Will AIG ever repay?
The bailed-out insurance company gets harsh comments from an investigating panel.
A panel investigating the bailout said that the federal government -- still an 80% owner in the company -- will likely continue as a significant shareholder through 2012, according to The Wall Street Journal. Taxpayers still "remain at risk for severe losses," the panel added.
AIG continues to be an embarrassment for the federal government, having received around $132 billion in aid from the Treasury Department and the Federal Reserve Bank of New York.
AIG is supposed to pay back $101 billion by selling assets and stocks, writes Serena Ng. The rest will come from mortgage securities the New York Fed received.
The panel has issued a report critical of the way the government handled the AIG bailout. Officials should have done more to get private-sector funds before funneling so much taxpayer aid, the report said.
Also, did the New York Fed really need to pay off AIG's bad bets in full? Did Goldman Sachs (GS) and other trading partners really need to get 100 cents on the dollar, in what essentially amounted to a free bailout?
"Billions of taxpayer dollars were put at risk, a marketplace was forever changed, and the confidence of the American people was badly shaken," the report said.
AIG's chief executive says he's sure taxpayers will be fully repaid, plus even some interest to boot. And Fed Chair Ben Bernanke is similarly confident, saying AIG will repay just as every other major bank that got a bailout repaid with interest and dividends, the Journal reports.
But AIG is having a heck of a time offloading assets at the price it needs in order to get full repayment. A plan to sell its Asian life insurance business to Prudential PLC has fallen through, Ng reports. Other deals have run into trouble as well.
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All hail the bull market, which ended the week with a big rally. But it also is starting to look a little like 1987, which suffered an epic blow-out.
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