Billion, Bank Bailout | featured news

A lawsuit claims that the rescue by the government deprived A.I.G.'s shareholders of tens of billions of dollars and took private property for public use without appropriate compensation.

The U.S. Treasury further reduced its stake in American International Group and said on Tuesday that the United States would now profit $15.1 billion from bailing out the insurer.

Fannie Mae and Freddie Mac, the two mortgage-finance giants, this week reported some of their best quarterly results since the real estate collapse. On Wednesday, Fannie Mae posted second-quarter net income of $5.1 billion. That is up from $2.7 billion in the first quarter of this year and an improvement from a net loss of $2.9 billion in the second quarter of last year. Fannie requested no additional money from the Treasury and said it would pay a $2.9 billion dividend to taxpayers.

The U.S. Treasury Department launched its fourth sale of shares in American International Group, with the insurer committing to repurchase two-thirds of the $4.5 billion in shares being offered to the public.

Small banks still owe $11 billion of taxpayer money under TARP, and the government is threatening to unload its stakes in them at big discounts to new investors. Nearly four years after Washington bailed out Wall Street, small banks have yet to repay $11 billion of taxpayer money.

A company run by former American International Group Chief Executive Maurice "Hank" Greenberg has sued the United States, claiming that the government takeover of the insurer was unconstitutional.

Mortgage finance giant Fannie Mae said it would ask for an additional $5.1 billion from taxpayers as it continues to suffer losses on loans made prior to 2009.

Shares of American International Group Inc fell more than 3 percent on Wednesday after the insurer and the U.S. Treasury sold $8.7 billion worth of stock.