AIG's ability to repay loans "uncertain"

       Despite some progress, congressional investigators on Monday cast doubt on whether efforts by American International Group Inc (AIG)to restructure its operations and pay back the government will ever prove successful.
       Still, the companys shares jumped more than 20% after the head of the House Committee on Oversight and Government Reform said that panel would examine a plan to reduce the AIG bailout package.
       In the biggest taxpayer-funded bailout of a single company, 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, AIGs outstanding balance of aid was $120.7 billion.
       The GAO found some progress in AIGs ability to repay the federal assistance.
       But improvement in the companys stability depends on its long-term health,market conditions and continued government support.
       The report concluded that the ultimate success of AIGs restructuring and repayment efforts remains uncertain.
       Responding to the report, AIG spokesman Mark Herr said:AIG remains committed to reducing risk and repaying taxpayers.
       Fearing that AIGs collapse could take down the entire US financial system and the broader economy, the Fed first came to AIGs rescue last September.
       The original $85 billion aid package came one day after Lehman Brothers filed for bankruptcy, the largest in US corporate history.
       AIG burned through the first lifeline,though, and continued to haemorrhage cash. It needed help three more times from the government, which owns about 80% of the company because of the bailout.
       Congressional investigators acknowledged that the federal assistance has helped stabilise AIGs financial situation. But they said the government remained exposed credit and investment risks that could result in the Federal Reserve and Treasury not being repaid in full.
       Rep Edolphus Towns, chairman of the House Oversight Committee, will have that panel study a proposal by AIGs former chief executive officer Maurice Hank Greenberg to reduce and restructure the companys bailout package, a committee spokeswoman said on 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 & Poors equity analyst Catherine Seifert upgraded her rating on AIGs stock to hold from sell on Monday,saying Towns review of Greenbergs plan should boost the insurers 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 New York-based 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%, to $48.40 on Monday.