AIG May Join Bailout Suit Against U.S. Government

AIG
Jan 8 (Reuters) - American International Group Inc (AIG), the insurer rescued by the U.S. government in 2008 with a bailout that ultimately totaled $182 billion, may now join a lawsuit against the government alleging the terms of the deal were unfair.

The news prompted a swift reaction from one of AIG's rescuers, with the Federal Reserve Bank of New York saying the insurer could have just as well chosen bankruptcy four years ago and wiped shareholders out entirely.

The move would be something of a shock development given that AIG just launched a high-profile television ad campaign called "Thank you, America," in which it offers the public its gratitude for the bailout.

At the same time, Chief Executive Bob Benmosche has complained that the company and its management have not gotten enough credit for avoiding a collapse, turning the business around and returning to profitability.

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.

"There is no merit to these allegations. AIG's board of directors had an alternative choice to borrowing from the Federal Reserve and that choice was bankruptcy. Bankruptcy would have left all AIG shareholders with worthless stock," a representative of the New York Fed said Tuesday.

A source familiar with the situation said lawyers for the New York Fed expect to attend the Wednesday board meeting to argue their side of the matter.

An AIG spokesman declined to comment beyond confirming that the board would meet. T he deliberations were first reported by the New York Times.

The U.S. Treasury completed its final sale of AIG stock in mid-December, concluding the bailout with what Treasury called a positive return of $22.7 billion.

A Treasury spokesman declined to comment.

AIG shares fell 0.5 percent to $35.74 in early trade. After losing half its value in 2011, the stock rose more than 52 percent in 2012, tripling the gains of the broader S&P insurance index.

U.S. Nets Nearly $8 Billion on AIG



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evan

Are you for real, why did big O bail them out? let them fail

January 08 2013 at 5:54 PM Report abuse +1 rate up rate down Reply
DDerr

Oh lawdy you MBAs and CEOs are just scary, selfish, incompetent wastes! You guided your company into disaster, Obama incorrectly bailed you out, and now you are saying "OOooOOo It was Unfair".

I want to see the bunch of you in jail or unemployed living in a one bedroom apartment. You ARE truly useless bottom feeding parasites.

January 08 2013 at 3:41 PM Report abuse +1 rate up rate down Reply
cha85308

The greedy are never happy!!!

January 08 2013 at 3:11 PM Report abuse +1 rate up rate down Reply
rvppfs

How about this for an idea? If AIG is not happy with the transaction, let's revoke their corporate charter and put them out of business.

January 08 2013 at 2:23 PM Report abuse +1 rate up rate down Reply
tnfourstar

Testing

January 08 2013 at 2:22 PM Report abuse rate up rate down Reply
tnfourstar

You folks been sleeping? "Chinese Group Buys 80% of AIG Plane Unit for $4.2 Billion". We have been taken over. Our GOV is selling it off to another country. This is why you can expect to pay even more and also pay out the butt when you get sued for paying more. You dont see the plan and im not going to be having people say I am crazy cause I do. So get out from under the covers and open your eyes. I am done debating with people that have no clue. Its not American anymore. Heck. America is not American anymore. No get back under the covers.

January 08 2013 at 2:22 PM Report abuse +1 rate up rate down Reply
taxpro1040

A waste of time

January 08 2013 at 2:17 PM Report abuse rate up rate down Reply
RonRuthNik

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.

---Is that a bad thing?

January 08 2013 at 2:16 PM Report abuse rate up rate down Reply
taxpro1040

Mootley Fool is either great source or a waste

January 08 2013 at 2:16 PM Report abuse rate up rate down Reply
taxpro1040

Mootley Fool is a waste

January 08 2013 at 2:16 PM Report abuse rate up rate down Reply