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.

PROMOTED VIDEO
News
Teeth should be brushed twice a day to prevent tooth decay
education
News
Bryan Cranston as Walter White, in the acclaimed series 'Breaking Bad'
news
Sport
footballChelsea 6 Maribor 0: Blues warm up for Premier League showdown with stroll in Champions League - but Mourinho is short of strikers
News
Those who were encouraged to walk in a happy manner remembered less negative words
science
Arts and Entertainment
Princess Olga in 'You Can't Get the Staff'
tvReview: The anachronistic aristocrats, it seemed, were just happy to have some attention
News
Renee Zellweger as Bridget Jones
i100
News
ebooksAn unforgettable anthology of contemporary reportage
Life and Style
tech

Board creates magnetic field to achieve lift

News
There have been various incidents of social media users inadvertently flouting the law
news

Life and Style
Stack ‘em high?: quantity doesn’t always trump quality, as Friends of the Earth can testify
techThe proliferation of online petitions allows us to register our protests at the touch of a button. But do they change anything?
News
Bourgogne wine maker Laboure-Roi vice president Thibault Garin (L) offers the company's 2013 Beaujolais Nouveau wine to the guest in the wine spa at the Hakone Yunessun spa resort facilities in Hakone town, Kanagawa prefecture, some 100-kilometre west of Tokyo
i100
Sport
CSKA Moscow celebrate after equalising with a late penalty
footballCSKA Moscow 2 Manchester City 2: Premier League champions let two goal lead slip in Russia
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

Helpdesk Analyst

£23000 per annum + pension and 22 days holiday: Ashdown Group: An established ...

Senior Helpdesk Analyst / Service Desk Co-ordinator

£27000 per annum + pension, 22 days holiday: Ashdown Group: An established ind...

Senior Pensions Administrator

£23000 - £26000 Per Annum: Clearwater People Solutions Ltd: Our client is curr...

Corporate Actions Administrator / Operations Administrator

£25 - 30k: Guru Careers: A Corporate Actions Administrator / Operations Admini...

Day In a Page

Indiana serial killer? Man arrested for murdering teenage prostitute confesses to six other murders - and police fear there could be many more

A new American serial killer?

Police fear man arrested for murder of teen prostitute could be responsible for killing spree dating back 20 years
Sweetie, the fake 10-year-old girl designed to catch online predators, claims her first scalp

Sting to trap paedophiles may not carry weight in UK courts

Computer image of ‘Sweetie’ represented entrapment, experts say
Fukushima nuclear crisis: Evacuees still stuck in cramped emergency housing three years on - and may never return home

Return to Fukushima – a land they will never call home again

Evacuees still stuck in cramped emergency housing three years on from nuclear disaster
Wildlife Photographer of the Year: Intimate image of resting lions claims top prize

Wildlife Photographer of the Year

Intimate image of resting lions claims top prize
Online petitions: Sign here to change the world

Want to change the world? Just sign here

The proliferation of online petitions allows us to register our protests at the touch of a button. But do they change anything?
Ed Sheeran hits back after being labelled too boring to headline festivals

'You need me, I don’t need you'

Ed Sheeran hits back after being labelled too boring to headline festivals
How to Get Away with Murder: Shonda Rhimes reinvents the legal drama

How to Get Away with Murder

Shonda Rhimes reinvents the legal drama
A cup of tea is every worker's right

Hard to swallow

Three hospitals in Leicester have banned their staff from drinking tea and coffee in public areas. Christopher Hirst explains why he thinks that a cuppa is every worker's right
Which animals are nearly extinct?

Which animals are nearly extinct?

Conservationists in Kenya are in mourning after the death of a white northern rhino, which has left the species with a single male. These are the other species on the brink
12 best children's shoes

Perfect for leaf-kicking: 12 best children's shoes

Find footwear perfect to keep kids' feet protected this autumn
Anderlecht vs Arsenal: Gunners' ray of light Aaron Ramsey shines again

Arsenal’s ray of light ready to shine again

Aaron Ramsey’s injury record has prompted a club investigation. For now, the midfielder is just happy to be fit to face Anderlecht in the Champions League
Comment: David Moyes' show of sensitivity thrown back in his face by former Manchester United manager Sir Alex Ferguson

Moyes’ show of sensitivity thrown back in his face... by Ferguson

Manchester United legend tramples on successor who resisted criticising his inheritance
Two super-sized ships have cruised into British waters, but how big can these behemoths get?

Super-sized ships: How big can they get?

Two of the largest vessels in the world cruised into UK waters last week
British doctors on brink of 'cure' for paralysis with spinal cord treatment

British doctors on brink of cure for paralysis

Sufferers can now be offered the possibility of cure thanks to a revolutionary implant of regenerative cells
Ranked seventh in world’s best tourist cities - not London, or Edinburgh, but Salisbury

Lonely Planet’s Best in Travel 2015

UK city beats Vienna, Paris and New York to be ranked seventh in world’s best tourist destinations - but it's not London