The federal government may sell its stake in American International Group through a public stock offering sometime after 2013, according to the Government Accountability Office.
GAO officials talk about the future of AIG and other large recipients of federal financial assistance in a report prepared for congressional committees. The government has provided $134 billion in indirect and direct assistance to AIG, with the majority made through government investments in AIG stock, officials noted.
"When AIG will be able to pay the government completely back for its assistance is currently unknown because the federal government's exposure to AIG is increasingly tied to the future health of AIG, its restructuring efforts and its ongoing performance as more debt is exchanged for equity," Gene Dodaro, the acting U.S. comptroller general, wrote in a letter describing the GAO's findings.
Officials at the U.S. Treasury Department and the Federal Reserve Board told GAO staffers that AIG must repay a Federal Reserve Bank of New York credit facility before the government's AIG trust can dispose of its AIG stock, according to Mr. Dodaro. AIG is supposed to repay the credit facility by Sept. 13, 2013.
Treasury officials and trustees for the AIG trust plan to coordinate their divestment efforts, Mr. Dodaro noted.
The trustees of the AIG trust said they will begin working on an exit strategy when AIG has repaid the New York Fed, according to Mr. Dodaro.
At the Treasury Department, the "team that manages the AIG investment has been running scenarios of possible exit strategies but has not decided which strategy to employ," he reported.
The AIG trust could convert its AIG Series C Preferred Stock into common stock and dispose of the common stock through a public offering or a private sale, Mr. Dodaro said. Treasury could dispose of its shares by having AIG redeem them; converting the shares into common stock and selling it through a public offering; or selling the shares to an institutional buyer or buyers through a private sale.
RANGEL CHARGES
Meanwhile, ethics charges against Rep. Charles Rangel, D-N.Y., include an allegation that he solicited and won a $5 million grant from a foundation then associated with AIG to create an educational institute that bears his name.
In its "statement of facts in support of the alleged violations," a special House Committee on member conduct said the $5 million donation from the Starr Foundation in June 2007 was made only eight days after Rep. Rangel met with Maurice "Hank" Greenberg, then chair and CEO of AIG.
The statement also charges that in April 2008, Rep. Rangel met with AIG lobbyist Edward Cloonan in hopes of "closing a $10 million gift" for the institution, called the Rangel Center, which would have been created at the City College of New York.
"At the AIG meeting, a potential donation to the Rangel Center was discussed," the statement said. "AIG raised concerns about a potential donation, including the potential headline risk."
Rep. Rangel, the statement said, "asked AIG, at least twice, what was necessary to get this done."
A representative for AIG told National Underwriter that "Mr. Rangel asked us for a contribution to the CCNY center, and we declined to make one." Mr. Greenberg could not be reached for comment.
In a statement denying the charges, Rep. Rangel's lawyers said: "The undisputed evidence in the record–assembled by the Investigative Subcommittee over its nearly two-year investigation–is that Congressman Rangel did not dispense any political favors; that he did not intentionally violate any law, rule or regulation; and that he did not misuse his public office for private gain."
Allison Bell is a senior editor with NU's Life & Health Insurance edition.
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