Fed, Treasury consider AIG exit plan
TEXT OF INTERVIEW
BILL RADKE: The government is trying to clean up one of the biggest messes still left over from the financial crisis the bailout of what used to be the world’s largest insurance company, AIG. Officials from the Treasury Department and the Federal Reserve Bank meet today with AIG’s board to consider an exit plan. Here’s Marketplace’s John Dimsdale joining us live from Washington, D.C. Good morning, John.
JOHN DIMSDALE: Good morning, Bill.
RADKE: Tell us, what is the government trying to do here?
DIMSDALE: Well the government owns about 80 percent of AIG. So there has to be some resolution of over $130 billion still owed to taxpayers. AIG got multiple government bailouts, which means there will have to be a lot of complicated transactions to make the company independent and recover taxpayers’ money. To pay off part of its debt to the Fed, AIG is selling some of it’s non-government-owned assets. And Treasury’s stake in AIG, which is $50 billion, will be converted into common stock and sold.
RADKE: OK, common stock and sold. So the government’s going to be selling stocks?
DIMSDALE: Yeah. And it will have to be done gingerly. If the stocks are sold too quickly, it will flood the market and dilute the value of the shares. That means taxpayers would get a bad deal, as would the private stock holders who still own about $5 billion worth of AIG shares. If they get cold feet and start selling as well, that could hurt taxpayers even more. So it’s figured that the government will unload its shares gradually, over the course of next year.
RADKE: OK. We’ll be following that and we’ll have Marketplace’s John Dimsdale in Washington to help us. Thank you, John.
DIMSDALE: Thanks Bill.
There’s a lot happening in the world. Through it all, Marketplace is here for you.
You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible.
Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.
