WASHINGTON (Bloomberg) — The US is working to sell its investments in American International Group Inc., Citigroup Inc. and the bailed-out auto companies "as soon as practicable", the head of the Treasury's financial-rescue office said.

Assistant Secretary Herb Allison, in testimony to a House subcommittee yesterday, said the government and AIG are in "active, ongoing discussions with regard to strategies to allow Treasury to monetise its investment" in the insurer. The US plans to gradually sell stakes it acquired in General Motors Co. and Chrysler Group LLC, both private companies, as soon as next year, Allison said.

The US was forced to intervene 14 months ago to stave off a collapse of the financial system and is a shareholder "reluctantly and out of necessity", said Allison, who oversees the Troubled Asset Relief Programme. "We will exit these investments and return TARP funds to the Treasury as soon as is practicable."

Allison offered the Treasury's most detailed plan to date for trying to reel in the $550 billion the government has committed from the $700 billion programme. The TARP will cost about $200 billion less than the $341 billion that the Obama administration estimated for fiscal 2010, he said.

As the US economy shows signs of stronger growth, and financial markets recover from the worst turmoil since the Great Depression, the Obama administration is shifting the emphasis of the bailout toward small businesses and away from Wall Street.

Lawmakers want some of the money that has been repaid to the rescue effort to be used for programmes that boost jobs and aid homeowners. In his testimony, Allison said "credit is flowing and the economy is growing".