Associated Press
NEW YORK -- American International Group finally has a plan to exit the biggest of the Wall Street bailouts a month before midterm elections. But much as embattled Democrats might wish otherwise, the book on TARP won't close anytime 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, Treasury 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 on 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.
The public remains angry about the bailouts, which were launched in the Bush administration's final months. Americans have been particularly furious over the outsize bonuses that bailed-out firms paid to executives. The anger may dissipate as the economy improves, but it will linger until most sitting lawmakers are out of office, said Norman Ornstein, resident scholar at the conservative American Enterprise Institute.
"Finding a way to reduce the anger, much of it misplaced, over what TARP did, is a pretty strong political goal" for the Democrats, he said. It will be an uphill battle, Ornstein said.
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.
