U.S. to make a $15B profit from AIG bailout

A new report from a congressional watchdog panel says the U.S. government stands to make $15.1 billion profit from the bailout of insurer American International Group. The Government Accountability Office says the exact size of the profit will be determined by the long-term health of AIG, as well as the timing of the U.S. Treasury’s sale of its stock and AIG’s share price. The GAO says AIG was showing signs in 2011 that it was becoming “stable and profitable,” with net income of $18.5 billion for the year, bolstered by income tax benefits and divested businesses. The Treasury’s exposure to AIG, which received government aid beginning in 2008, has been reduced sharply from the more than $180 billion committed to the bailout. In the latest sale of AIG stock, the Treasury reported Monday that it plans to sell about $5 billion worth of common stock, reducing the remaining investment to $30.7 billion. The GAO says it conducted the study because assistance to AIG from the Treasury’s Troubled Asset Relief Program and the Federal Reserve “represented one of the federal government’s largest investments in a private-sector institution.” AIG was bailed out due to its exposure to the faltering mortgage market during the recent housing meltdown. See the complete report for more details here.