Last night, Assistant Secretary for Financial Stability Tim Massad appeared on CNBC’s Mad Money with Jim Cramer to discuss Treasury’s $20.7 billion public offering this week of AIG common stock.
As Assistant Secretary Massad noted, the offering represented a significant milestone in the effort to restructure AIG and recover taxpayer dollars. With the proceeds from that sale, the combined $182.3 billion that the Federal Reserve and Treasury committed to stabilize AIG during the financial crisis is now fully recovered – with a $15.1 billion positive return to date:
Massad: We’ve come an incredible distance. We have now recovered every single dollar that the Federal Government, including the Federal Reserve, committed to prevent the collapse of AIG in the dark days of the financial crisis . . . We've now recovered all of that, plus a $15 billion gain. That's a credit to the overall strategy, the work of people in both a Democratic and Republican administration, as well as the hard work of the people of AIG under [CEO] Bob Benmosche, who have been very committed to restructuring the company and paying back the taxpayer. It's terrible that we ever had to do this. The federal government should never have been put in this position. And that's why we need to continue with financial reform. But this is a great day that we've managed to come this far in such a short time.
Preventing the disorderly collapse of AIG was a key part of a broad-based effort to break the back of an historic financial panic and prevent a second Great Depression. But the fact that Treasury and the Federal Reserve were able to fully recover the overall funds committed to stabilize that company – with a profit – was an outcome that few had expected:
Cramer: There has to be some surprise factor about what happened with AIG, because Mr. Benmosche was on our show in March. And he said listen, ‘I am confident that the government can make a profit of what, $5 to $10 billion.’ And at the time he said it, we were kind of chuckling because it seemed to be inconceivable . . . but it worked.
Massad: It did work. And again, that's a credit to his efforts and all the people at AIG who have worked very hard to restructure the company, to de-risk the company and to pare it down, as well as to the overall strategy. Again, it's because the government acted with incredible speed and overwhelming force when confronted with the financial crisis.
To watch the full interview and read the entire transcript click here, courtesy of CNBC.
Anthony Reyes is the New Media Specialist at the U.S. Department of the Treasury.