http://www.reuters.com/article/wtUSInvestingNews/idCNN1030693020091110

UPDATE 3-AIG likely to be able to repay government-Moody's
Tue Nov 10, 2009 11:10am

NEW YORK, Nov 10 (Reuters) - Insurance giant AIG has made progress on its restructuring and will likely be able to repay a taxpayer bailout and buy back much of the government's stake in the company, Moody's Investors Service said on Monday.

The Moody's statement was a rare expression of optimism for American International Group Inc (AIG.N), which has received up to $180 billion of federal aid and is now 80 percent owned by U.S. taxpayers.

Moody's said AIG's restructuring plan still relies heavily on government support, but if its operations and global financial markets continue to stabilize, the company likely can generate enough value to repay the government.

The vote of confidence sent AIG's hard-hit shares up 3.7 percent to $37.52. The cost of insuring $10 million of AIG debt for five year fell to around $732,000 annually, down $10,000 from Monday, according to Markit Intraday.

AIG posted its second straight quarterly profit last week, helped by a recovery in the value of its investments. But its underlying business remained weak. For details click on [ID:nN06174086]

The quarterly results "show continued stabilization of the core insurance operations despite challenging market conditions," Moody's said.

With the government likely to recoup its investment, it has incentive to continue supporting AIG and its various creditors, Moody's said. The agency affirmed AIG's long-term credit rating of A3, the seventh-highest investment grade, with a "negative" outlook.

Credit spreads on AIG's 8.25 percent notes due in 2018 tightened by 0.15 percentage point on Tuesday, to 7.51 points over U.S. Treasuries, according to MarketAxess.

AIG's $180 billion of federal aid includes more than $80 billion in loans. The company has sought to sell major business units to help repay the government, but has struggled to find buyers willing to pay enough.

Since the appointment of former MetLife Chief Executive Robert Benmosche as AIG CEO in August, the company has focused on rebuilding the value of some businesses previously slated for sale, Moody's said.

"We believe that the slower approach to restructuring could help AIG to generate more favorable values from its business portfolio than would be the case under rushed asset sales," it said. (Reporting by Dena Aubin; Additional reporting by Joe Giannone and Karen Brettell; editing by Walker Simon and John Wallace)



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So, there is at least now the possibility that the taxpayers investment in the banks and AIG via the Bush administration may turn out to cost the taxpayers far less than 780 billion that most people believed it would. Of course, the auto deals with the governemnt were mainly taxpayer giveaways.

New York Times: Nearly a year after the federal rescue of the nation’s biggest banks, taxpayers have begun seeing profits from the hundreds of billions of dollars in aid that many critics thought might never be seen again. The profits, collected from eight of the biggest banks that have fully repaid their obligations to the government, come to about $4 billion, or the equivalent of about 15 percent annually, according to calculations compiled for The New York Times. These early returns are by no means a full accounting of the huge financial rescue undertaken by the federal government last year to stabilize teetering banks and other companies."

I think most of em have been repaying in a timely manner. The bailout was never a "give-away" but loans. We (the people) will actually prolly make money off of it in the form of interest

yeah, fo shizzle