AIG Repaying Government for BailoutVW Staff
Insurance behemoth, American International Group (NYSE:AIG), has been looking for ways it can pay back the US government for bailout money that it received back in 2008. As of late, AIG is looking to raise $6 billion by reducing stake in the Asian insurance business. AIG also is planning a 1.7 billion share expansion in Hong Kong. Shares will be priced between 27.15 and 27.50.
AIG has been desperately trying to get out of the shadow that is a dark public view of the company along with taking money from the government. Unfortunately for AIG, the US government has given the insurance giant $182 billion in bailout money. Since spinning off its Asian sector the insurance group has raised $17.8 billion. However, this $17.8 billion plus the $6 billion from selling its Asian business as well as funds that will be raised in the public offering in Hong Kong, they are on a good footing and right mindset to get the government slowly off their back.
The US government still own 77% of outstanding AIG shares. The US Treasury has said that they plan to make most of the bailout money back through the AIG shares which are said to be sold at some point on the NYSE. For the government to break even AIG shares must be at $29.00 a share, they are currently at $29.80.
I am glad that AIG is taking an active role and a serious role to giving back the government its money. The government did not and should not have given AIG that much money but at least if they do get the money back then it is not a big deal. My main concern here is the government not taking a strong enough stance against these banks and the auto makers saying that this bailout frenzy was a onetime ordeal, next time you are in trouble, file for Chapter 11. Our government can not be taking on more debt just to bailout banks and autos that decided to take on more risk. If you want to take on more risk then that is your decision and you must live with the consequences. We can not bankrupt our country just because AIG decided it wanted to be greedier and fund riskier options.
Bottom line is that its good that AIG is making repaying the government a top priority. It has long been a worry that the government may never see most of the bailout money back which is a huge disappointment considering that they can really use some of that money right now to pay off debt and fund more projects to promote job growth. I just hope these companies that received bailout money have learned their lesson and understand that the government is not put in place to bail them out.