American International Group Inc. is offering $15.7 billion for a heap of toxic mortgage bonds that the Federal Reserve Bank of New York took off its hands at the peak of the financial crisis in 2008.

The insurance conglomerate said in a letter to the New York Fed Thursday that the sale would reduce the amount of government money it holds to $26 billion, including an unused $2 billion line of credit, from $39 billion.

AIG received the largest bailout of the financial crisis. The New York Fed and Treasury Department extended lifelines worth a total of $182 billion.

The insurer is paying off its government debts by selling businesses and restructuring its balance sheet. Treasury still owns 92 percent of AIG's common shares.