Despite being bailed out to the tune of $182.5 billion dollars, and despite its current “Thank You, America” ad campaign, insurance giant American International Group (AIG) is considering joining a $25 billion shareholder lawsuit against the U.S. government that claims shareholders’ rights were “trampled” during the 2008 financial crisis.
“The government is not empowered to trample shareholder and property rights even in the midst of a financial emergency,” said former CEO Maurice Greenberg and his 2011 complaint.
What exactly does the lawsuit allege?
“Because of the bailout’s ‘punitive’ interest rate, the suit claims the U.S. violated the Fifth Amendment, which protects private property from ‘public use, without just compensation,’” New York explains.
AIG’s board will meet on Wednesday to decide whether or not they want to join the suit and seek the $25 billion from Uncle Sam.
From the New York Times:
The choice is not a simple one for the insurer. Its board members, most of whom joined after the bailout, owe a duty to shareholders to consider the lawsuit. If the board does not give careful consideration to the case, Mr. Greenberg could challenge its decision to abstain.
Should Mr. Greenberg snare a major settlement without A.I.G., the company could face additional lawsuits from other shareholders. Suing the government would not only placate the 87-year-old former chief, but would put A.I.G. in line for a potential payout.
Yet such a move would almost certainly be widely seen as an audacious display of ingratitude. The action would also threaten to inflame tensions in Washington, where the company has become a byword for excessive risk-taking on Wall Street.
“The fact is we now have succeeded in getting the Fed back all of their money, and we’re just close to getting the Treasury paid back,” current AIG CEO Bob Benmosche said in an interview with New York’s Jessica Pressler before the bailout ended.
“And do you know, neither of them have ever said ‘Thank you’? We have done all the right things. Somebody should say, ‘By golly, those AIG people made a promise and they are living up to a promise!’ We’re left with a major part of the economy in America; they’re going to make a profit on top of everything else they’ve got,” he added.
And by “thanks,” Benmosche’s predecessor means “billions.”
“The government has been saying, ‘We’re your friend, we owned and controlled you and we let you go.’ But A.I.G. doesn’t owe loyalty to the government,” a source close to Greenberg told the Times. “It owes loyalty to its shareholders.”
Although the case was thrown out by a federal judge in New York, it has managed to make its way down to Washington.
The lawsuit “paints a portrait of government treachery worthy of an Oliver Stone movie,” said the New York judge, ruling that AIG ”voluntarily accepted the hard terms offered by the one and only rescuer that stood between it and imminent bankruptcy.”
And what does AIG have to say for itself? “The AIG board of directors takes its fiduciary duties and business judgment responsibilities seriously.”
The company is expected to come to a decision on whether to join the suit by the end of the month.
“There is no merit to these allegations,” a spokesman for the Federal Reserve Bank of New York said. “AIG’s board of directors had an alternative choice to borrowing from the Federal Reserve, and that choice was bankruptcy.”
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South Philly Boy
Jan. 8, 2013 at 6:55pmOne has to be CAREFUL when one DEALS with the DEVIL
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TDrury
Jan. 8, 2013 at 4:26pmThese A-holes gladly agreed to the loan terms and took the money. Now they want to sue? WTF is going on in this country?
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JRook
Jan. 8, 2013 at 4:54pmWell I guess it is just capitalism at work. Wake up and realize that most if not all the things you don’t like about the government is a result of influence and actions of large banks, corporations and the wealthy individuals who control them. If you need proof check out who lobbies for higher food stamp benefits and looser qualification criteria. Hint…. food producers and food suppliers. In all things just follow the money. The poor can’t afford lobbyists.
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starchy
Jan. 8, 2013 at 4:59pmHey JROOK – you might be right on this. Maybe this means that we should have a very limited government that should not be handing out food stamps, loans, etc. that are costing us all money? Maybe if the government wasn’t spending so much money we could all lead better, more free lives.
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sizzlinsexybeckster
Jan. 8, 2013 at 3:11pmThis is just another sneaky scam for the government to print and hand out more money and tax us more cash.
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jessieH
Jan. 8, 2013 at 3:09pmCash in our chips, AIG. Your time is up. Side with the devil & you’re bound to get burned.
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malbro
Jan. 8, 2013 at 3:05pmI love America…Eat away at it you rats..
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brigott
Jan. 8, 2013 at 1:23pmSO, what exactly is that “punitive” interest rate?
Is it any higher than the “punitive” rates that AIG charges its customers?
But it is a typical government response: “We stepped in when no one else would and saved you. You should give us your eternal thanks and loyalty. Never question what we do, because we ALWAYS do only what is best for you. Be glad that we saved you from yourself.”
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IndyGuy
Jan. 8, 2013 at 1:18pmRepeat from another post….SSSSUCCCKERS…
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barber2
Jan. 8, 2013 at 1:16pmSuccessful capitalism is based on winners and losers. Not government enablers. This entire crony capitalism mess is heading just where the Chicago radicals want it to go : the total destruction of the American capitalist system. When the Democrat controlled cities allowed the OWS crowds to set up residence, that was official radical Democrats’ welcome sign. And the ” screw the investors” was another sign of the White House desire for ” war on the rich / the nasty capitalist” that the radicals wish to punish . Very “transparent ” as a Chicago radical Democrat would say !
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Timmy_NorthWest
Jan. 8, 2013 at 1:03pmAIG you took the money signed on the dotted line and spent it on bonuses. Now shut up and take your lumps. You made plenty of money despite ypur complaints. Not cool on you.
Signed,
A taxpayer who loaned you money.
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Cavallo
Jan. 8, 2013 at 1:02pmRights trampled? You should talk to the bond holders of Government Motors about the shellacking they took from Bobo the Gay, Dog Eating Marxist. But don’t worry, they want us to shell out 1 trillion more in taxes, 25 billion is pocket change to shell out and make you shut up. AIG better get what they can before this moronic house of cards built on shifting sand comes tumbling down on all our heads.
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Shasta
Jan. 8, 2013 at 1:12pm“Bobo the Gay”? That’s perfect.
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BODYBAG
Jan. 8, 2013 at 1:24pm@CAVALLO
Posted on January 8, 2013 at 1:02pm
AIG better get what they can before this moronic house of cards built on shifting sand comes tumbling down on all our heads.
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At first glance there is a temptation to jump behind them but you must remember the money
they’re after is OURS. The government doesnt have any money of its own.
Everyone with any brains knew crawling in bed with big gov was a disaster waiting to happen.
Its like getting in with the Mob.
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Cavallo
Jan. 8, 2013 at 1:41pm@Body, The Mob has more ethics and honor.
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