NEW YORK — American International Group finally has a plan to exit the biggest of the Wall Street bailouts a month before midterm elections. But as much as embattled Democrats might wish otherwise, the book on TARP won’t close any time soon.
There’s no guarantee taxpayers who gave AIG a $182 billion bailout will be made whole under the plan the company announced Thursday. Under the deal, the U.S. Treasury Department will swap its majority stake in AIG for common stock and then sell those shares over time.
The government loses its authority to tap Troubled Asset Relief Program funds Sunday. Democrats facing tough re-elections hope voters will see the bailouts as nearing an end.
That will be a tough case to make. Close to $190 billion in TARP money remains unpaid, and the Congressional Budget Office estimates that taxpayers will never get back about $66 billion of it.
The deal will give Treasury a 92.1 percent stake in AIG before it begins selling its shares. But it can’t be completed until AIG proves its strength by displaying its ability to raise money from private investors and regain a top rating from credit agencies.
Otherwise, “this deal won’t go through,” chief executive Robert Benmosche said Thursday.
“The Treasury wants to assure itself it’s investing in a company with the strength to be competitive in the marketplace,” he said.
