AIG earns $1.5 billion profit, still owes U.S. $182 billion

Bailout recipient American International Group reported a profit Friday for the third time in four quarters, improving odds that taxpayers will see at least some of their money returned by the insurance giant.

AIG, which is still nearly 80 percent government-owned, reported first-quarter earnings of $1.5 billion compared with a loss of $4.4 billion in the corresponding period last year. The latest results are a far cry from last March, when AIG reported the worst annual earnings of any U.S. company in history.

AIG’s outlook rose in part because the entire insurance industry is benefiting from stronger credit markets. Consumers have also become more willing to open their wallets and purchase coverage plans.

Still, the company remains on the hook for $182 billion of assistance from the Federal Reserve and Treasury.

And AIG continues to borrow from the government: Last month, it increased its credit line with the Federal Reserve Bank of New York by $1.5 billion.

 

Consumer borrowing rises by $1.95 billion in March

Consumer borrowing posted an unexpected increase in March, only the second gain in the last 14 months. It could be a sign that households are feeling more confident about boosting spending, a key development needed to support a sustained economic recovery.

The Federal Reserve reported Friday that consumer borrowing rose by $1.95 billion in March, better than the $3.85 billion drop that economists had expected.

Consumer credit was also up in January but other than those two gains, it has been falling steadily since February of last year as households have cut back on their borrowing to repair their battered balance sheets.

The March gain represented a 1 percent rise at an annual rate following a 3 percent drop in February and a 3.2 percent January increase.

The strength came from a big 3.9 percent jump in nonrevolving credit, the category that includes auto loans. Revolving credit, which covers credit card debt, actually fell by 4.5 percent, the 18th consecutive decline.

The overall increase of 1 percent pushed total credit up to $2.45 trillion at the end of March, down 3.4 percent from a year ago.

 

Goldman Sachs CEO wins re-election as chairman

Goldman Sachs shareholders re-elected Chief Executive Officer Lloyd Blankfein as chairman Friday and voted against splitting the two roles after Blankfein said he has “no current plans” to step down.

All directors up for re-election, including Blankfein, received more than 95 percent support in preliminary results, Goldman Sachs co-general counsel Greg Palm said at the annual shareholders’ meeting in New York.

The Securities and Exchange Commission sued Goldman Sachs for fraud last month in connection with the sale of securities linked to mortgages, and Blankfein and other company executives were interrogated at a Senate subcommittee hearing probing the matter.

Federal prosecutors are also investigating Goldman Sachs, which reported record profit last year.

The firm has said the SEC’s case is “completely unfounded.”

 

Consumer Reports lifts ‘Don’t Buy’ for Lexus SUV

Consumer Reports magazine is lifting a “Don’t Buy” recommendation for a Lexus sport utility vehicle that failed an emergency handling test.

The magazine said Friday that the 2010 Lexus GX 460 luxury SUV passed the test after a dealership updated software that runs its electronic stability control system.

Toyota Motor Corp. recalled about 10,000 of the SUVs in the United States in April after the magazine told readers not to buy them. The automaker also stopped selling them.

Consumer Reports said the rear of the GX 460 slid sideways when testers lifted their feet off the gas pedal during a high-speed turn on the magazine’s test track. The magazine told readers not to buy the SUV because its rear wheels could slide into a curb or off the pavement, raising the risk of rolling over.