The historic taxpayer bailout of American International Group in 2008 was vilified by its critics as a reckless overreach of federal power that was doomed to fail. But that controversial investment to protect the world's teetering financial markets is proving to be worth the risk. The AIG rescue package, instead of hemorrhaging red ink, could eventually result in a $15.1 billion profit to the American people, according to Congress' Government Accountability Office.
History will judge whether the multinational insurance and financial services giant AIG was too big to fail. But this much is known: Allowing the cratering of the company with 57,000 employees around the world would have set off another economic tsunami. The $125 billion rescue package cobbled together in the waning days of the Bush administration gave the federal government an 80 percent ownership stake in AIG and prevented an already dire economic crisis from getting even worse. Today, the GAO reports, AIG is returning to profitability. A number of AIG assets have been sold to pay off the bailout money at a profit to taxpayers, and the company's stock value is improving. The federal government's ownership position has been reduced to about 61 percent.
The bailout of AIG was not without risk. But the payoff is proving twofold. Greater economic disruption was spared, and now it looks as if taxpayers could make a little profit to boot.