NEW YORK (AP) — American International Group Inc. said on Tuesday that it has been fully repaid for a $5 billion loan made to a fund established to help facilitate the insurance company's taxpayer bailout during the 2008 financial crisis.
The fund, called Maiden Lane III LLC, was used in part to buy risky securities known as collateralized debt obligations from counterparties of an AIG subsidiary. The securities had fallen sharply in value during the financial crisis, and the fund began buying the CDOs to reduce AIG's exposure to insurance-like contracts, called credit default swaps, written to cover defaults on the CDOs.
The Maiden Lane III fund borrowed $24.3 billion from the Federal Reserve Bank of New York, along with $5 billion from AIG. The total $5.6 billion that AIG was repaid includes interest on the loan owed to AIG.
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The New York Fed said last month that the loan it extended had been repaid in full.
The New York Fed has been auctioning off assets from the fund, and will continue to receive a two-thirds share of residual profits generated by future sales of fund assets. AIG will continue to receive a one-third share. The company has already received $427 million from residual profits so far.
AIG President and CEO Robert Benmosche said in a statement that the continued sale of assets from the fund "is another sign of the progress we have made with our partners at the U.S. government to achieve our goal of profitably reducing the American taxpayer's investments in AIG."
Shares of AIG rose $1.10, or 3.5 percent, to $32.38 in afternoon trading. Including Tuesday's gain, the stock is up almost 40 percent this year.
The government stepped in with a $182.5 billion package to rescue New York-based AIG from collapse in the depths of the financial crisis in 2008. It was the largest bailout in history.
The Treasury Department still owns about 60 percent of AIG's common stock and has been selling its shares in chunks. Treasury has recovered $38 billion of the $68 billion it gave to AIG.
The Fed also still owns some investments it acquired from AIG, which it plans to sell over time.
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