TARP Program Overseer Says U.S. Losing Big On AIG Investment

National Underwriter News
February 6, 2009

WASHINGTON -- A report today by the board overseeing the Troubled Asset Relief Program (TARP) shows that the value of the government's investment in American International Group declined 63 percent within six weeks of the time the money was expended.

The report said the $40 billion investment made in AIG was the worst decision the government made under the TARP, followed by its $20 billion investment in Citigroup, which it valued as of Nov. 24 as worth $10 billion.

The report said the $40 billion investment in AIG, made Sept. 17, 2008, was worth $14.8 billion as of Nov. 10, the date it was valued.

It said that under the programs used for AIG and Citi, both regarded as riskier investments, for every $100 spent the Treasury received assets worth $41.

Overall, in the first 10 transactions under TARP, for each $100 spent the Treasury received assets worth approximately $66.

The report released today of the 10 largest TARP investments the Treasury made during 2008 "raises substantial doubts about whether the government received assets comparable to its expenditures," the TARP Oversight Board said.

In its latest report, the TARP oversight panel said that "valuation of the transactions is critical because then-Treasury Secretary Henry Paulson assured the public that the investments of TARP money were sound, given in return for full value."

It then quoted Secretary Paulson as saying, "This is an investment, not an expenditure, and there is no reason to expect this program will cost taxpayers anything."

At the same time, the panel said its analysis "does not explore whether these investments were the best means of achieving broader policy goals."

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