FORTUNE — The U.S. Treasury is finally ridding itself of AIG stock, four long years after the government’s bailout escalated to $182 billion, after AIG continued paying bonuses when it shouldn’t have, and after enraged taxpayers lobbed death threats at executives.
Yes, the bailout is over. The government has made $23 billion on its stake in AIG stock. The price at which Treasury breaks even on its “investment”—a loose term in any bailout— is $28.72 a share, so the newest sale of almost 235 million shares at $32.50 should add $1 billion-$2 billion to the total. That the government didn’t lose billions on AIG is undeniably good news. It should celebrate. But the long-term consequences of a bailout the size of Singapore’s GDP are hard to assess.
The government’s “earnings” may turn into ammunition for future administrations to say, “Bailouts work, just look at AIG!” Then there’s the problem of optics: AIG’s executives left with hundreds of millions of dollars worth of bonuses, even those who were at the storm’s center in the tiny Financial Products subsidiary. So AIG fails, executives win, taxpayers assume the bailout risk.
MORE: Why quantitative easing isn’t working
Of course, under Dodd-Frank, the insurer could officially become too-big-to-fail if the Federal Reserve Board of Governors decides to regulate the insurer. That hasn’t been decided. But in any case, even though AIG is a dramatically smaller enterprise today after selling off businesses like its Asian insurer, it is essentially immortal from here on, no matter how bad its decisions.
Oh, and one ironic endpoint: even though Treasury is proud to sell its AIG stock for a sizable profit, it still holds warrants to purchase additional AIG shares (probably for much higher than the current stock price) if it so chooses.
