AIG to Pay Back $3.9 Billion of Bailout Loan

Submitted by Chris Gaetano on Tue, 08/24/2010 - 11:40

American International Group (AIG), the too-big-to-fail insurance giant saved from collapse in 2008, announced on Monday that it will be devoting $3.9 billion generated from a recent debt sale to paying down some of the $85 billion that was used to bail out the failing company at the height of the financial crisis. This is the single largest cash payment that AIG has made to the government since first being rescued, a move that CEO Robert H. Benmosche said show that progress is being made on repaying the company’s existing obligation.

With this payment, AIG’s remaining debt to the government totals $21 billion, a sum that the Washington Post notes does not include an additional $40 billion sent to the company since September 2008 as well as $7.5 billion worth of credit that the Treasury department made available.

AIG’s most recent action is a sharp contrast from a previous attempt to make a big payment on its loan, with the sale of one of its Asian assets to British firm Prudential having fallen through over last minute changes to the deal’s terms, a move that would have resulted in $16 billion for the federal government.

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