March 24, 2023

Off the Charts: Gender Gaps Appear in Employment Recovery

The Bureau of Labor Statistics reported last week that women held 54,623,000 private sector jobs in June, an increase of 116,000 from the previous month and 63,000 more than they held in December 2007, when the previous high was set. The gap between records — 65 months — was the longest such period since the government began keeping track of the gender of job holders in 1964.

Men have been gaining jobs as well, but the 59,428,000 jobs they now hold is 1.8 million jobs below the previous high, reached in June 2007.

The relatively better performance of women does not appear to be the result of employer preference for female employees. In fact, the opposite may be true. In most industries, women’s share of the labor force is down from what it was when the recession began. But some professions with a predominantly female work force have done better than the economy as a whole.

The best example of that is health care, where about 80 percent of the jobs are held by women. Employment in that industry continued to rise throughout the downturn.

The latest figures indicate that the number of men with jobs in the field is up 15.8 percent since January 2008, when overall employment peaked just as the Great Recession began, while female employment has risen by just 9.8 percent. But given the preponderance of women in health care jobs — about four out of every five workers in the field are women — those numbers translate into new jobs for more than twice as many women as men.

The charts accompanying this article compare job growth or shrinkage since January 2008. Women hold 0.1 percent more private sector jobs now than they did then, but male employment is still 2.8 percent below its level then.

The number of government jobs has been steadily shrinking, even as the economy recovers, and both male and female public sector employment is 2.4 percent below the levels of early 2008. There was a brief recovery in government employment in 2010 as temporary workers were hired to help conduct the census, but the underlying trend was negative.

The figures come from the government’s monthly survey of employers, which asks not only how many employees a company has but also how many of them are women. The figures are subject to revision, and there is no assurance that the slim female gain shown in the latest report will stand once the figures become final. For some industries, the figures are released with a month’s delay, and the charts for those industries reflect May employment levels.

In industries as disparate as manufacturing, information services and financial services, women and men lost jobs at about the same rate in the first year or two after the economy began to decline. But as the industries stabilized or began to recover, men were far more likely than women to find jobs. Since June 2009, significant numbers of jobs in all three industries have gone to men, while the ranks of women among jobholders continued to shrink in two of the fields, manufacturing and information services, and stabilize in the third, financial services.

In the category that includes restaurants and bars — in which women hold a small majority of the jobs — men and women lost jobs at roughly the same rate until the end of 2009. But since then, as employment increased, men have been more likely to find positions. For the entire period, male employment in such establishments is up more than 8 percent, while female employment has risen nearly 5 percent.

In the early months of the downturn, women came tantalizingly close to realizing a new milestone. In October 2009, women held 49.99 percent of all jobs, with private and public sectors combined. The difference in job totals was only 24,000 — 64,819,000 for men and 64,795,000 for women. But since then, as employment has risen, the female share has dipped to 49.37 percent, and men now have 1.7 million more jobs than women.

Floyd Norris comments on finance and the economy at

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Unemployment in Euro Zone Reaches a Record High

The jobless rate reached 12 percent in both January and February, the highest since the creation of the euro in 1999, Eurostat, the statistical agency of the European Union, reported from Luxembourg.

The January jobless rate for the 17-nation currency union was revised upward from the previously reported 11.9 percent.

For the overall European Union, the February jobless rate rose to 10.9 percent from 10.8 percent in January, Eurostat said, with more than 26 million people without work across the 27-nation bloc.

European officials continue to hold out hope that the economy, which continued to shrink in the first quarter of 2013, will begin turning around in the second half of the year. Many private sector forecasters are more pessimistic, expecting a contraction of as much as 2 percent in the euro zone’s gross domestic product this year, after a 0.9 percent contraction last year.

While there is general agreement that the current course for addressing the euro crisis — heavily focused on budget- balancing measures that reduce overall demand — is not working, the need for emergency action like the recent bailout of Cyprus has appeared to inhibit any deep rethinking of economic policy.

In the absence of new measures to stimulate growth at the European and national levels, all attention will be focused Thursday on the governing council of the European Central Bank, which meets in Frankfurt to consider whether to maintain interest rates at their current record low or cut even further.

Britain, the largest E.U. economy outside the euro zone, had an unemployment rate of 7.7 percent in December, the latest available month.

In the United States, the jobless rate fell in February to 7.7 percent, the lowest since late 2008. The consensus among economists surveyed by Reuters is for U.S. nonfarm payrolls Friday to show a gain of 200,000 jobs in March, after a gain of 236,000 in February.

The European labor market has now declined for 22 straight months, making this the worst downturn since the early 1990s, Jennifer McKeown, an economist in London with Capital Economics, wrote in a note. In particular, she said, the rise in France’s February jobless rate to 10.8 percent from 10.7 percent in January “looks very worrying.”

“With fiscal tightening still putting downward pressure on disposable incomes and consumer confidence at very low levels, household spending is likely to fall further in the coming months,” Ms. McKeown said.

On Tuesday, a report by Markit Economics showed the euro zone’s manufacturing sector contracted again in March, with an index of purchasing managers activity dropping to 46.8 from 47.9 in February. An index level below 50.0 suggests contraction, while a level above that suggests expansion.

The manufacturing index has contracted every month since August 2011. Manufacturing activity in Germany and Ireland, which had been expanding, began to decline again.

The euro zone manufacturing sector shed jobs in March for a 14th consecutive month, Markit reported, with “steep rates of declines reported in France, Italy, Spain, the Netherlands, Ireland and Greece,” and only Germany and Austria bucking the trend.

Eurostat said Greece had the euro zone’s highest unemployment rate: 26.4 percent unemployment in December, the latest month for which data are available. A sovereign debt crisis, and the tax increases and spending cuts that followed it, have wrecked the Greek economy. An astonishing 58.4 percent of Greek youth were classified as unemployed, Eurostat reported.

Spain, where the economy has also contracted sharply following the collapse of the global credit bubble, posted the second-highest unemployment rate in the euro zone: 26.3 percent in February.

Austria’s jobless rate was the lowest, at 4.8 percent. Germany’s was near the bottom at 5.4 percent, while France’s was double its larger neighbor, at 10.8 percent.

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Frequent Flier: When Even 4 Hours of Layover Time Isn’t Enough

I WORKED for more than 30 years for the government as a psychiatrist with the Department of Veterans Affairs system. I flew all the time for meetings and other bureaucratic events. I now work in the private sector as a psychiatrist, and still fly for business about  twice a month.

I don’t like flying much. If I could take a train, that’s what I would do.  I don’t mind talking to seatmates, but I don’t advertise what I do. I might say I’m a doctor, and if they ask me what kind, I’ll usually answer “a pretty good one.”  I don’t want to get into a discussion about psychiatry when I’m trapped in a plane.

I’ve had my share of flying misadventures, but nothing like one recent experience where everything that could go wrong, did.

My wife and I were coming home  from Scotland. We booked plenty of time between our flight from Edinburgh to London and then on to Boston. We booked through a  British carrier, but the  London-to-Boston leg was subcontracted to an American carrier. We were feeling very hopeful that everything was going to go smoothly. That is, until we  got to the airport and saw the plane we were supposed to board was empty. Other travelers were gathering, so we figured that we were in the right place. After about  90 minutes, we found out the delay was caused by fog at Heathrow.

We finally boarded, but then we sat on the runway for another hour because we couldn’t take off because of the backup at Heathrow. We started with a four-hour cushion of time between leaving Scotland, landing in London and then going to Boston. So much for that, and even more time was eaten up as we  circled Heathrow because of continued congestion.

We finally landed, but then had to wait for an open gate, and then found out we had to be bused to a terminal. By the time we got to Heathrow Terminal 5, our Boston flight was gone.

We went to the flight connections desk, where about 2,000 people were in line ahead of us. I called the American carrier whose flight we missed and was told that since it wasn’t a simple round-trip booking, I would have to buy another ticket to get home. I refused, and was told to call  the British carrier with whom I booked the ticket originally.

They told me that we could get on a flight offered by the same American carrier I had just spoken with. Fine by me. It was leaving in 90 minutes. I asked what gate the flight was departing from. It was Terminal 3. It took 45 minutes to get there, only to find out bookings for the flight had closed.

I’m pretty sure tears of frustration were streaming down my face as I explained we had just been sent there from Terminal 5. They found our names, which was great, but we still had to clear security, and then make it to the gate. I was beat up at this point, but we finally boarded our flight home only to discover that we left a backpack at security. The attendant gave me 10 minutes to run back to security and then run back to the plane.

I’m 72 years old. I thought I was going to die, but somehow ran the mini-marathon. When I finally sat down on the plane, we were delayed another 30 minutes. I drank wine. We landed in Boston. My luggage was lost. It did arrive one week later, dirty laundry still intact. After that ordeal, I figured someone might have at least washed it.



By William Boutelle, as told to Joan Raymond. E-mail:

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DealBook: How Much Does the Fed’s Plan Really Help Main Street?

Ben Bernanke, the Federal Reserve chairman, said Thursday that the Fed’s new stimulus was meant to help Main Street.

One way to gauge the extent to which Main Street might benefit is to look at the interest rates ordinary people pay on their mortgages, credit cards and car loans. Those rates, however, don’t make the strongest case for Mr. Bernanke being a man of the people.

Since 2008, the Federal Reserve has purchased some $2.75 trillion of bonds. On Thursday, it promised to keep buying bonds until it felt comfortable that the jobs market was properly back on its feet.

The Fed’s purchases aim to drive down borrowing costs for companies and consumers. In theory, this will make them more likely to take out loans to buy goods and services, stimulating the wider economy in the process.

By some measures, the Fed’s policies have worked. Mortgage rates have fallen to multidecade lows, large corporations have had no trouble issuing bonds, the economy is growing and the private sector has been adding jobs for months now.

The Fed’s largess has even helped borrowers much lower down the credit scale. Lenders are making lots of subprime auto loans right now. Some $14 billion of such loans have been packaged up into bonds and sold to investors so far this year, according to Fitch Ratings. At the rate companies are lending, the 2012 total for subprime car loans could exceed $20 billion, which would put this year on par with 2005, a boom year.

But in many cases borrowers could be getting an even bigger benefit. As the Fed’s actions have pushed down some key rates, the ones that consumers borrowed at haven’t fallen anywhere near as much.

The federal funds effective rate, one short-term rate that banks use to lend to each other, is at 0.14 percent. That compares with a rate of 3.62 percent in September 2005.

The 10-year Treasury note has a yield of 1.87 percent, down from 4.2 percent in 2005. These are huge declines.

Yet the cost of credit card loans has hardly budged. The Fed’s own data shows that average credit card interest rate was 12.06 percent earlier this year; in 2005, it was 12.45 percent.

One explanation is that the banks making credit card loans have to charge that level to cover the costs of their own borrowing. But that doesn’t seem to be the case.

For instance, JPMorgan Chase, a big credit card lender, paid an average of just 0.76 percent on its liabilities in the second quarter of this year. That’s way down from 3.1 percent in 2005.

The banks’ fears of credit-card defaults could be a driver. They may want to charge more than 12 percent to cover these potential costs, which are always part and parcel of doing credit card loans. If so, that fear could prevent certain consumer rates from falling much further, limiting the impact of the Fed’s policies.

But even when fear of default is removed from the equation certain interest rates seem to be stuck too high.

Take mortgages. The federal government agrees to shoulder the cost of defaults in nearly all of the mortgages made today. Banks make mortgages to borrowers, and then take those loans and attach the government guarantee of repayment to them.

After that, they package the loans into bonds, which they then sell to investors. The Fed’s purchases of these bonds have helped their yields fall to 2.2 percent. But the cost of mortgages to borrowers hasn’t fallen anywhere near as much.

The banks are choosing not to reduce mortgage rates further. One reason: By keeping the rates elevated, they are able to earn much larger profits when they sell the mortgages into the bond market. If the level of profits on those sales stayed at recent average levels, borrowers might, for instance, pay $30,000 less in interest payments on a $300,000 mortgage, according to a recent New York Times analysis.

Based on these practices, it seems as if the banks are an obstacle to the Fed’s latest efforts to generate economic growth. It’s almost impossible to imagine the Fed forcing banks to lower credit card rates, or take lower profits on their mortgage sales.

Main Street may therefore have to wait a long time for the full effect of the Fed’s latest actions.

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Economix Blog: The Role of Austerity



Thoughts on the economic scene.

The chart here offers one of the better recent snapshots of the American economy that you will find.

The blue line shows the rate at which the government — federal, state and local — has been growing or shrinking. The red line shows the same for the private sector.

Annualized growth in the public and private sectors.Source: Bureau of Economic Analysis, via Haver AnalyticsQuarterly change at seasonally adjusted annual rate.

The brief version of the story is that the government, which helped mitigate the recession, has been a significant drag on growth for more than a year now.

In 2007, both the private sector and government were growing. The government continued growing through 2008 and most of 2009, with the exception of one quarter when military spending fell. The private sector, though, began to shrink in 2008 and by late 2008, as the financial crisis took hold, it was shrinking rapidly.

The government — first the Federal Reserve and the Bush administration and then, more aggressively, the Fed and the Obama administration — responded with various stimulus programs. They are the reason for the blue line’s upward spike in 2009.

The private sector began to recover in 2009. The recovery slowed in 2010 and again in 2011, as the dips in the red line show. But by the end of last year, the private sector was expanding at a healthy 4.5 percent annualized pace.

Why, then, wasn’t economic growth in the most recent quarter better than the 2.8 percent that the Commerce Department reported today?

Because the economy is the combination of the private and public sectors. The public sector has been shrinking for the last year and a half — mostly because of cuts in state and local government, with some federal cuts, especially to the military, playing a role as well. In the fourth quarter, government shrank at an annual rate of 4.5 percent.

Over the last two years, the private sector grew at an average annual rate of 3.2 percent, while the government shrank at an annual rate of 1.4 percent.

The combined result has been economic growth of 2.3 percent.

People can obviously have a spirited debate about cause and effect here. I’m not aware of much research or evidence suggesting that short-term declines in government activity — at least in a largely free-market economy — cause short-term growth in the private sector.

Lacking such evidence, the obvious conclusion seems to be that economic growth, and employment growth, would have been significantly stronger over the last two years without government cuts. But I’d invite readers to point us to any research that bears on the question, one way or the other.

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High & Low Finance: U.S. Manufacturing Is a Bright Spot for the Economy

When the Labor Department reports December employment numbers on Friday, it is expected that manufacturing companies will have added jobs in two consecutive years. Until last year, there had not been a single year when manufacturing employment rose since 1997.

And this week the Institute for Supply Management, which has been surveying American manufacturers since 1948, reported that its employment index for December was 55.1, the highest reading since June. Any number above 50 indicates that more companies say they are hiring than say they are reducing employment.

There were new signs Thursday that the overall jobs climate was improving, as the Labor Department reported that new claims for unemployment benefits fell last week and a payroll company’s report showed strong growth in private-sector jobs in December.

As stores have filled with inexpensive imports from China and other Asian countries, the perception has risen that the United States no longer makes much of anything. Certainly there has been a long decline in manufacturing employment, which peaked in 1979 at 19.6 million workers. Now even with hiring over the last two years, the figure is 11.8 million, a decline of 40 percent from the high.

But those numbers obscure the fact that the United States remains a manufacturing power, albeit one that has been forced to specialize in higher-value items because its labor costs are far above those in Asia. The value of American manufactured exports over a 12-month period peaked at $1.095 trillion in the summer of 2008, just before the credit crisis caused world trade volumes to plunge. At the low, the 12-month figure fell below $800 billion, but it has since climbed back to $1.074 trillion. Those figures are not adjusted for inflation.

In total exports, including manufactured goods as well as other commodities like agricultural products, the United States ranked second in the world in 2010, behind China but just ahead of Germany. For the first 10 months of 2011, Germany is slightly ahead of the United States.

The United States is particularly strong in machinery, chemicals and transportation equipment, which together make up nearly half of the exports. Exports of computers and electronic products are growing, but are well below their precrisis levels. Production of cheaper computers and parts shifted to Asia long ago.

Just how long the rise in manufactured exports can last depends, in part, on the health of other economies. The euro zone no longer takes as large a share of American exports as it once did, but it is still a major customer. A recession there this year, as has been widely forecast, would hurt all major exporters, including the United States.

Similarly, the strong exports provide a stark reminder of how vulnerable this country could be to protectionist trade wars. The Doha round of world trade talks, which was supposed to result in the lowering of more trade barriers, has stalled. And last month China imposed punitive duties on imports of American large cars and sport utility vehicles, which total about $4 billion a year.

That move was seen as retaliation for United States requests that the World Trade Organization rule that Chinese subsidies for its solar and poultry industries violated international law. The Chinese denounced those requests as protectionist.

The American government denies that, of course. “Part of a foundation of a rules-based system is dispute settlement,” said Ron Kirk, the United States trade representative, in an interview with Reuters after the Chinese announced the new tariffs. “That’s what we think is so important about the W.T.O. How China reacts to that is up to China. But I just cannot buy into the argument that our standing and protecting the rights of our exporters and workers is somehow igniting a trade war or being protectionist.”

Since employment in the United States hit its recent low, in February 2010, the economy has added 2.4 million jobs through November, of which 302,000 were in manufacturing. With government payrolls shrinking, and financial services jobs also lower, manufacturing employment has played an important role in keeping the economy growing. It also is helping that construction employment appears to have hit bottom. In the first 11 months of 2011, it is up a small amount.

To be sure, the gains in manufacturing employment and exports have come after sharp declines during the recession and credit crisis. There are still 6 percent fewer manufacturing jobs than there were when President Obama took office at the beginning of 2009, and it seems very unlikely that he will be the first president since Bill Clinton, in his first term, to preside over growing manufacturing employment during a four-year term.

During George W. Bush’s two terms, the number of manufacturing jobs fell by 17 percent in the first four years and by 12 percent in the following four years. The number declined by 1 percent in Mr. Clinton’s second term.

The Institute for Supply Management survey of manufacturers has shown more companies planning to hire than to fire in every month since October 2009. That string of 27 months is the longest such string since 1972, but remains well behind the longest one, 36 months, which ended in December 1966.

Over all, that survey has indicated that a plurality of companies has believed business is getting better for 29 consecutive months, and December’s reading of 53.9 was the strongest since June.

This summer, one widely watched part of the I.S.M. survey showed that a small plurality of companies reported new orders were falling, a fact that helped to stimulate talk of a double-dip recession. But the latest reading, of 57.6, indicates widespread strength in new orders.

In an economy where there is widespread concern over consumer spending, and in which government spending and payrolls are under heavy pressure, manufacturing has become a bright spot. It is not enough to produce a strong rebound, and it remains vulnerable to weakness overseas. But it has helped to keep a weak economic recovery from turning into a new recession.

Floyd Norris comments on finance and the economy at

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Beyond Greece, Europe Fears Financial Contagion in Italy and Spain

Hopes that pledges of new austerity would turn sentiment toward Greece around have proved illusory, and more officials are acknowledging that Greece has to cut its debt, meaning losses for those who hold Greek bonds. But the way forward is immensely complicated, partly because European leaders cannot agree on how much pain to inflict on private-sector bond holders, especially big European banks.

Meanwhile, the European Central Bank continues to demand a response that will not be considered by ratings agencies to be the first default among countries that use the euro, which the bank fears could reduce confidence in the currency’s stability.

It amounts to a game of political and financial chicken, and the markets are becoming fed up with the uncertainty. Investors are now demanding sharply higher interest rates to buy the debt of Italy and Spain — the third- and fourth-largest economies in the euro zone. By doing so they are sending a clear message that Europe has to decide how to absorb the losses necessary to slash Greece’s debt.

Otherwise, the analysts warn, continued confusion about the euro will spread to other weak members of the euro zone, including Italy and Spain, which are considered too big to bail out. Italy alone has debts of 120 percent of its annual gross domestic product, and must refinance nearly a quarter of its debt — nearly 400 billion euros — in the next 18 months. That figure alone is larger than all of Greece’s debt of some 340 billion euros, and at suddenly spiking interest rates of 6 percent or so, even Italy could be teetering toward insolvency.

Officials involved in talks on the new Greek rescue package said that in recent days the debate had moved beyond Greece, and that markets were now questioning the very architecture of the euro, a common currency for sovereign nations with diverse economic and fiscal problems.

“For Spain and Italy, you need to provide a solution for Greece, plus a safety net to prevent contagion,” said Antonio Garcia Pascual, chief southern European economist for Barclays Capital. “But the inaction of policy makers is unhelpful. And we don’t have weeks. It’s a matter of days, especially with Italian and Spanish bonds at this level.”

Until recently, the argument was that any Greek restructuring or default would bring a market frenzy aimed at other countries in difficulty. Instead, the failure to cope with the reality of Greek insolvency has had the opposite effect, causing more contagion, many analysts say.

“To see those yields on highly developed countries like Italy jump so fast has really focused minds,” said Simon Tilford, chief economist for the Center for European Reform in London. Chancellor Angela Merkel of Germany has insisted that there is little urgency and that the private sector must be involved in restructuring.

“Merkel is now in a very difficult position,” Mr. Tilford said. “The Germans are now alive to the risk in ways they weren’t before. For all the derision about Silvio Berlusconi, Italy is core Europe and has very strong ties to Germany and France.”

But those pressing for a comprehensive solution may be disappointed, with Mrs. Merkel saying on Tuesday that “a spectacular, single step cannot responsibly be made, including on Thursday.” Instead, she said, “we need a controlled and manageable process of successive steps and measures” for “reducing debt and improving competitiveness.”

European technocrats are reportedly exploring a tax on euro zone banks to cover burden-sharing by the private sector. They are also said to be considering a supposedly voluntary “rollover” of existing bonds for ones with a lower interest rate and a much longer maturity, preserving, at least notionally, the face value of the bond. That idea, originally French, might not be judged a “default” by all ratings agencies.

Steven Erlanger reported from Paris, and Rachel Donadio from Rome.

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A.I.G. Tells Shareholders Stock Sale Still Planned

The Treasury Department has been planning to sell some of its shares for months, as the Obama administration has worked to return the big insurer to the private sector. But questions about the size and the price of the deal have mounted, as A.I.G.’s share price has been sliced in half this year.

No specific selling price was quoted by top company executives, who answered questions about the insurer’s planned return to the private sector at the company’s annual meeting. But the planned offering of 300 million shares would yield about $9 billion at the stock’s current price, much less than anticipated just a few months ago.

The Treasury, which now owns 92 percent of A.I.G.’s common stock, aims to sell 200 million of its 1.66 billion shares, leaving it with 77 percent of the company, according to an offering document filed Wednesday. At the same time, A.I.G. plans to sell 100 million new shares.

A person familiar with the company’s plans said some of the proceeds would be used to increase the company’s available cash and capital, allowing it to eliminate a line of credit from the Treasury.

Several factors have depressed the company’s shares. In recent months, A.I.G.’s biggest remaining operating unit, renamed Chartis, has posted losses on earthquake claims from Japan and New Zealand. It has had to bolster its reserves too.

The company’s share price has also fallen sharply since the issuance in January of a warrant that allowed shareholders to buy stock for $45 a share. The warrant had been announced in October to encourage investors to hold the stock while the Treasury executed a series of restructuring transactions. Until January, the value of the warrant was included in A.I.G.’s stock price.

“You’re now selling this stock at one-half of what it was selling for just a few months ago,” Kenneth Steiner, the owner of 600 A.I.G. shares, told the board at the annual meeting. “What’s happened here is a real shame and a real tragedy, and it’s only being made worse now by this dilutive offering.”

From a 2011 high of $61.18 in January, A.I.G.’s stock closed at $30.65 on Wednesday in regular trading, up $1.03 for the day.

Treasury officials have said that taxpayers will break even as long is A.I.G. can sell its stake for at least $28.72 a share. The price on the first tranche will be determined in part by demand as the company and its bankers begin a road show to market the shares. The big banks underwriting the deal are said to want a lower price, in hopes of maximizing how much they will make on the sale.

Mr. Steiner, the investor, said he considered it unfair for the company to announce stock offering terms suddenly at an annual meeting, depriving investors of information that they could analyze to decide whether to support the current management.

He said that the stock would be offered at two-thirds of A.I.G.’s book value, about $47 a share, “way below what most insurers would have sold their stock at.”

A.I.G.’s chairman, Steve Miller, said the board had decided to go ahead because a broader shareholder base would be helpful. The stock would then be less vulnerable to the sharp price swings that plague thinly traded stocks. That, in turn, could encourage more investors to buy, and the stock would eventually rebound.

He added that the Treasury’s portion of the sale was not dilutive, because it would not increase the number of shares outstanding — it would simply shift a block of shares from the government to many owners.

Along with paying down the Treasury line of credit, the company said that $550 million of its proceeds would go to settle a lawsuit filed by three Ohio pension funds in 2004.

The current chief executive, Robert H. Benmosche, said the company could not begin paying dividends to shareholders until all the Treasury’s holdings were sold. He suggested shareholders might recover some value as soon as 2012 or 2013, when A.I.G. could begin to buy back some of the shares now being put on the market.

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Economix: Foreclosure Prevention: The Treasury’s View

An article today, and a follow-up blog post here on Economix, looked at a Treasury effort at the heart of the administration’s foreclosure-prevention effort, the Home Affordable Modification Program. The program is widely considered to have fallen short of expectations, and the Republican-led House voted Tuesday evening to eliminate it. The Treasury makes the case that any judgment of the program must take into account the circumstances in which it has operated. In response to the Times article, Timothy Massad, the acting assistant secretary for financial stability, laid out the Treasury’s view:

Any assessment of the success of the Administration’s Home Affordable Modification Program (HAMP) must account for the climate in which the program was launched, the unprecedented nature of the program itself, the authority we have in administering it and the targeted universe of homeowners we set out to help. Today’s New York Times piece, “Foreclosure Aid Fell Short, and Is Fading Away,” is unfortunate in its failure to address many of these realities.

Before HAMP was launched in the Spring of 2009, little had been done by the government or private sector to address the historic housing crisis or to provide relief to the significant backlog of homeowners at risk of foreclosure. The Administration built from scratch a program to address the tremendous need while appropriately balancing the interests of taxpayers. Mortgage modifications had never been done on such a scale; servicers did not have the people, the procedures or the systems to deal with the crisis; and the housing market was constantly changing.

Under the law, Treasury had the legal authority to implement a voluntary foreclosure prevention program. We are not able to regulate the mortgage servicers and we cannot issue fines. But at a time when the industry still has a long way to go in meeting customers’ basic needs, we have used disclosure around servicer compliance to keep the pressure on and help ensure that homeowners are better served by mortgage companies. And we have used the important standards that HAMP has put in place to push the industry to modify 2 million additional mortgages outside of the program. Because of the standards HAMP has created, American families have many more options to avoid foreclosure and relief is becoming more sustainable for struggling homeowners.

Without question, we have not helped as many people under HAMP as we originally estimated. Much of that is due to prudent eligibility criteria under a program designed to protect limited taxpayer resources. As a result, we’ve also spent far less on HAMP than we originally estimated.

Even so, under HAMP, more than 600,000 families across the country have received permanent mortgage modifications to date, resulting in real payment relief. And each month, an additional 25,000-30,000 homeowners receive HAMP modifications. For many of these families, a reduced monthly payment is the difference between keeping their home and foreclosure.

The housing crisis took years to create, and there is no easy or quick way to repair the deep damage that it caused. We believe that HAMP continues to provide critical assistance for homeowners and is an important part of the continued recovery of the housing market. We will continue to work to strengthen program implementation while providing additional relief for communities hit hard by foreclosure.

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