Clear 35° Good Afternoon
Clear 35° Good Afternoon

Editorial: AIG sale shows 2008 bailouts are (mostly) working out

The Pine Street headquarters of American International Group

The Pine Street headquarters of American International Group Inc. in lower Manhattan. Photo Credit: Getty Images

Uncle Sam's 2008 financial-crisis bailouts were practically the definition of a necessary evil. While there's plenty not to like about rescuing banks, insurers and automakers -- especially when their troubles were of their own making -- there was little alternative. And not only did Washington rescue the financial system and the auto industry, but many of its investments are paying off.

Case in point: insurance giant AIG, beneficiary of a $182-billion bailout. The Treasury said this week it plans to sell at least $18 billion of its AIG stock, cutting its stake to 20 percent (it peaked at 92 percent) and giving taxpayers a $12-billion gain so far.

Since 2008, AIG and Uncle Sam have been selling assets to unwind the bailout, which was necessary because the failure of AIG might have dragged down other financial giants. The Government Accountability Office figures the profit ultimately could exceed $15 billion. And let's not forget AIG's 57,000 jobs.

AIG did benefit from a dubious $18-billion tax break. And some will call the stock sale announcement's timing political. But bear in mind that the unpopular bailouts were bipartisan and undertaken while George W. Bush was president.

The results aren't all good. Taxpayers remain saddled with Fannie Mae and Freddie Mac. The financial system, while safer, remains vulnerable to "too big to fail." But things could have turned out much worse; in 2008, most people thought they would.