Former CEO Maurice “Hank” Greenberg wants loans eased
Congressional investigators said AIG may never pay back the government and the House Committee on Oversight and Government Reform said that panel will examine a plan to reduce the AIG bailout package, CBS reports.
The Government Accountability Office said that in early September, AIG's outstanding balance of aid was $120.7bn.
The GAO found "some progress in AIG's ability to repay the federal assistance." But said: "the ultimate success of AIG's restructuring and repayment efforts remains uncertain."
An AIG spokesman said: "AIG remains committed to reducing risk and repaying taxpayers."
Hank Greenberg’s plan
Edolphus Towns, Democrat chairman of the House Oversight Committee, wants to study a plan by AIG's former CEO Maurice "Hank" Greenberg to reduce and restructure the company's bailout package.
Towns, who has not spoken to the Treasury Department about the plan, met with Greenberg last week.
Reuters said the plans would cut the government stake in AIG from the current 80% and lower interest rates on AIG's government loan. It also would extend the term of the loan.
Towns is considering whether the proposal would buy AIG more time to avoid selling assets at fire-sale prices, which could improve the government's overall return.
AIG welcomed move
"AIG is open to constructive efforts by Mr. Greenberg or others that assist the company in restoring value to shareholders and repaying the taxpayer," AIG said in a statement.
Bloomberg quoted Towns as saying: “I’ve directed the committee staff to take a look at Hank Greenberg’s proposal to restructure the debt, because I think it is something to which we should give serious consideration and that means looking at a number of options, including restructuring the federal loans.”
Loan details
AIG is charged the three-month London interbank offered rate (Libor) plus three percentage points. It has four years to repay. The original credit line was for two years and charged a higher interest rate, Bloomberg reports.
Towns, 75, said regulators have pressured AIG to liquidate the company at “fire-sale” prices. “What’s the rush if we can get a better return on our money a few years down the road and save a major company and thousands of jobs?” he said.
Chair Golub goes to Towns
Harvey Golub, AIG’s chairman, also visited Towns last week to repair AIG’s relations with Congress. He told Towns that he expected AIG to remain a large company after repaying its debts. Golub was concerned about retaining employees who may be lured to rivals that face fewer compensation restrictions.
