Here is a really big news today on AIG,
NY Fed says AIG, Bear Stearns bailout funds repaid
NEW YORK (AP) — The Federal Reserve Bank of New York said Thursday that loans it set up to help facilitate the bailouts of American International Group Inc., and now defunct investment bank Bear Stearns during the financial crisis, have been fully repaid with interest.
In total, $53.12 billion in loans were repaid. The original amount of the loan to a portfolio called Maiden Lane III LLC, created to buy the securities, repay debt and provide capital for some of AIG’s operations, was $24.3 billion. Another $28.82 billion in loans, set up through a portfolio named Maiden Lane LLC, which helped facilitate Bear Stearns’ takeover by JPMorgan Chase & Co. were also repaid. The loans were repaid through asset sales.
The government stepped in with a $182.5 billion package to rescue New York-based AIG from collapse in the depths of the financial crisis in 2008. It was the largest bailout in history. The Treasury Department provided $68 billion under its financial bailout program. The government helped broker a rescue sale of Bear Stearns to JPMorgan, as it veered toward ruin.
“This is a major milestone for the Bank and for the public,” said William Dudley, president of the New York Fed. Dudley said the loans were made to protect the U.S. economy at a time of great economic stress. “I am pleased we were able to accomplish that policy objective and be fully repaid.”
The Treasury Department, meanwhile, still owns about 60 percent of AIG’s common stock and has been selling its shares in chunks. Treasury has recovered $38 billion of the $68 billion it gave to AIG.
The Fed also still owns some investments it acquired from AIG, which it plans to sell over time.
From the AIG website, we can see the confirmation of this news,
NEW YORK–(BUSINESS WIRE)–Jun. 14, 2012– American International Group, Inc. (NYSE: AIG) confirmed today that, as a result of the recently completed auctions by theFederal Reserve Bank of New York (FRBNY) of certainMaiden Lane III LLC(ML III) assets, the outstanding loan by the FRBNY to ML III has been fully repaid. The ML III loan was non-recourse to AIG, and was being repaid with the cash flows from the interest and principal payments and liquidation of the assets in the facility.
“The repayment of the Federal Reserve’s Maiden Lane III loan represents another significant milestone in the transformation of AIG,” saidRobert H. Benmosche, AIG President and Chief Executive Officer. “We are extremely encouraged by the continued progress our partners at the Federal Reserve and U.S. Treasury have made to profitably reduce the U.S. government’s investments in AIG.”
To date, AIG has paid in full the FRBNY Credit Facility, the AIA SPV preferred interests, and theAmerican Life Insurance Company(ALICO) SPV preferred interests. In addition, the U.S. Treasury’s stake in AIG common stock has been reduced by$17.5 billionand the Maiden Lane II and III loans have been fully repaid. The Federal Reserve has earned nearly$3 billionfrom the sale of the Maiden Lane II (ML II) portfolio and, based on current market values, could earn as much when the ML III portfolio is fully liquidated.
The maximum support authorized by the U.S. government to AIG reached $182 billionin 2008, of which$21 billionwas unused or expired. Together with repayments, withdrawals, exchanges, sales, and other actions, total outstanding government support to AIG has decreased 83 percent, or$152 billion, with approximately$30 billionworth of shares of AIG common stock owned by the U.S. Treasury as the remaining investment. It should be noted that the$152 billiondecrease only includes a reduction of original authorized support and not the Federal Reserve’s profit to date on ML II or the expected profit for ML III.
Once we have the completion of all the sales, AIG will be paid $5.6B, and with the current stock price, AIG can buy back 20% of the shares owned by Fed, which means that Fed’s shares can be reduced from current 63% to ~50%, which is very significant!!!
About Timeless Investor
My name is Samual Lau. I am a long-term value investor and a zealous disciple of Ben Graham. And I am a MBA graduated in May 2010 from Carnegie Mellon University. My concentrations are Finance, Strategy and Marketing.
TimelessInvestor
Big news: AIG bailout funds fully repaid
Here is a really big news today on AIG,
NY Fed says AIG, Bear Stearns bailout funds repaid
NEW YORK (AP) — The Federal Reserve Bank of New York said Thursday that loans it set up to help facilitate the bailouts of American International Group Inc., and now defunct investment bank Bear Stearns during the financial crisis, have been fully repaid with interest.
In total, $53.12 billion in loans were repaid. The original amount of the loan to a portfolio called Maiden Lane III LLC, created to buy the securities, repay debt and provide capital for some of AIG’s operations, was $24.3 billion. Another $28.82 billion in loans, set up through a portfolio named Maiden Lane LLC, which helped facilitate Bear Stearns’ takeover by JPMorgan Chase & Co. were also repaid. The loans were repaid through asset sales.
The government stepped in with a $182.5 billion package to rescue New York-based AIG from collapse in the depths of the financial crisis in 2008. It was the largest bailout in history. The Treasury Department provided $68 billion under its financial bailout program. The government helped broker a rescue sale of Bear Stearns to JPMorgan, as it veered toward ruin.
“This is a major milestone for the Bank and for the public,” said William Dudley, president of the New York Fed. Dudley said the loans were made to protect the U.S. economy at a time of great economic stress. “I am pleased we were able to accomplish that policy objective and be fully repaid.”
The Treasury Department, meanwhile, still owns about 60 percent of AIG’s common stock and has been selling its shares in chunks. Treasury has recovered $38 billion of the $68 billion it gave to AIG.
The Fed also still owns some investments it acquired from AIG, which it plans to sell over time.
From the AIG website, we can see the confirmation of this news,
NEW YORK–(BUSINESS WIRE)–Jun. 14, 2012– American International Group, Inc. (NYSE: AIG) confirmed today that, as a result of the recently completed auctions by theFederal Reserve Bank of New York (FRBNY) of certainMaiden Lane III LLC(ML III) assets, the outstanding loan by the FRBNY to ML III has been fully repaid. The ML III loan was non-recourse to AIG, and was being repaid with the cash flows from the interest and principal payments and liquidation of the assets in the facility.
“The repayment of the Federal Reserve’s Maiden Lane III loan represents another significant milestone in the transformation of AIG,” saidRobert H. Benmosche, AIG President and Chief Executive Officer. “We are extremely encouraged by the continued progress our partners at the Federal Reserve and U.S. Treasury have made to profitably reduce the U.S. government’s investments in AIG.”
To date, AIG has paid in full the FRBNY Credit Facility, the AIA SPV preferred interests, and theAmerican Life Insurance Company(ALICO) SPV preferred interests. In addition, the U.S. Treasury’s stake in AIG common stock has been reduced by$17.5 billionand the Maiden Lane II and III loans have been fully repaid. The Federal Reserve has earned nearly$3 billionfrom the sale of the Maiden Lane II (ML II) portfolio and, based on current market values, could earn as much when the ML III portfolio is fully liquidated.
The maximum support authorized by the U.S. government to AIG reached $182 billionin 2008, of which$21 billionwas unused or expired. Together with repayments, withdrawals, exchanges, sales, and other actions, total outstanding government support to AIG has decreased 83 percent, or$152 billion, with approximately$30 billionworth of shares of AIG common stock owned by the U.S. Treasury as the remaining investment. It should be noted that the$152 billiondecrease only includes a reduction of original authorized support and not the Federal Reserve’s profit to date on ML II or the expected profit for ML III.
Once we have the completion of all the sales, AIG will be paid $5.6B, and with the current stock price, AIG can buy back 20% of the shares owned by Fed, which means that Fed’s shares can be reduced from current 63% to ~50%, which is very significant!!!
About Timeless Investor
My name is Samual Lau. I am a long-term value investor and a zealous disciple of Ben Graham. And I am a MBA graduated in May 2010 from Carnegie Mellon University. My concentrations are Finance, Strategy and Marketing.