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The last U.S. owned stock in AIG sold for $7.6 Billion giving the U.S. a total net profit of $22.7 Billion from the bailout of AIG.

The $182 Billion bailout of AIG was the most shamefully necessary action that had to be taken in 2008 to keep the great recession from becoming another great depression. Even those who understood the necessity of the action were repulsed and angry at having to take it and the critics of the President used it as a poster child for wasteful spending.

Well, it is over. And rather than costing $182 Billion it actually netted a profit of $22.7 Billion. Most of the profit came from the sale of mortgage backed securities, while the rest came from the sale of stock.

The Treasury acquired AIG common stock at a cost of about $47.5 billion, and the department’s profit on the share sales was about $4.1 billion. Most of the total $22.7 billion profit was recorded by the Fed, fueled by gains in mortgage-linked securities assumed in the rescue.
In addition to helping prevent economic collapse, another good result from this affair was that it spurred passage of Wall Street reform legislation. But overall everyone is glad it's over and will hopefully never be repeated. (But that's another story.)

Update

The comments suggest the need for a fuller explanation of the AIG Bailout. There is an excellent Forbes article that includes a good breakdown.

Bottom line is "profit" means the amount of return that exceeds the amount invested. The Fed invested $112B in AIG in the form of mortgage backed securities, loans and other items. It sold them for $130B making a profit of $17.7B. The treasury invested $69.8B in AIG stock which it sold for $74.8 B making a profit of $5B. In total, the U.S. invested $182.3B which it sold for $205B making a profit of $22.7B.

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Comment Preferences

  •  Don't forget the "best" part (16+ / 0-)
    AIG CEO Bob Benmosche, who was profiled by New York's Jessica Pressler in October, expressed chagrin that the government failed to convey appropriate gratitude for AIG's efforts to climb back from the brink.

    “Everybody said it’s just not going to happen, they’ll never pay [the bailout] off,” he goes on. “SIGTARP, Elizabeth Warren, Gretchen Whatshername in the New York Times. The fact is we now have succeeded in getting the Fed back all of their money, and we’re just close to getting the Treasury paid back. And do you know,” he adds, an indignant note creeping into his voice, “neither of them have ever said ‘Thank you’?

    You know, also bet he wonders whys so many people still hate the supposed "masters of the universe."

    The 47% also "pay all the taxes that are legally required and not a dollar more" but when Romney does it he thinks it's a virtue, while when they do it, he thinks they are deadbeats.

    by jsfox on Tue Dec 11, 2012 at 06:18:13 AM PST

    •  Wow. They use Wall Street as a casino and (5+ / 0-)

      play high stakes poker with security backed mortgage derivatives (that they know are junk...next to worthless) and almost single handedly destroy the global economy,
      we, the people, have to bail your ass out to the tune of $182 Billion dollars and we're supposed to thank you??

      I cannot wait until January 3 when Elizabeth Warren is sworn in :D  

      "On this train, dreams will not be thwarted, on this train faith will be rewarded" The Boss

      by mindara on Tue Dec 11, 2012 at 06:48:59 AM PST

      [ Parent ]

    •  When I need to borrow money.... (3+ / 0-)
      Recommended by:
      grover, Gary Norton, ConfusedSkyes

      to get myself out of a mess it is I who say "thank you" and I do it twice. The first thanks from me comes when I borrow the money and my second thanks pops out of my mouth when I finally pay back all the cash. What I don't expect is for the person who loaned me the money to thank me for the "honor" of getting it back.

  •  That's a little more than Goldman made... (3+ / 0-)
    Recommended by:
    jfromga, stagemom, Gary Norton

    ...when AIG was bailed out...

    "I always thought if you worked hard enough and tried hard enough, things would work out. I was wrong." --Katharine Graham

    by bobswern on Tue Dec 11, 2012 at 06:21:05 AM PST

    •  We're talking a 12.5% return on our money (5+ / 0-)

      over 4 years. Not bad at all, especially in a bad economy.

      Maybe Timmeh isn't as sold out as we've suspected.

      “I’m able to fly, do what I want, essentially. I guess that’s what freedom is — no limits.” Marybeth Onyeukwu -- Dreamer.

      by chuco35 on Tue Dec 11, 2012 at 07:10:23 AM PST

      [ Parent ]

      •  As the lender/investor of Last Resort!!!!!!!!!!! (0+ / 0-)

        12.5% is awful.

        On a risk-adjusted basis, the US taxpayer got robbed.

        Ask anyone on Wall Street, off the record, and he'll tell you as much.

        Learn about Centrist Economics, learn about Robert Rubin's Hamilton Project. www.hamiltonproject.org

        by PatriciaVa on Tue Dec 11, 2012 at 11:19:22 AM PST

        [ Parent ]

        •  Not so much when we were looking at perhaps losing (0+ / 0-)

          the whole taxpayer wad, if necessary to save the Banksters from their own misdeeds (cough, cough, I mean The Economy from an Act of God).

          “I’m able to fly, do what I want, essentially. I guess that’s what freedom is — no limits.” Marybeth Onyeukwu -- Dreamer.

          by chuco35 on Tue Dec 11, 2012 at 11:28:45 AM PST

          [ Parent ]

          •  That's precisely what Japanese pols said 20 years. (0+ / 0-)

            ..ago, when US officials, including Bernanke and Greenspan, castigated them for bailing out Japanese banks and conglomerates.

            The, "you can't imagine how much worse it would have been" defense.

            Learn about Centrist Economics, learn about Robert Rubin's Hamilton Project. www.hamiltonproject.org

            by PatriciaVa on Tue Dec 11, 2012 at 11:38:43 AM PST

            [ Parent ]

  •  we made money on the stock purchase (2+ / 0-)
    Recommended by:
    stagemom, Gary Norton

    but the people of this country have still lost an enormous amount of wealth from the financial chicanery that necessitated the bailout.

    We need to remember that the ills of financial casino investments are not yet cured, that ordinary people's net worth and income have declined, and the predators on Wall Street plan more of the same to reap large returns for 1% of the population on the money they have already stolen.

  •  I don't get the math at all (0+ / 0-)

    Since

    The $182 Billion bailout of AIG
    appears to have been countered by an intake of $22.7 billion from selling off the stocks they got in exchange for that $182 billion.

    In what world is that "profit"?

    To me profit would be if the got the $182 billion back PLUS $22.7 billion.

    •  That's how I read it too. Maybe we are missing (1+ / 0-)
      Recommended by:
      Roadbed Guy

      something.

      •  Maybe, but somehow I fear that we're not. (0+ / 0-)
      •  Or, now I get your comment, yeah, the (0+ / 0-)

        "something" that we're missing (with "we" being the US taxpayer) is the gap between $182 billion and $22.7 billion!

        •  I believe we took an $182B equity stake and (2+ / 0-)
          Recommended by:
          TomP, bear83

          because we did it gave the company value and made it a good investment(full faith and credit).  It is now at a point we can sell the stock and make $22.7B in profit on the sale of the stock.  Someone correct me if that is not what happened.  I think it is rich that the CEO did anything to make that happen.  The government stepped in and made them worth investing in.  The insurance business was never the problem.  They divested themselves of the gambling casino in London and the rest of the business,old line insurance was fine.  The government stepped in order to make international investors(which included Goldman) whole.

          •  I don't know what that means (0+ / 0-)

            are you saying that "taking an equity stake" didn't require the outlay of any "real" money?

            Again, from the linked article:

            The revised bailout included a $60 billion credit line from the Federal Reserve Bank of New York, a Treasury investment of as much as $69.8 billion and up to $52.5 billion from the Fed to buy mortgage-linked assets once owned or backed by AIG.
            It sounds like except for the $60 billion credit line, the rest of the bailout still required "real" money . .. .
            •  Credit line indicates a loan which has to be paid (0+ / 0-)

              back, the second indicates we got an equity stake, we got stock and we purchased what were probably overvalued mortgage linked assets(we probably got taken on these) as we probably paid full value.  

    •  The use of the term net profit (5+ / 0-)

      would seem to indicate that the initial outlay of $182B was recovered plus $22.7B.  I don't know what else net profit could mean here.

      A petty criminal is someone with predatory instincts but insufficient capital to form a corporation. --Clarence Darrow

      by stlsophos on Tue Dec 11, 2012 at 06:43:30 AM PST

      [ Parent ]

      •  Well, from the link given in the diary (0+ / 0-)

        it appears that in addition to the $22.7 billion from selling stock, the Treasury * might * have gotten an additional $65 billion:

        The Treasury Department is selling 234.2 million shares at $32.50 each in the sixth offering since the 2008 rescue. The proceeds boost the U.S. profit on the rescue that began in 2008 to $22.7 billion, according to a statement today from the Treasury, which injected capital through the Troubled Asset Relief Program.

        The U.S. took over the New York-based company in a 2008 bailout that swelled to $182.3 billion to save the global economy from collapse. AIG has sold more than $65 billion of assets to help repay the rescue, while Chief Executive Officer Robert Benmosche scaled back from the derivative bets that almost destroyed the firm. He’s focusing on property-casualty coverage globally and life and retirement products in the U.S.

        But still ( $182.3 minus $22.7 minus $65, all in billions) is still a $94.6 billion LOSS (not PROFIT!!!!).
        •  You're wrong. (3+ / 0-)

          $182B plus $22.7B.

          Join us on the Black Kos front porch to review news and views written from a black pov—everyone is welcome.

          by TomP on Tue Dec 11, 2012 at 06:53:40 AM PST

          [ Parent ]

          •  Wrong how? (0+ / 0-)

            maybe I should have stated the bailout in negative $ figures:

            Bailout, we're at -$182.3 B

            Selling assets: we're at -$182.3 B + $65 B = - $117.3B

            "profits" from selling stocks: we're now at -$117.3B + $22.7B = -$94.6B

            That is, 94.6 billion dollars in the hole.

            •  Your assumption that (7+ / 0-)

              182B was not paid back is incorrect.  It was.  Then there was an additional 22.7B profit.   You are misreading a story to arrive at your conclusion.  It is erroneous.  Since your premise is wrong, you math is irrelvant.

              So you can repeat it over and over, but it is incorrect.

              Facts matter.  

              You can be for or agaisnt the bailout, but the fact is that AIG mader its money back plus a profit.  You can still think it was wrong and that a financial crash and depression was better.  

              But the fact is that there was no loss.  That is a fact.  The rest is open to argument.

              Join us on the Black Kos front porch to review news and views written from a black pov—everyone is welcome.

              by TomP on Tue Dec 11, 2012 at 07:17:00 AM PST

              [ Parent ]

              •  I am going by the information linked to in the (0+ / 0-)

                diary.

                If a diary is incorrect, why is the onus on me to search the internet for the correct information?

              •  OK, here's another description of the situation (0+ / 0-)
                AIG stock has traded between $22.19 and a high of $37.67 the past 52 weeks.

                Proceeds from the final stock sale are expected to total approximately $7.6 billion.

                Treasury said with the stock sale it has realized a positive return of $5 billion, while the Federal Reserve received a positive return of $17.7 billion.

                Treasury conducted six public offerings of AIG stock the past 19 months, selling a total of 1.66 billion shares of the company. At the start of the sales, Treasury had owned 92% of AIG's outstanding common stock.

                link

                So, the Government sold 1.66 billion shares at a maximum of $37.67 - that's $62.43 billion, still considerably short of the $182.3 billion in bailout funds thrown their way.

                If it's so crystal clear where the other tens of billions of dollars have come from, why hasn't (can't!) anybody summarize this information a handy table?  You know, so the average American like myself  - as opposed to somebody with an advanced degree in financial chicanery -  can understand?  

              •  Tom. Thanks. I posted the update, including (1+ / 0-)
                Recommended by:
                virginislandsguy

                a link to the Forbes article that breaks it all down, to help you bring an end to this discussion.

                What you and I thought was pretty clear in the original article and to people who have followed this, was , well, not so clear to others.

                Further, affiant sayeth not.

                by Gary Norton on Tue Dec 11, 2012 at 08:47:07 AM PST

                [ Parent ]

            •  Details (4+ / 0-)
              The revised bailout included a $60 billion credit line from the Federal Reserve Bank of New York, a Treasury investment of as much as $69.8 billion and up to $52.5 billion from the Fed to buy mortgage-linked assets once owned or backed by AIG.

              The Treasury acquired AIG common stock at a cost of about $47.5 billion, and the department’s profit on the share sales was about $4.1 billion. Most of the total $22.7 billion profit was recorded by the Fed, fueled by gains in mortgage-linked securities assumed in the rescue. The U.S. still holds warrants to buy about 2.7 million shares of AIG stock.

              Bloomberg

              Join us on the Black Kos front porch to review news and views written from a black pov—everyone is welcome.

              by TomP on Tue Dec 11, 2012 at 07:18:38 AM PST

              [ Parent ]

            •  You are confusing AIG's selling assets with the (4+ / 0-)

              government's assets in AIG stock (and warrants).  

              It's really pretty simple: the govt laid out less to buy AIG stock and save the company than it got back in selling that stock.

              The trouble with the world is that the stupid are cocksure and the intelligent are full of doubt. Bertrand Russell

              by accumbens on Tue Dec 11, 2012 at 07:20:45 AM PST

              [ Parent ]

    •  They got back $182B plus (5+ / 0-)

      $22.7B.

      Join us on the Black Kos front porch to review news and views written from a black pov—everyone is welcome.

      by TomP on Tue Dec 11, 2012 at 06:52:26 AM PST

      [ Parent ]

    •  No. the $22.7 was the last stock sale. We have (3+ / 0-)
      Recommended by:
      TomP, virginislandsguy, ConfusedSkyes

      been selling stock and mortgage backed securities for years. This is simply the end of the road and the total net profit after recovering the $182B was $22.7B.

      Further, affiant sayeth not.

      by Gary Norton on Tue Dec 11, 2012 at 07:09:16 AM PST

      [ Parent ]

    •  There's been various forms of bail and payback: (3+ / 0-)

      The paybacks start here:

      Dec. 1, 2009: The government allows AIG to reduce its credit- line debt by turning over two non-U.S. life divisions, American Life Insurance Co. and AIA Group Ltd. (1299), to Fed vehicles.

      Jan. 8, 2010: Treasury Secretary Timothy F. Geithner is asked to testify before Congress after Bloomberg News reported that the New York Fed asked AIG in 2008 to withhold bank-payment details from the public. Geithner led the district bank in 2008.

      Jan. 27, 2010: Geithner says the AIG bailout prevented an “utter collapse” of the U.S. economy.

      Feb. 26, 2010: AIG Chairman Harvey Golub says pay limits imposed as part of the bailout make “little business sense”

      March 8, 2010: MetLife Inc. (MET) agrees to buy Alico for $16 billion.

      June 10, 2010: AIG’s rescue had a “poisonous” effect because it showed the U.S. would rescue firms if risky bets went bad, Elizabeth Warren’s Congressional Oversight Panel says.

      Sept. 30, 2010: AIG says it will convert Treasury’s $49.1 billion preferred stake to common shares for sale to investors.

      Oct. 29, 2010: AIG sells a majority stake in AIA in an initial public offering in Hong Kong, raising about $20.5 billion.

      Jan. 14, 2011: AIG repays Fed credit line and swaps Treasury’s stake for common stock, giving the U.S. a 92 percent holding.

      March 30, 2011: The New York Fed says it will auction bonds from the Maiden Lane II fund created to stabilize securities lending.

      May 6, 2011: AIG Chief Financial Officer David Herzog says “we’re really not going to pay much income tax to the U.S., as we have very large deferred-tax assets” accumulated when the company was unprofitable. Benmosche said the assets will be a “source of funds” helping AIG repurchase stock from the U.S.

      May 24, 2011: The U.S. and AIG sell shares at $29 apiece in the insurer’s first stock offering since the bailout, raising $8.7 billion and cutting the government’s stake to about 77 percent.

      Feb 23, 2012: AIG books a $17.7 billion tax benefit as the insurer cites a return to “sustainable operating profit.”

      March 12, 2012: Former oversight panel members led by Warren say AIG got a “stealth bailout” by avoiding taxes. Treasury has said that laws prohibiting the transfer of tax assets when a company changes hands don’t apply to government rescues.

      Aug. 23, 2012: The New York Fed ends its portion of the rescue with the sale of the last mortgage debt it assumed in the Maiden Lane III vehicle, created to cancel credit default swaps.

      Sept. 11, 2012: The U.S. cuts in stake in AIG to 16 percent from a majority, selling $20.7 billion of shares at $32.50 apiece in its fifth offering. Including the Fed’s mortgage-bond sales, taxpayers have recouped the cost of the bailout with a profit.

      I haven't done the math, but this is Bloomberg saying that we turned a profit in September.

      http://www.bloomberg.com/...

      One piece of free advice to the GOP: Drop the culture wars, explicitly.

      by Inland on Tue Dec 11, 2012 at 07:31:47 AM PST

      [ Parent ]

  •  a little clarification (10+ / 0-)


    for those who don't know the meaning of the word 'profit' - it means the amount received for sale of AIG stock plus repayments by the company, minus the bailout amount.  The $22 billion profit is what the government is left with when the books close.  AIG paid back the bailout.

    "Kossacks are held to a higher standard. Like Hebrew National hot dogs." - blueaardvark

    by louisev on Tue Dec 11, 2012 at 06:57:25 AM PST

  •  Hey, maybe the way out of the budget deficit is (3+ / 0-)
    Recommended by:
    Gary Norton, accumbens, grover

    for the federal government to get into the "private equity" business. That's clearly where the big bucks are to be made. Why let the Romney's of the world walk off with all the loot.

    (OK, this is snark, but still....)

  •  And the US still holds warrants to buy AIG stock, (3+ / 0-)
    Recommended by:
    Gary Norton, TomP, virginislandsguy

    which I assume could be sold as well for an additional profit unless they have restrictions to prevent that.  

    The trouble with the world is that the stupid are cocksure and the intelligent are full of doubt. Bertrand Russell

    by accumbens on Tue Dec 11, 2012 at 07:16:42 AM PST

  •  Krugman was always wrong, Geithner was (7+ / 0-)

    right.  The crisis was a liquidity crisis, not a solvency crisis.

  •  Damn, where are all these lost trillions that (2+ / 0-)
    Recommended by:
    Gary Norton, virginislandsguy

    everyone here has been talking about? Unicorns must have eaten them.

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