U.S. Treasury to Raise $5B from AIG Stock Sale

August 6, 2012

  • August 6, 2012 at 1:36 pm
    Sarah says:
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    This is meant to shore up the idiot democrat vote right? Lets take a little closer look at this.
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    The Treasury Department priced the offering at $30.50 a share, six percent above the $28.72 price needed for the U.S. government to break even on its investment in the insurer.

    AIG intends to buy up to $3 billion of the offering.
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    AIG intends to buy $3 billion? Who is the largest stock holder of AIG, So who who has decided to pay 30.50 per share. BINGO, that’s right! you and I (Government) has agreed to pay ourselves this amount.

    • August 6, 2012 at 1:44 pm
      Dumbfounded says:
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      Sarah, Based on your math and your logic, the only idiot in this equation is you.

      • August 7, 2012 at 11:06 am
        Sarah says:
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        Dumbfounded, I think we found you dumb! Give me your math! Who determined the value of 30.50 a share? Does not sound like real market value when you only have one seller and one buyer and they are virtually the same. But what would a liberal know about free market capitalism. To you I am sure Government owning private industry is not a problem at all. LOL….

    • August 6, 2012 at 2:15 pm
      Agent says:
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      More financial manipulation to make themselves look better. The truth is that AIG hosed the taxpayers and the Treasury is a willing partner to the hosing. How many foreign banks were bailed out from AIG’s scheme on the sub prime mortgage mess? Will we ever see our money back from the torrent of money that left the country? Don’t hold your breath.

    • August 6, 2012 at 3:56 pm
      Former Status Quo says:
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      how is AIG’s purchase of the shares from the US government any different than a stock buy back program? That’s right, it isn’t. The government is selling these shares and AIG is electing to buy them. If the government did not sell these shares, then the taxpayers would continue to own an equity stake in the company; however, by selling the shares to AIG or to anyone else for that matter, the government is liquidating their position.

      I don’t like the guy in the white house and I don’t like the bailout, but it’s no different than what ay other major company does during a stock buy back plan. The only difference is who they are buying the shares from.

  • August 6, 2012 at 2:44 pm
    Bill DeGenova says:
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    The fact is that the Feds actually made a good decision by rescuing AIG. The FRB has already profited and the Treasury stands to make a profit. AIG proved to be indeed large enough to pay back the package by divesting assets and generating cash from operating results, the FED kept global counterparties confident that American companies will honor contracts 100% (restoring faith that the USA is the best venue to do business), and Americans will be fully indemnified by YE 2013. Also, both Obama and Bush administrations did a good job stabilizing the 2008 crunch so it is a bipartisan achievement. That hasn’t happened in the US in a long time!

    There is a lot to complain about, but AIG is a case study of success so far. They still will see proceeds from the sale of AIA, Met, ML3, and ILFC. AIG still owes roughly $25B, but from the aforementioned transactions they’ll get close to raising the $25B.

    I’m more interested to see how the core operations perform once the assets are all divested and the cash from buying back stock from the treasury is done. The real story is can AIG stand on its own and generate returns without having to sell businesses.

  • August 6, 2012 at 3:59 pm
    Captain Planet says:
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    I’d have to agree with Bill and Joan on this. Would you rather have lost money on our investment?

    • August 6, 2012 at 4:35 pm
      Agent says:
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      How is that GM bailout “investment” working out for us? Their stock is steadily going down because their sales have declined. They couldn’t give the Volt away because it is a bad buy, burns up in event of a collision, Dealers didn’t want to stock it so they had to shut the plant down.

      • August 6, 2012 at 4:55 pm
        Bill DeGenova says:
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        The article was about AIG.

      • August 6, 2012 at 5:12 pm
        Captain Planet says:
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        Ask someone employed by GM or an affiliate (auto parts supplier). Also, look at the long term benefits of having American-made cars. You really want to shut down GM and force countless more Americans to lose jobs? Besdies, like Bill says, this article isn’t about GM.

        • August 7, 2012 at 11:11 am
          Sarah says:
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          Captain, when a company goes bankrupt that does not mean everyone loses their job. It just means they know work for the buyers of the company in the bankruptcy proceedings. Would it not be great to see GM spit into different divisions competing against each other for your business. Pontiacs would not look like Buicks and the Chevy Volt would be thrown in the garbage can. Smaller more creative, more competitively priced, More dealers and much better service. To bad Obama violated bankruptcy laws and pushed the unions to the front of the line and bond holders to the back. We really could have seen things work out for the better long term.

          • August 7, 2012 at 12:19 pm
            Agent says:
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            Sarah, don’t expect Planet to believe you on Chapter 11 Bankruptcy proceedings. He thinks if Obama hadn’t bailed them out, they would have just closed all their plants and laid off several hundred thousand workers. The reality is that if bankruptcy had been taken, the unions would have had to renegotiate their overly generous benefit packages on a new contract and it wouldn’t have been nearly so lucrative. With the bailout, they gained ownership of the company and kept everything in place. Now, they are struggling again trying to compete with the much more efficient foreign cars who doesn’t have the albatross of union contracts around their neck. There is no telling how many millions GM has “invested” in the Volt and it is one big turkey.

  • August 6, 2012 at 4:02 pm
    Agent says:
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    Really Joan? I think TARP originally was on the hook for $182 Billion. I don’t think that was the stockholders. That was called We the People taxpayers. No matter how you slice and dice this bailout, the American People will never see the whole balance paid back. Everytime a liberal says we are “investing” in something, that means more deficit spending which they are very good at. AIG is a nasty company with a lot of skeletons in their closet going back the the Marsh bid rigging schemes and toxic paper being sold was the frosting on the cake.

  • August 7, 2012 at 9:28 am
    Captain Planet says:
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    But, since you brought it up, interesting article on GM here:
    http://wardsauto.com/sales-amp-marketing/gm-s-2011-sales-gains-provide-first-market-share-bump-years

    I’d say they are performing pretty well. One of my neighbors at the lake loves his Chevy Volt, by the way. And it looks pretty sharp, too.

    • August 7, 2012 at 10:34 am
      Agent says:
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      Planet, you trotted out an article from 2011. Apparently, you didn’t bother to read up on how they are doing in 2012. Sales are way off and their stock price has deteriorated significantly. In fact, GMAC Financial is offering sub-prime loans to people with low credit scores to sell cars. Given recent history in housing, what could possibly go wrong with that approach? If the Volt is such a great car, how come the Dealers don’t want them and they had to shut the plant down? I hope your neighbor doesn’t have a wreck in his because it may just blow up as others have done.

      • August 8, 2012 at 2:01 pm
        Captain Planet says:
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        Agent,
        GMAC isn’t the only one offering subprime in the auto lending dept. It’s widespread. And, here is an article about subprime lending in the auto industry. Also, comparing subprime loans on a car compared to subprime loans on a house is comparing apples to chimneys. Ever heard of the repo man? Just a little reality for you.

        • August 8, 2012 at 2:01 pm
          Captain Planet says:
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          Lousy Credit? Need a Car Loan? No Problem!
          By John Rosevear, The Motley Fool
          Posted 2:19PM 07/30/12

          Posted under: Credit, Autos
          151605201
          The fallout from the 2008 financial crisis still plagues would-be borrowers. Banks are still being pretty stingy about extending credit these days. Credit cards aren’t nearly as easy to get as they were a few years ago. And ordinary folks are finding that only borrowers with high credit scores are being considered for a mortgage.

          But there’s one big exception, and it may be having a big effect on the economy: auto loans.

          U.S. auto sales haven’t yet returned to their pre-recession highs, but they’ve been surprisingly strong. Total sales of “light vehicles” — cars, pickups, and SUVs — were up 14.8% in the first half of 2012, and they’re still picking up steam.

          But what’s driving it? After all, unemployment remains high, and many people who are employed have seen their earnings decline. Lots of folks have seen their credit ratings dented. It can’t be easy for all those people to be buying new cars, can it?

          Maybe it can be that easy for those with roughed-up credit to buy a car.

          Subprime Loans Driving Auto Sales

          It turns out that auto lending is one place where the banks are willing to be a little loose — maybe even more than a little relaxed about lending standards.

          New auto loans from banks totaled $47.5 billion in the first quarter of 2012. According to credit bureau Equifax, that’s a seven-year high. Automotive finance companies added another $52.5 billion, says Equifax, up 49% from three years ago.

          A lot of those loans are subprime loans.

          A recent report from financial data firm Experian shows that the percentage of new auto loans going to subprime borrowers — people with credit scores below about 680 — has increased significantly in the last year, just as auto sales have taken off.

          Some automakers are benefiting more from this than others. The Detroit News reported recently that Chrysler, whose sales were up a whopping 30% in the first half of 2012, has a special relationship with an arm of Spanish bank Santander (SAN) that specializes in subprime lending. That, experts say, has probably been a key contributor to Chrysler’s recent success.

          Is It Time to Worry?

          Not necessarily. For one thing, default rates on auto loans are lower than they have been in years — even as the percentage of loans going to subprime borrowers has risen. And defaults on auto loans tend to be less common than defaults on mortgages in general, probably because it’s so easy for a lender to repossess a car — and so hard for many people to get by without one.

          And finally, this rise in subprime lending may just be a feature of the times we live in.

          Many people had top-notch credit for years but because of the tough economy, have seen their credit dinged by unavoidable circumstances. Now that they’re back on their feet, those people are probably still pretty good candidates for a loan. If banks are now starting to see that, it’s probably a good thing.

          • August 8, 2012 at 2:50 pm
            Agent says:
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            Planet, it is interesting how you trot out articles that fit your Progressive agenda. Sub prime loans are bad business practice whether they are for homes or autos. We are still in the midst of the worst housing crisis in the country’s history due to the sub prime mortgage meltdown and you are advancing the theory that sub prime auto loans could be a good thing. It is bad enough that many of the manufacturers offer 0 down, 72 months to pay or offer a lease which can be very punitive if the vehicle is driven more miles or comes back with damage to them, but sub prime loans?? I guess they may create some jobs though with all the Repo guys they will have to hire. I wonder how big their lots will have to be to hold all of these cars and what kind of damage will be on these cars to fix. It is interesting also that you mention a bank in Spain offering the sub prime auto loans. Where are they getting their money? Did they get TARP or Stimulus Funds? Unemployment in Spain is at 23.4%. I hardly think their economy is in any shape to finance anything and is probably the next economy to go down after Greece.

          • August 8, 2012 at 4:05 pm
            Captain Planet says:
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            Agent,
            It’s funny to me you think I have an “agenda”. I have an opinion and I’m not afraid to voice it. But, I don’t have any plans in the works. All I was doing was presenting an article from a non-partisan site that speaks about the auto subprime loaning practices in response to you digging on GMAC on a blog that is supposed to be about AIG. If you want to turn it into something political, that’s your perogative (Bobby Brown). I’m simply passing along information. Again, houses to cars is like apples to apple orchards. Because I posted the article, I’m sure you will turn a blind eye to it, cover your ears, and yell “lalalalala” without actually taking a look at its merits. The key to the subprime business is good underwriting. If these underwriters look at enough history and find out the reasons why someone’s credit score is on the low side, loans can be written with limited risk. If those making the loans just start approving of anyone and everyone without doing their homework, then yes, you’ll see the repo lots fill up with some damaged vehicles. I won’t argue that. Good underwriting practices are necessary, crucial even.

            I see Lending Tree is already back at it with subprime home loans. I know they aren’t the only one, but they are certainly advertising a lot on the radio waves.

    • August 7, 2012 at 11:12 am
      Sarah says:
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      I think they have sold about 5000 last I heard and a good deal of those to the government.

      • August 8, 2012 at 4:39 pm
        Agent says:
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        Planet, From all the posts I have seen from you over several articles on IJ, I think your opinion is your agenda which is very left wing to say the least. Do you really think that loan officers are doing their homework approving sub prime loans for autos? They certainly didn’t in the home mortgage crisis and look where that took us. GMAC is part of GM and they aren’t moving cars right now and they have been told to go full steam ahead by management. You painted a rosy picture of how they did in 2011. I wonder what happened to them in 12 when other manufacturers have been forging ahead.

  • August 7, 2012 at 9:57 am
    D says:
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    The genesis of the AIG deal started with a republican adminstration. It was cooked up by former Goldman Sachs managment to prevent further damage to Goldman Sachs. Check your facts, Sarah. Read up on warrant rights too. I know the concept is way over your head, as most things probably are. Warrants are a key concept in how these deals get done and assure the US governments makes money in the end. Warrant rights will take a deal that looks pretty sinister at the outset (like AIG), and gives the US government a chance to earn a profit. AIG, GM, and the majorty of US government bailouts are prime examples.

    • August 7, 2012 at 11:44 am
      Agent says:
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      Actually D, the genesis of the sub-prime mortgage mess which led to AIG and many other large financial institutions getting in trouble with the toxic paper originated in the Clinton Administration. The Bush Administration signed off on it when politicians thought it was a great idea that everyone should be able to own a home whether they could pay the mortgage or not. Both parties were wrong. Then, we had to have this massive bailout because they were too big to fail. The government has been in the business of picking winners and losers for some time now. The government is twice as big as it needs to be and terribly wasteful. Is it any wonder why we have $16 Trillion debt. Progressive Keynsian spending policy has not worked and will never work to make this country prosperous again.

  • August 7, 2012 at 11:37 am
    Captain Planet says:
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    Agent – it’s from January 4, 2012 speaking about the 2011 results. Results, which, wouldn’t have existed had it not been for the assistance they received.

    Sarah – I encourage you to take D’s advice. The facts and truth may not fit your narrative, but then again, it seems that is often the case. Significant number of jobs would be lost in bankruptcy, or simply shipped overseas. Then again, you probably aren’t for job creation or salvage under this President. You are more interested in ousting him, the number 1 goal admitted by Mitch McConnell.

    D – Quit it with all the facts and truth already. They get in the way of the 8 second sound-bite talking points presented daily out here in the IJ blogosphere.

    I will get double digit dislikes with this, which means, I’m on the right track. Thumb down away!

    • August 7, 2012 at 11:56 am
      Agent says:
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      Planet, you never let facts get in the way of your Progressive drivel. I encourage you to bone up on how GM is doing now, not some report that is 12 months old. GM was saved for the unions who now own it, not the bondholders who lost out. GM could have declared Chapter 11 and re-organized and come back from that, but oh no, Obama had to save the unions bacon. The unions with all their benefit packages, work rules etc are the reason why GM’s costs are much higher than their foreign competitors. Indeed, most of the foreign car makers with plants in this country chose to locate in the south where there is right to work and cars can be produced much cheaper while maintaining productive jobs at competitive wages.

      • August 7, 2012 at 12:09 pm
        Captain Planet says:
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        You’re right, it’s unprecedented to see companies have good and bad quarters/years. My bad.

        • August 8, 2012 at 8:44 am
          Bartleby says:
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          You cited a stellar period in an attempt to show how amazing the bailout was. If a single stellar period is evidence of it doing well, why isn’t a single negative period evidence of it doing poorly?

          The way the bondholders were hurt ignored black letter law. It’s something I’d expect from a banana republic, not from the USA.

          • August 8, 2012 at 9:44 am
            Agent says:
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            Bartleby, Don’t expect Planet to use reality in his posts. He always has a Progressive agenda and tries to spin it just like the Democrats running for office. Basically, it is called Doublespeak which means whatever is said means just the opposite. We have gotten used to that in the past 3 1/2 years with his President.

  • August 7, 2012 at 11:50 am
    Baxtor says:
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    I’m confused on what people’s definition of making money is? Okay if you allow AIG to buy back some of their stock and the Federal reserve makes a little money off of it, but the IRS allows AIG to not pay any taxes, which is millions, where is this making money? Okay the Federal reserve took in some money, but the IRS gave it right back to AIG. To me, this is our governments way of fooling the people into believing they did something good. I wish we get the whole truth because as of right now, I don’t think our Federal government has made a penny off of AIG. I’m sure we’ve lost money if you figure in our expenses for having people working on their bailouts, stock sales, etc….

  • August 8, 2012 at 8:37 am
    Bartleby says:
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    While Former Status Quo’s commentary is correct, we’re still losing money on AIG. We’ve guaranteed some of the investments that have failed, and as a result, AIG is still a net loss prospect.

    • August 11, 2012 at 11:16 pm
      Free Market says:
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      What exactly are you smoking in that pipe Bartleby? What money has been “lost” on AIG? Fed Reserve Bank has made Billions of profit on the toxic mortgage debt instruments they bought – so much so that the Fed Reserve returned $6 Billion that AIG had to give the Fed Reserve with the toxic debt it took over in 2008. Everyone needs to check their facts of the $182 Billion pledged and loaned – only $140 Billion was actually used by AIG and of the $140 Billion only $25 Billion held by US Treasury in TARP is left to be paid back. What exactly has been guaranteed? The Fed Reserve has already sold ALL of the mortgage debt it purchased from AIG to some of the very same Wall Street banks that were all too happy to sell it to the Fed Reserve back in 2008? As for the tax credit AIG has, they did pay taxes even in 2008 and 2009 when they lost money. They are taking a carry forward of the losses they realized in those prior years – like any other business is allowed to do.



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