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Bailed Out Insurance Giant: On Second Thought, Suing The U.S. Gov’t Is a Bad Idea

Jan. 9, 2013 2:51pm Becket Adams

The board of American International Group (AIG) on Wednesday decided not to join a $25 billion shareholder lawsuit against the U.S. government that claims shareholders’ rights were “trampled” during the 2008 financial crisis, the Wall Street Journal reports.

“Most of AIG’s directors began Wednesday’s board meeting leery of supporting a controversial lawsuit that accuses the U.S. government of taking advantage of the company in its rescue from the financial crisis,” the Journal reports.

“Now the WSJ is reporting the board has made its decision: It won’t join the Starr International lawsuit,” the report adds.

The multi-billion-dollar lawsuit was started in 2011 by AIG’s former CEO Maurice Greenberg, TheBlaze reported yesterday.

“The government is not empowered to trample shareholder and property rights even in the midst of a financial emergency,” Greenberg said in his complaint.

The New York Times adds: “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.’”

Not too surprisingly, news that AIG was seriously considering the lawsuit did not go over well.

“AIG’s consideration of the matter this week unleashed a torrent of criticism that the big insurer appeared ungrateful toward taxpayers for the massive rescue effort, one of the biggest of the 2008-09 crisis,” the Journal explains.

“Endorsing Starr’s action,” people familiar with the details of the meeting said, “could hinder AIG’s efforts to rebuild its reputation.”

Greenberg’s case was originally thrown out by a federal judge in New York, but was later taken up in Washington where AIG board members considered jumping on board.

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.”

Unsurprisingly, the Federal Reserve (which “rescued” the company during the financial crisis) was a bit incredulous towards the insurance giant.

“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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Comments (29)

jessieH
Posted on January 10, 2013 at 12:04pm
The fact that the federal reserve had no business bailing them out with taxpayer money doesn’t seem to be relevent.

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- G-WHIZ
  Posted on January 10, 2013 at 2:33pm
  Your Govt has your taxmoney to fight against your lawsuit…INDEFFINNITLY!! tHEY WILL PAYFORE IT WITH YOUR-TAXMONEY UNTILL YOU’RE BROKE…YOU’LL NEVER WIN!! Then they’ll throw you in prison for derrilection(unable to pay) an you’ll loose your house and all you ever saved in your lifetime! Don’t forget King-O’ signed an EXECUTIVE ORDER so you can be made extinct/dedtained infinitly for having thoughts not in line with HIS adm.!! A public-bystander was THROWN IN PRISON for telling KLINTON “YOU SUCK”…NOW YOU CAN BE MADE “NEVERBORN” BY HIS “JUSTWORDS”!!
  
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charles116
Posted on January 10, 2013 at 1:41am
That don’t want to start with Warren.
Glad she won!

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Keatonc33
Posted on January 10, 2013 at 1:27am
suing the people who saved your a** what idiots! and then complaining that the interest was too high for a proven risky company! haha thats your exact business model AIG!

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breiten
Posted on January 9, 2013 at 8:05pm
Hmmmm, going to try to prove the Federal Reserve is committing fraud? The Fed’s don’t like that idea, your name is on the list, watch out or you might end up like one of those unfortunate people in the movie “Godfather”. Movies are for real. LOL

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- Keatonc33
  Posted on January 10, 2013 at 1:28am
  by setting a high interest rate? hows that fraud?
  
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BasketFullOfPuppies
Posted on January 9, 2013 at 3:55pm
I don’t believe they were given the choice of filing for bankruptcy. They would have been nationalized, because they were too big to fail….

On one hand, I agree that the government should be sued for the way the whole bailout was illegally handled.

On the other hand, it should be the taxpayers that are suing them. But, there’s not a court in the country that would say we have standing. We don’t seem to have standing for anything, anymore.

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- barber2
  Posted on January 9, 2013 at 4:11pm
  Agree with you. Our Chicago radicals have handled all of the financial mess so cleverly. They have pitted groups against one another. Created regulations which do further damage rather than fixing the problem. Blown up the deficit. Deprived shareholders of profits. Kept interest rates low to desperately try to bolster their disastrous economy via low interest lows which, in turn, means poor interest earned on savings. Oh, the Chicago radicals studied their Alinsky and their Marx and all of the other ” anti-capitalists.” And they continue their War on Capitalism policies…
  
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- Marci
  Posted on January 9, 2013 at 4:46pm
  You have that right. Every time someone tried to sue regarding the birth certificate, the suit was not dumped on merit, it was on standing—even when there were people who could prove harm was done by not revealing the facts. The courts have gone too far and are quickly going the way of the media and becoming one and the same with the executive branch rather than guardians of our liberties. I still do not understand what Roberts motive was for letting ObamaCare stand as a tax. I still haven’t seen where this will eventually become a good thing.
  
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- dlanod
  Posted on January 9, 2013 at 7:02pm
  nope they did not have a change of heart. a phone call was made an the riot act was given. to them. nothing more than that. they got the message.
  
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- Keatonc33
  Posted on January 10, 2013 at 1:30am
  how was the bailout illegally handled?
  
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- Keatonc33
  Posted on January 10, 2013 at 1:33am
  Marci.. the birther suits were dropped do to overwhelming evidence to the contrary… including 2 copies of birth certificates. a Hawaiian magazine chronicling Obama’s birth on his birthday and repeated eye witness testimony! you guys never give up do you? its like trying to convince you the earth is older than 6,000 years!
  
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- Keatonc33
  Posted on January 10, 2013 at 1:37am
  oh and Marci on Obamacare.. 50 million people who now wont have to choose between cancer treatment and a lifetime of debt is a good thing. thats how its a good thing. among many others pre existing conditions etc etc.. you really couldn’t see that?
  
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moreteaplease
Posted on January 9, 2013 at 3:09pm
Shasta
Posted on January 9, 2013 at 2:57pm

Or someone in the OBlamo admin explained it to them
———————————-
That’s what I’m guessing too.

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progressiveslayer
Posted on January 9, 2013 at 3:05pm
Newsflash the government runs the banks,auto companies,insurance,health care,EVERYTHING. Thousands and thousands of regulations proves the government runs the whole damn show. How could they sue the government the government runs their so called private company.

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- Vickie Dhaene
  Posted on January 9, 2013 at 3:13pm
  Yeah, wouldn’t they be suing themselves and screwing the taxpayers again?
  
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- Snowleopard {gallery of cat folks}
  Posted on January 9, 2013 at 3:20pm
  Indeed, the government suing itself. Though I wonder if Obama’s thugs paid the leaders of the company a visit and delivered the ultimatum of ‘stay out or pay the price.’
  
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- progressiveslayer
  Posted on January 9, 2013 at 3:25pm
  Yes they would,it’s like a public employee union bargaining with the government it can’t be done.
  
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- JRook
  Posted on January 9, 2013 at 4:04pm
  Your naivety is staggering. It is large corporations and the wealthy who own the federal government and use it as an ATM and club to restrict competition. A good number of the regulations are designed to increase barriers to entry and protect existing companies. Companies who pour $millions into reelection campaigns and has a track record of hiring politicians, ex-military officers and spending $100millions on lobbying firms who are staffed with ex Washington types. It is rather easy champ if you can see past your ideological pathology and just Follow The Money.
  
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- progressiveslayer
  Posted on January 9, 2013 at 6:14pm
  Rook A more accurate description would be crony capitalism and the sooner we rid our society of it the better.
  
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DREDGE
Posted on January 9, 2013 at 3:04pm
Are you going to sue the mafia after paying protection money!!!!!

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socialism.rocks
Posted on January 9, 2013 at 3:02pm
its too bad we are going to break up aig now …they are really going to pay

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- TIMEBOMB
  Posted on January 9, 2013 at 3:21pm
  As your magnificent ruler I pledge to my simpletons I mean supporters that I will nationalize all businesses in new Amerika. You’ll get paid no matter how bad of an employee you are and the services you provide will be rotten but you’ll still get paid just like in unions. Workers won’t have an incentive to work hard because like I said you’ll all be paid the same no matter how bad you are. Everyone will be equal because your magnificent ruler has deemed it so. Praise be to me BHO.
  
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rightwingwacko
Posted on January 9, 2013 at 2:57pm
Of course not they may ned another bailout soon.

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SocialistSlayer
Posted on January 9, 2013 at 2:55pm
The Court of Public Opinion Wins Again !

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- Shasta
  Posted on January 9, 2013 at 2:57pm
  Or someone in the OBlamo admin explained it to them
  
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- BODYBAG
  Posted on January 9, 2013 at 3:03pm
  “Now the WSJ is reporting the board has made its decision: It won’t join the Starr International lawsuit.”
  
  Good plan. The Gov uses taxpayer money since it has no money of its own.
  
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- Darmok and Jalad at Tanagra
  Posted on January 9, 2013 at 3:04pm
  If they sue, we may find out about the slush fund the Govt is funneling through the bailouts. So I am sure they got a call from the top to knock it off.
  
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- Snowleopard {gallery of cat folks}
  Posted on January 9, 2013 at 3:20pm
  @Darmok:
  
  Same thought here.
  
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