The U.S. government and AIG, the giant insurer rescued with $182 billion at the depths of the 2008 financial meltdown, announced a plan Friday to end taxpayer involvement in the company over the next two years.
American International Group Inc. paid its $21 billion outstanding balance to the New York branch of the Federal Reserve on Friday and converted preferred stock owned by the Treasury Department into more than 1.6 billion shares of common stock that can be sold on the open market.
The common stock gives the government a 92 percent ownership stake. The Treasury Department is expected to start selling its shares in March.
"Treasury remains optimistic that taxpayers will get back every dollar of their investment in AIG," Treasury Secretary Timothy Geithner said in a statement.
In a separate statement, AIG President and CEO Robert H. Benmosche said: "Today, AIG, with the support of countless people, has accomplished a huge goal that many people once thought impossible: completely repaying the Federal Reserve Bank of New York."
The rescue package for AIG, which included loans and guarantees, was the largest of any U.S. company that accepted government help during the September 2008 financial crisis.
At the time, federal officials worried that a collapse of AIG, which worked with hundreds of financial institutions around the world, would be a death blow to already fragile credit markets and possibly bring down the financial system itself.
The insurer became a touchstone for public outrage over excessive risk on Wall Street.
Under the plan announced Friday, the government will sell its stock over two years as market conditions allow.
The government holds roughly 1.67 billion shares of AIG now. Those shares were handed over to taxpayers at a value of just under $30 apiece and were trading Friday at about $54.
The two-year unwinding of the federal stake in the company is similar to an arrangement to end government involvement in Citigroup and in General Motors, which returned to the stock market this year after going through bankruptcy.
