The White House said in a blog post Wednesday the recent report from the Special Inspector General for the Troubled Asset Relief Program was wrong in its assessment of the Treasury's handling of its investments in American International Group (AIG). On Nov. 25, 2008, the Treasury Department bought $40 billion of AIG's preferred stock, and in the following April set aside $29.8 billion to an equity capital facility, from which AIG drew $7.5 billion, leaving AIG's debt to the Treasury at $47.5 billion, according to SIGTARP. On Sept. 30, 2010, AIG announced it entered into a restructuring plan with the Treasury and the Federal Reserve Bank of New York to begin the government's exit from the company. SIGTARP called out the Treasury's methodology in reporting losses on those AIG investments. According to the report, the Treasury estimates a $5 billion loss, down from $45 billion six months earlier without citing a change to its methodology. According to SIGTARP:
"The Retrospective, however, abandoned the published methodology, instead estimating a $5 billion loss based solely on the recent market closing price of AIG’s common stock, on the assumption that the recapitalization plan will go exactly as planned and result in Treasury receiving approximately 1.1 billion common shares of AIG stock in return for its current preferred interests."
But the White House Wednesday said the report is "stuck in a time warp" for ignoring AIG's exit strategy in the investment evaluation and it has valued that common stock on the current market price based on the New York Stock Exchange. "Any truly independent observer would say that Treasury’s stake in AIG will be worth more than taxpayers originally invested in that company," the White House said. "Treasury is confident that we are in a much stronger position today to recoup our investment in AIG than two years ago – or even a few short months ago." Write to Jon Prior.