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The credit rating firm Moody’s Investor Services believes that there is a fair likelihood that the U.S. government will recoup most, if not all of it’s $182 billion bailout to American International Group(AIG).  There have been a number of out spoken critics of both the Federal Reserve and the U.S. Treasury over their handling of the matter and the huge risk to taxpayers the government took on.

The government has restructured it’s bailout to the embattled insurance giant a number of times and continued support for the company will be in their best interest.  Many analysts believe AIG is out of the danger zone unless the economy goes into a relapse.

It’s has had two straight quarters of profitability and as the stock market continues to stabilize, that should improve their position going forward.  AIG has also slowed the pace of it’s asset sales in order to seek higher prices when markets improve.

A highly leveraged position though insurance contracts called credit default swaps provided spectacular profits earlier in the decade, but those bets turned disastrous in the wake of the subprime collapse and nearly lead to their collapse if it weren’t for the government’s intervention.  One of the so called “too big” to fail firms, AIG’s collapse would have sent shock waves through an already reeling financial system.

Once it’s restructuring plan is complete and it repays the government back, many believe AIG will remain a profitable company albeit at a much smaller scale than it’s former position as the world’s largest insurer.

Late Saturday night, the House of Representatives narrowly approved the Affordable Health Care for America Act by a vote of 220-215, a much closer margin than was thought, considering the overwhelming majority Democrats hold. 39 Democrats broke ranks and opposed the bill, while there was only one Republican that supported it.

It will now be up to the Senate to vote on it’s version but that may prove an ever stiffer test.  At this point it doesn’t look likely that Democrats will be able to muster the 60 votes needed to overcome a filibuster and end debate.

The key figures in the Senate vote may be Senator Joseph Lieberman of Connecticut, an independent and Senator Olympia Snowe of Maine, a Republican.  Lieberman, while an independent, sits on the Democratic caucus and would be the 60th vote needed to break a filibuster, however, he has vowed to join a Republican filibuster as long as the bill contains a “public option”.

Meanwhile, Snowe, unlike her fellow Republicans has opened the door to compromise and the White House may try to seek her support, although it’s unclear at the moment what it would take to sway her vote.  At this point there are serious doubts on whether a bill will reach President Obama’s desk before the year is out.

It would be a major defeat for the President, whom has made health care reform his primary domestic policy issue.  The final outcome may also have a strong bearing on next year’s midterm Congressional elections.

Lost in all the attention with all the media coverage over healthcare reform over the past month, Congress once again voted to extend the National Flood Insurance Program(NFIP).  The NFIP which was set to expire on October 31, has seen a series of short term extensions over the course of the past year.

Congress has been unable to come to a consensus over a long term solution for the program.  Still carrying considerable amounts of debt from Hurricane Katrina, legislators have been at odds over whether to forgive the debt, as well as adding a controversial wind coverage option, after private market coverage for it started to wane.

It is likely a long term agreement won’t arise until the next Congressional session with the healthcare reform issue yet to be resolved.  There is a general feeling that premiums need to rise, otherwise we would be seeing much of the country’s tax base subsidizing residents who live in more flood prone areas.

Efforts to create a private market for flood coverage have been unsuccessful although a couple of private insurers have unveiled some form of coverage, it is difficult for them to compete with low premiums the government charges for it’s coverage.

Critics have blasted the program for encouraging the development of flood prone areas but even with that, for residents living in those areas, the participation rate for the program is remarkably low.  FEMA, the agency running the NFIP has tried to increase awareness for the program over the past couple of years but as of yet coverage rates remain well below par.

It’s now been over a year since the NFIP was originally set to expire and it could very well be another year before Congress agrees to long term solution if it ever does.