TAILIEUCHUNG - AIG Remains in TARP as TARP’s Largest Investment

Note that as a testament to the fundamental importance of sports, the effects of sports results extend far beyond simple mood changes. For instance, in many cases sport results have such a strong effect that they adversely affect health. Carroll et al. (2002) show that admissions for heart attacks increased 25% during the three-day period starting June 30, 1998, the day England lost to Argentina in aWorld Cup penalty shoot-out. 4 Further, White (1989) documents that elimination from the . National Football League playoffs leads to a significant increase in homicides in the relevant cities following the games, and Wann et al. (2001) list several cases of riots. | Special Inspector General for the Troubled Asset Relief Program July 25 2012 SPECIAL INSPECTOR GENERAL I TROUBLED ASSET RELIEF PROGRAM QUARTERLY REPORT TO CONGRESS I JULY 25 2012 1 INTRODUCTION1 Treasury s largest TARP Investment 1s American International Group Inc. AIG with Treasury holding 61 of AIG s common stock as of June 30 2012. Once the world s largest insurance company AIG became a central figure in the fixed-income securities market beginning in the 1990s by underwriting the risk on a number of structured products including volatile residential mortgage-backed securities RMBS . In 2008 AIG suffered a severe liquidity crisis and credit downgrades due to exposures on risky derivatives related to mortgage-backed securities in its subsidiary AIG Financial Products Corporation AIGFP . The Government first through the Federal Reserve Bank of New York FRBNY and later through TARP s Systemically Significant Failing Institutions SSFI program bailed out AIG at a price tag of 161 Taxpayers are still owed more than half of the original TARP investment a significant 36 billion of the billion TARP investment. According to Treasury s TARP books and records taxpayers have realized losses on the TARP investment from an accounting standpoint of billion on Treasury s sale of AIG stock. However given the January 2011 restructuring of the FRBNY and Treasury investment according to Treasury the Government overall has made a gain thus far on the stock sales. According to Treasury this leaves billion in TARP funds In return for that investment Treasury holds billion shares of AIG common stock 61 of AIG s common stock . Post-bailout there have been several changes to AIG s corporate governance sales of AIG s subsidiaries and assets and a reduction in AIG s exposure to risky derivatives. As controlling shareholder Treasury has consented to or been consulted on many of these changes. Largely as a result of assets sales by the end of 2011

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