The Government Is Profiting from AIG's Rescue, But What About Other Bailouts?

Equities Editors Desk |

Timothy Geithner, United States Secretary of the TreasuryWith the largest sale to date of its holdings in AIG (AIG), the U.S. Treasury Department cut its stake at the once failing insurer to around 21.5 percent from 53 percent. The Treasury department owned as much as 92 percent of AIG as part of the $180 billion bailout program in 2008.



The sale of 554 million AIG stock at $32.50 per share generated proceeds of about $18 billion. The break-even point is $28.72 per share. Combined with the $18 billion profit from the Fed's asset sales from the bailout, the U.S. government has captured a $12.4 billion profit from the rescue on top of the shares it still holds. The bailout was heavily criticized for both financial and moral implications of using taxpayer money to rescue irresponsible actions by too-big-to-fail institutions. While the financial aspect is sorting its way out, the concern that a the success of the bailout could resurrect the high risk behavior that led to a necessary rescue in the first place.

2008 Bailouts Revisited

According to ProPublica.org, the government has disbursed $603.8 billion in bailout funds to multiple industries--mostly financial institutions. It has so far recovered $337.5 billion of those funds, and generated an additional $87.1 billion in revenue through interest, dividend and other loan payments. Most of the major banks such as Citigroup (C), Bank of America (BAC), Wells Fargo (WFC), JP Morgan Chase (JPM) and Goldman Sachs (GS) have repaid the government money they received, and then some, many smaller banks are still struggling.

Currently, the top four institutions with the most funds outstanding, still owe the government about $178 billion: Fannie Mae (FNMA) at $90.6 billion, Freddie Mac (FMCC) at $51.2 billion, General Motors (GM) at $27.2 billion, and Ally Financial (formerly GMAC) at $10.7 billion.

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Companies

Symbol Name Price Change % Volume
PEGA Pegasystems Inc. 37.40 -0.05 -0.13 292,345
C Citigroup Inc. 56.11 -0.55 -0.97 27,722,281
JPM JP Morgan Chase 83.67 0.37 0.44 18,436,790
GS The Goldman Sachs Group Inc. 232.20 0.79 0.34 5,211,836
GM General Motors Company 37.01 -0.29 -0.78 14,001,523
BAC Bank of America Corporation 22.64 0.11 0.49 102,564,870
WFC Wells Fargo & Company 55.07 0.49 0.90 24,160,823
AIG American International Group Inc. New 66.54 0.25 0.38 9,070,940

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