The government at one point owned 92% of AIG.
The planned offering comes four years after AIG was crippled by the financial crisis and required a government bailout, called the Troubled Asset Relief Program, that eventually swelled to $182 billion. The government at one point owned 92% of the firm.
Treasury now owns 15.9% of AIG, or 234.2 million shares. The department did not reveal an offering price for these shares, though they're worth $7.8 billion at Monday's closing price of $33.36.
Following completion of the offering, the department will still hold warrants allowing it to purchase AIG stock in the future.
An AIG (Fortune 500) spokesman declined to comment. Shares rose 4% in midday trading Monday. ,
Neil Barofsky, who oversaw TARP from 2008-2011 and is now a senior fellow at New York University School of Law, said the sale is "very good for the taxpayer." But he also called it "misleading in that nearly a third of that stock came from the Federal Reserve, not from purchases made by Treasury through the TARP program."
In an email to CNNMoney, Barofsky said the fact that Treasury paid out AIG's creditors at 100 cents on the dollar created a "massive moral hazard" and incentivizes "the exact same types of behavior that led to the last crisis and will almost certainly cause the next."
In September, the Treasury Department sold $20.7 billion worth of AIG shares, reducing its stake in the company from 53.4% to 15.9%. At that time, Treasury said it and the Federal Reserve together had generated a $15 billion profit on the AIG rescue, having recovered $197 billion on a $182 commitment.
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