value, the report says, noting that the Congressional Budget Office estimates that taxpayers will lose US$36 billion.
A large part of the money needed to repay the government will come from the sale of assets.
"The uncertainty lies in whether AIG's remaining business units will generate sufficient new business to create the necessary shareholder value to repay taxpayers in full," the report says.
The oversight panel was created by Congress to oversee the Treasury Department's US$700 billion financial bailout program that came in at the height of the financial crisis in the fall of 2008. AIG was the largest of the government rescues.
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