The most remarkable story no one is talking about: the recovery of AIG due to TARP

This is a great success story that few are talking about. AIG could have gone under during the financial crisis of 2008, and if it had, it had the potential of taking down the global economy. Instead, it was rescued by TARP. Not only was it rescued, but the American government is going to make a profit from it and sell off most of their shares. Key take aways from this Globe and Mail story:

It’s not easy to celebrate the anniversary of the financial meltdown. American International Group, however, is providing reason for a muted cheer. Uncle Sam is ceding control of the giant insurer four years after a rescue that eventually put taxpayers on the hook for $182-billion (U.S.). The planned sale of AIG shares should net a profit, too. But exuberant political messaging would create the wrong impression about bailouts…..

Over the weekend, the U.S. Treasury said it could sell as much as $20.7-billion of its AIG common shares if underwriters exercise an overallotment option. That would slash the government’s stake to 15 per cent from the current 53 per cent – and 92 per cent in the aftermath of the crisis. Given the horror show AIG was, it’s a turnaround nearly impossible to have foreseen at the end of 2008.

It seems to me whoever wrote this article has gone out of their way to downplay the success of this. Ignore the tone of the article: this is a big success.

It is a shame it is not going to get touted more, but it won’t. The Republicans hate TARP and would hate even more to play up the success of it. And the Democrats don’t want to be associated with bailing out a Wall Street firm as big and terrible as AIG.

Still, this is remarkable.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s