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Fed, Treasury consider AIG exit plan

A security guard stands in front of the American International Group building in Tokyo.

TEXT OF INTERVIEW

BILL RADKE: The government is trying to clean up one of the biggest messes still left over from the financial crisis the bailout of what used to be the world's largest insurance company, AIG. Officials from the Treasury Department and the Federal Reserve Bank meet today with AIG's board to consider an exit plan. Here's Marketplace's John Dimsdale joining us live from Washington, D.C. Good morning, John.

JOHN DIMSDALE: Good morning, Bill.

RADKE: Tell us, what is the government trying to do here?

DIMSDALE: Well the government owns about 80 percent of AIG. So there has to be some resolution of over $130 billion still owed to taxpayers. AIG got multiple government bailouts, which means there will have to be a lot of complicated transactions to make the company independent and recover taxpayers' money. To pay off part of its debt to the Fed, AIG is selling some of it's non-government-owned assets. And Treasury's stake in AIG, which is $50 billion, will be converted into common stock and sold.

RADKE: OK, common stock and sold. So the government's going to be selling stocks?

DIMSDALE: Yeah. And it will have to be done gingerly. If the stocks are sold too quickly, it will flood the market and dilute the value of the shares. That means taxpayers would get a bad deal, as would the private stock holders who still own about $5 billion worth of AIG shares. If they get cold feet and start selling as well, that could hurt taxpayers even more. So it's figured that the government will unload its shares gradually, over the course of next year.

RADKE: OK. We'll be following that and we'll have Marketplace's John Dimsdale in Washington to help us. Thank you, John.

DIMSDALE: Thanks Bill.

About the author

As head of Marketplace’s Washington, D.C. bureau, John Dimsdale provides insightful commentary on the intersection of government and money for the entire Marketplace portfolio.
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