American International Group Inc. (NYSE: AIG) saw its stock shares jump more than 20 percent Monday after news from Congress about a possible bailout reduction, according to Associated Press.
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The head of the House Committee on Oversight and Government Reform said that panel will examine a plan to reduce the company's massive bailout package.
Rep. Edolphus Towns, chairman of the House committee, will have that panel study a plan by AIG's former CEO Maurice "Hank" Greenberg to reduce and restructure the company's bailout package, a committee spokeswoman said Monday.
Towns, who has not spoken to the Treasury Department about the plan, met with Greenberg last week, the spokeswoman said.
Greenberg was ousted as CEO in 2005 amid an accounting scandal. He still holds millions of shares of AIG stock through a privately held investment company called CV Starr & Co.
Standard & Poor's equity analyst Catherine Seifert upgraded her rating on AIG's stock to "Hold" from "Sell" Monday, saying Towns' review of Greenberg's plan should boost the insurer's stock price in the near term. Seifert raised her price target on the stock to $45 from $30.
AIG shares have been extremely volatile in recent months as investors bet on whether the company will be able to pay off its government debts and fully recover from the economic downturn. Its shares jumped $8.49, or 21.3 percent, to $48.40 Monday.
In a taxpayer-funded bailout, the Federal Reserve and Treasury Department have provided $182.3 billion to the insurance giant. The Government Accountability Office said that as of early September, AIG's outstanding balance of aid was $120.7 billion.
The GAO, in a report released Monday, found "some progress in AIG's ability to repay the federal assistance." However, improvement in the company's stability depends on its long-term health, market conditions and continued government support.
The report concluded that "the ultimate success of AIG's restructuring and repayment efforts remains uncertain."
Fearing that AIG's collapse could take down the entire
The original $85 billion aid package came one day after Lehman Brothers filed for bankruptcy, the largest in
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