Weekend Economists Go Out with a Boom August 24-26, 2012

[Demeter]

2. Fed says taxpayers earned $17.7B from AIG bailout

http://www.chicagotribune.com/business/breaking/chi-fed-aig-bailout-0824,0,3413873.story

The New York Fed said its final sale of AIG-related securities resulted in a $6.6-billion profit, which was added to gains of about $11 billion...The Federal Reserve said taxpayers ended up earning $17.7 billion from the central bank's role in bailing out insurance giant American International Group Inc.

On Thursday, the Federal Reserve Bank of New York, the investment management arm of the Fed, sold the last of the asset-backed securities it acquired in the multi-step bailout of AIG, which the central bank engineered in 2008 with the Treasury Department.

The government pledged more than $182 billion to AIG in exchange for a 92% ownership stake as it stepped in to keep the company from filing for bankruptcy and possibly causing a global meltdown in financial markets.

AIG used about $125 billion of the money, and the Fed and Treasury have been working since 2011 to extricate the government from AIG...The Treasury Department still has about $25 billion invested in AIG as it slowly sells its shares in the company. The Treasury sold about $5.75 billion in AIG stock this month, reducing the government's stake to about 53%.

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