AIG Exit Plan Speeds Up Taxpayer Payback

The Treasury and AIG are negotiating a plan that will allow the government to sell off its massive stake in the insurance company and repay taxpayers in full—over several years. Under the plan, the US would convert its $49 billion in preferred shares into common shares, likely increasing the government’s ownership stake to more than 90%, from its current 79.8%, the Wall Street Journal reports. Then the government will slowly sell off its stock. An independent AIG would be seen as a victory for both the company and the government, which has seen many banks repay their bailout debts earlier than expected.

AIG and federal officials will detail the plan to investors in the coming weeks, in the hopes that a definitive road plan will boost market confidence in the company. Private investors own just $5 billion worth of AIG stock, down from more than $100 billion before the bailout. Success is far from certain, but AIG does have some reason for hope: The value of its debt is rising, as investors regain confidence that it will make good on its obligations, making the company able to raise capital again.
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