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Rescued by a Bailout, A.I.G. May Sue Its Savior

Posted on January 9th, 2013 at 11:26 by Desiato in category: News -- Write a comment

[Quote]:

Maurice R. Greenberg, A.I.G.’s former chief executive, who remains a major investor in the company, filed the lawsuit in 2011 on behalf of fellow shareholders. He has since urged A.I.G. to join the case, a move that could nudge the government into settlement talks.

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.

This is from the same article that was posted here yesterday, but shows a bit more nuance on the situation: AIG isn’t originating the lawsuit. The AIG is effectively legally forced to consider whether or not to join a lawsuit initiated by one of its shareholders.

  1. John Sinteur on January 10th, 2013 at 0:02:

    [Quote]:

    In response to the news, Senator Elizabeth Warren released a sharply worded statement that’s worth quoting in full:

    “Beginning in 2008, the federal government poured billions of dollars into AIG to save it from bankruptcy. AIG’s reckless bets nearly crashed our entire economy. Taxpayers across this country saved AIG from ruin, and it would be outrageous for this company to turn around and sue the federal government because they think the deal wasn’t generous enough. Even today, the government provides an ongoing, stealth bailout, propping up AIG with special tax breaks — tax breaks that Congress should stop. AIG should thank American taxpayers for their help, not bite the hand that fed them for helping them out in a crisis.“

    This is very interesting, and here’s why. Warren didn’t merely castigate the company for ingratitude. She put it in a crucial larger context, specifically noting that Wall Street recklessness was what caused the country’s economic meltdown in the first place. She also used this as an occasion to indict the continued tax breaks that the company continues to enjoy — calling them a “stealth bailout.”

  2. Desiato on January 10th, 2013 at 10:46:

    Warren didn’t merely castigate the company for doing something it hadn’t done yet, she also recommended it do something it was already doing.

    Hmmm. I was more impressed with Warren before I read that bit.

  3. Desiato on January 10th, 2013 at 10:53:

    My comment above was a bit hyperbolic and more critical of Warren than I should have been. To be fair, Warren phrased it as “it *would* be outrageous for this company to…”, recognizing that AIG hadn’t joined the suit yet.

    I was set off more by the idea that you posted this as if Warren’s opinion on AIG somehow indicates that there was indeed fire where people claimed to see smoke. It doesn’t.

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