The government may stick to the template established with Citigroup (C) to exit its massive bailout of AIG (AIG). The troubled insurer has struck two deals--one to sell its Asian unit, American International Assurance (AIA); the other to sell foreign life insurance unit American Life Insurance--that will raise $50 billion. That might be used to pay down almost all of its Federal Reserve Bank of New York credit facility, notes Reuters. But what about the nearly $50 billion in equity investments, the amount drawn via a $30 billion equity line, and a nearly 80 percent government stake in AIG? Can the government, as it did with Citi, convert its preferred shares to common and then sell them to investors?

Given the huge sums involved in the AIG bailout, it seems unlikely. It would, for the short-term anyway, leave the government as an even more than 80-percent owner of the company. It would take many years. AIG should perhaps concentrate on asset sales. There are certainly more assets that could be marketed. It depends in part on how patient the Treasury is willing to be. The political pressure has abated so perhaps there is more time to work this out. 

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