AIG thanks America in new ad…and then considers suing the government?
January 9, 2013 at 9:23 am in News by Dustin Siggins 24 Comments
In the never-ending drama of the 2008 bailouts, AIG has gone from thanking America in a major ad buy to threatening to sue the federal government. As reported by Reuters via Huffington Post:
AIG confirmed on Tuesday that its board would meet Wednesday to discuss joining a lawsuit filed against the government by the insurer’s former chief executive, Maurice “Hank” Greenberg.
Greenberg, whose Starr International owned 12 percent of AIG before its near-collapse, has accused the New York Fed of using the rescue to bail out Wall Street banks at the expense of shareholders, and of being a “loan shark” by charging exorbitant interest on the initial loan.
A federal judge in Manhattan dismissed Greenberg’s suit in November; a separate suit under different legal theories in the U.S. Court of Federal Claims is still pending.
On the one hand, this is utterly ridiculous. AIG was saved by government intervention, and now within a month of paying off its loan it is considering suing? Additionally, what did AIG’s executives expect when the bailout happened? Did they think they were going to be treated like kings?
While I am open to being a little sympathetic to potential improprieties by the federal government – one of many reasons bailouts are bad – the fact is that AIG took a loan from the federal government. It did so knowing it would go bankrupt otherwise, and that stockholders would probably lose more value than whatever expenses they allegedly incurred due to federal mismanagement or corruption. Lastly, I have strong doubts AIG’s executives were at all surprised at the interest rate when they signed for the loan under their own free will.
The drama of 2008 is still unfolding, as is the cost of the bailout. Another reason the federal government should not bail out companies ever again.
Update: Tuesday night, The Washington Post reported AIG’s Board of Directors had decided to not join former CEO Maurice Greenberg in suing the federal government over the terms of the 2008 federal bailout of the company. The company, which was legally required to consider the lawsuit, decided the public backlash would be too great:
AIG, which was legally obligated to consider joining the lawsuit, demurred. The company said it would not join Greenberg’s lawsuit and wouldn’t permit Greenberg to pursue his claims in AIG’s name.
“The majority of directors decided that the reputational damage was greater than the possibility on a long-shot lawsuit,” said John Coffee, a professor at Columbia Law School who specializes in corporate and securities law.
This was a good decision by the AIG Board.
You have jumped the shark….. Board of directors is convening. They have a fiduciary responsibility to ALL shareholders including (one of its largest shareholders, Hank Greenberg) to take a position on it’s largest shareholders law suit vs the Govt…… at least wait until they have taken a position…..
Emotional reaction are you a liberal at heart?
I hear people saying how great it is that companies like AIG, GM, etc have paid back bailout money including some “profit” for the US Treasury. Problem is that any report of profit is dubious at best, notwithstanding the fact that the US Government should never have been involved at this level in the first place. Let the market take care of it!
In the fall of 2008 the market was dead and there was no money. If these companies had folded we’d be talking Great Depression II instead of Great Recession. This was brewing for over a year but Bush was either to stupid to see it or to much of a ding to do anything until it was too late.
That’s what they said, but it looked to me like a plan for big business and big government to get together and steal money from regular people.
A lawsuit would be more of the same, taking money from taxpayers (again) and giving it to the big muckety mucks at AIG (again).
The “elite” get rich, everybody else pays, and, it might help collapse the economy too.
What a plan!
AIG dropped the whole thing. Their board concluded they would look like greedy heartless bloodsuckers to sue the group that saved their butt.
Wal-Mart Stores Inc. will join talks at the White House on Thursday about gun control and safety.
Vice President Joe Biden is conducting a series of gatherings this week aimed at building a consensus around proposals to curb gun violence following the deadly shooting at a Newtown, Conn., elementary school last month.
The vice president is meeting Wednesday with victims groups and gun-safety organizations. On Thursday, Biden will meet with the National Rifle Association and other gun-owner groups. Meetings with representatives from the video-game and entertainment industries are also planned.
AIG was the insurer of all the mortgage backed securitys. To bail out the big banks, the govt had to save AIG from hundreds of billions of payouts on the failed MBS’s. The govt broke many laws in the process of seizing and restructuring AIG, hence the lawsuit. If the big banks and AIG were allowed to fail in 2008 and were broken up and the parts sold off to smaller banks and brokerages we would be in an economic boom today. October 2008 Bush was a lame duck. Even if he understood what was happening (he didn’t) not much he could have done about it. Mc Cain folded to the bankers and lost the election partly because of his show of weakness in this crisis.
Actually Fannie and Freddie handled most of that sub-prime mortgage bundle buying, and they got a HUGE bailout, with another coming…
The why did Bear Sterns and Lehman fold? They were messing with something bad.
Robert – So if we allowed the banks to fail – we would be in an economic boom? Really? That’s a bold statement.
We’d have to get the money out BEFORE they failed or we’d all be broke.
F.D.I.C. Jerry, it’s been around a long time.
Jeff – FDIC only insures for $250,000. The job creators had billions to lose.
Hellfire, allowing mismanaged companies to fail is how free markets work. Preventing free markets from working has much worse long term consequences than any possible damage done by individual corporate bankruptcies.
Jeff – You have a flair for the obvious, but must have a short memory. Do you not remember how bad the stock market crashed and the hundred of thousands of lost jobs in 2008? If AIG was allowed to fail it would have been a total disaster because they insured a good percentage of all the credit default swaps by the big banks.
That is why AIG should be treated like any other insurance company and must have the capital to cover all losses and claims, but this requires gov’t intervention which goes against your free market thinking.
In my humble opinion, anyone who says the economy would have been better without gov’t intervention in 2008 is a complete fool and lacks a understanding of our modern economic system.
McCain lost due to cluelessness like declaring the economy to be in fine shape in the fall of 2008.
AIG was responsible for the fraudulent ratings being applied to the real estate traunches comprised of toxic assets the world was duped into purchasing.
I don’t recall anyone in AIG going to prison for this. I do recall AIG being rewarded for this.
Now, what’s wrong with that picture?
The US government made $22,000,000,000 on the AIG bailout. Not bad for government work!!
Jerry, It’s actually rigged. The gov’t loans money to the banks at zero percent interest. Then these same banks loan the money back to the gov’t and the citizenry with interest. Supposedly, it was the only way to make the banks whole after the Great Recession (that they caused).
That’s free market for you.
Hellfire,
I still think some of those bankers should be in jail, I don’t care if they are Job Creators or not.
Jerry, I agree these goons should be in jail, but they didn’t break any laws. That was pretty smart, change the laws, make a boatload of money, bankrupt the global economy, get bailed out, then continue business as usual. Sad thing is nothing serious was done to stop it from happening again.
Obama and the liberals can’t do anything because the Republicans will filibuster any real change.
Hellfire,
I think the banks own Obama too. There really is no hope. The only hope for real freedom might be to move to a remote area and live off the land.
Jerry, I agree, Obama and the deadbeat moocher liberals are also beholden to the big banks.