Treasury to cut AIG stake below half in $18B sale

  Eyewitness NewsWASHINGTON -- The U.S. government is selling more of its shares in insurer American International Group Inc., in a move that should decrease its holdings below a majority stake for the first time since the $182 billion bailout in 2008.

The sale is the latest step to recoup taxpayer money spent on the largest bailout of the financial crisis.

AIG said Sunday that the Treasury Department is selling $18 billion worth of its common shares to institutional investors.

If there is more demand, the government will grant the underwriters a 30-day option to buy up to $2.7 billion more of its stake in the company.

AIG said it will buy back $5 billion worth. The price is not yet determined.

The move should reduce the government's stake in AIG to less than 20 percent of the insurer's total outstanding stock. Right now, Treasury holds about 53 percent of the company, or more than 871 billion shares of common stock, worth about $30 billion.

The government has reduced its stake from 92 percent of the company, after selling shares four times in the last couple of years for a total of $23.3 billion. The most recent sale of about $5 billion was in early August.

AIG, which is based in New York, nearly collapsed in 2008. It received $182 billion from the U.S. government - the biggest of the Wall Street bailout packages - after suffering massive losses from investments in derivatives.

The company has sold off several different units in order to raise money to pay off its debt to the government.

The insurer has been profitable the last two years and is expected to post a net profit of $7.4 billion in the year through this December. CEO Robert Benmosche said last month the company was close to its goal of repaying the government everything it provided to AIG during the financial crisis "plus a profit."

The bailout sparked public outrage and demands in Congress for an investigation, especially after it was revealed that millions in bonuses would go to employees in the AIG division most responsible for the company's need for a bailout. The bonuses were found to be contractual obligations agreed upon years earlier, before AIG received the bailout.

AIG shares closed Friday at $33.99, up about 47 percent since the start of the year.

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Facebook's stock falls below $30 for 1st time

  Eyewitness NewsNEW YORK -- Facebook's stock has fallen below $30 for the first time since its much-awaited public debut this month.

The stock fell $3.07, or 9.6 percent, to close at $28.84 on Tuesday. That's down 24 percent since its public stock debut. It went as low as $28.65 earlier in the day.

Facebook Inc. began trading publicly on May 18 following one of the most anticipated stock offerings in history.

The site, which was born in a Harvard dorm room eight years ago and has grown into a worldwide network of almost a billion people, was supposed to offer proof that social media is a viable business and more than a passing fad.

Facebook's initial public offering of stock priced at $38 and raised $16 billion for Facebook and some of its early investors. It had valued the company at $104 billion - more than Amazon.com Inc., at $98 billion, at the time.

But the stock's public debut was marred by technical glitches at the Nasdaq Stock Market that delayed trading.

And the company, along with the investment banks that led the IPO, is the subject of at least two shareholder lawsuits. They allege that analysts at the large underwriting investment banks cut their financial forecasts for Facebook just before the IPO and told only a handful of clients. Morgan Stanley has declined to comment. Facebook calls the lawsuits "without merit."

Wedbush analyst Michael Pachter said that Facebook's stock has been hurt by what he called "near-term issues" that include the Nasdaq glitches, an oversupply of stock that was being offered and the allegations of selective information disclosure.

But he rates the stock "Outperform" and has a 12-month target price of $44.

"Facebook has built a huge moat between it and its competitors, and we endorse Mr. Zuckerberg's mission," he wrote in a note to investors Tuesday, referring to Facebook CEO and founder Mark Zuckerberg.

With the latest drop, Facebook's value is about $79 billion.

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