AIG will likely not be able to pay back all their loans

AIG “borrowed” $182 billion from the United States government from the bailout program. On Monday September 21st, a watchdog group sent out a warning to the American public that AIG would likely never be able to pay back the loan.

The Government Accountability Office said that AIG will likely not be able to restructure the company in a way to repay the government and subsequently the taxpayers that funded the bailout. Part of the problem cited by the watchdog group is that the government relies too heavily on the government’s aid as its source for liquidity as well as capital.

The report said, “The sustainability of any positive trends of AIG’s operations and repayment efforts is not yet clear. The government’s ability to recoup the federal assistance money depends on the long-term health of AIG, its sales of certain businesses, and the maturation or sale of assets in the Maiden Lanes among other factors.”

At the beginning of September 2009, AIG still owed the government $120 billion.

A year ago this month, AIG took the first handout from the government TARP fund. The money did help stabilize the company according to the Government Accountability Office. It helped the company stabilize so much that it actually posted a $1.8 billion profit in the second quarter. The profit is the company’s first since 2007.

AIG has continued to prove itself to be a burden on the American taxpayer. Of course everyone had a problem when the company took out a huge loan from the government for $182 billion. If the government were to give that money to the citizens of the country (with 305 million people in the country) they could give every man, woman, and child $596.

I never realized how big AIG really was until the government started spending billions of dollars to bail the company out. This company should be split up so that part of the company can be actually held accountable for its actions per department or division. Parts of this company should be allowed to fail.

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