Anthony Hilton: AIG's great escape is an omen that RBS and Lloyds will one day be out of debt

That single bailout, it should be noted, is more than the current UK budget deficit

The unexpected highlight of my week was to be in the room in the Lloyds Building on Tuesday when Bob Bernmosche, the chief executive of AIG (American Insurance Group), announced that as of the previous evening his company owed the taxpayer nothing.

This was an historic moment. After all, it is not every day you hear a company has paid back $184bn (£114.1bn).

AIG, at the time the world's largest insurance company, was at the heart of the financial crisis. It was the firm which had decided in a moment of madness to insure credit default swaps ( against default) and in so doing it made securitised bonds acceptable to a whole range of investors who otherwise would never have touched them. This in turn fuelled the explosion of credit, the sub-prime bubble and all the other excess that followed.

And while we British taxpayers think we were so hard done by after putting £40bn into Royal Bank of Scotland (RBS) and Lloyds to keep them afloat, the US taxpayer injected three times that into AIG, because if it had been allowed to collapse it would have brought down all the banks in America and across the world who were relying on it paying out on those default policies.

That single bailout, it should be noted, is more than the current UK budget deficit which George Osborne is finding so difficult.

Restoring the fortunes of the company is an astonishing achievement, because when Mr Bernmosche picked up the reins – he was not from AIG and indeed came out of retirement to sort out the mess – the business was trying to repay the US government by selling off its assets at rock-bottom prices.

He quickly realised that this would leave them well short of what was needed but he then had to persuade the politicians, the regulators and indeed those in the business who included his own chairman that they should stop the fire sale because AIG could be rebuilt. That was probably the hardest part of the job, and his neck was put firmly on the line.

Almost everyone else believed the crash had tarnished the AIG brand so badly no one would ever want to insure with it again. But in fact the business lost only about 10% of its customers – though it had to drop prices pretty sharply to keep some of them. Today, while there is still some lingering sucking of teeth at the mention of the name in the US and parts of Europe, in the rest of the world it is as if the scandal had never happened.

Thus it was that on Monday of this week, the US treasury sold the last of its shares, meaning that not only had the $184bn been repaid in full but government has actually come out with a near-$20bn profit.

If a company of that size can be sorted out and turned round in four years, then we ought reasonably to expect that one day, before too long, RBS and Lloyds will also be able to come out blinking into the sunlight.

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Client Services Manager - Relationship Management - London

£30000 - £32000 per annum + benefits : Ashdown Group: A highly successful, int...

Recruitment Genius: Credit Controller / Customer Service

£18000 - £20000 per annum: Recruitment Genius: This rapidly expanding business...

Guru Careers: In-House / Internal Recruiter

£25 - 28k + Bonus: Guru Careers: An In-house / Internal Recruiter is needed to...

Recruitment Genius: Tax Assistant

Negotiable: Recruitment Genius: A Tax Assistant is required to join a leading ...

Day In a Page

Syria crisis: Celebrities call on David Cameron to take more refugees as one young mother tells of torture by Assad regime

Celebrities call on David Cameron to take more Syrian refugees

One young mother tells of torture by Assad regime
The enemy within: People who hear voices in their heads are being encouraged to talk back – with promising results

The enemy within

People who hear voices in their heads are being encouraged to talk back
'In Auschwitz you got used to anything'

'In Auschwitz you got used to anything'

Survivors of the Nazi concentration camp remember its horror, 70 years on
Autumn/winter menswear 2015: The uniforms that make up modern life come to the fore

Autumn/winter menswear 2015

The uniforms that make up modern life come to the fore
'I'm gay, and plan to fight military homophobia'

'I'm gay, and plan to fight military homophobia'

Army general planning to come out
Iraq invasion 2003: The bloody warnings six wise men gave to Tony Blair as he prepared to launch poorly planned campaign

What the six wise men told Tony Blair

Months before the invasion of Iraq in 2003, experts sought to warn the PM about his plans. Here, four of them recall that day
25 years of The Independent on Sunday: The stories, the writers and the changes over the last quarter of a century

25 years of The Independent on Sunday

The stories, the writers and the changes over the last quarter of a century
Homeless Veterans appeal: 'Really caring is a dangerous emotion in this kind of work'

Homeless Veterans appeal

As head of The Soldiers' Charity, Martin Rutledge has to temper compassion with realism. He tells Chris Green how his Army career prepared him
Wu-Tang Clan and The Sexual Objects offer fans a chance to own the only copies of their latest albums

Smash hit go under the hammer

It's nice to pick up a new record once in a while, but the purchasers of two latest releases can go a step further - by buying the only copy
Geeks who rocked the world: Documentary looks back at origins of the computer-games industry

The geeks who rocked the world

A new documentary looks back at origins of the computer-games industry
Belle & Sebastian interview: Stuart Murdoch reveals how the band is taking a new direction

Belle & Sebastian is taking a new direction

Twenty years ago, Belle & Sebastian was a fey indie band from Glasgow. It still is – except today, as prime mover Stuart Murdoch admits, it has a global cult following, from Hollywood to South Korea
America: Land of the free, home of the political dynasty

America: Land of the free, home of the political dynasty

These days in the US things are pretty much stuck where they are, both in politics and society at large, says Rupert Cornwell
A graphic history of US civil rights – in comic book form

A graphic history of US civil rights – in comic book form

A veteran of the Fifties campaigns is inspiring a new generation of activists
Winston Churchill: the enigma of a British hero

Winston Churchill: the enigma of a British hero

A C Benson called him 'a horrid little fellow', George Orwell would have shot him, but what a giant he seems now, says DJ Taylor
Growing mussels: Precious freshwater shellfish are thriving in a unique green project

Growing mussels

Precious freshwater shellfish are thriving in a unique green project