Tuesday, January 8, 2013

AIG May Sue Federal Government Because The Federal Government Bailed Out The Company

Sometimes words fail. The New York Times reports that AIG may sue the government because the government bailed it out during the financial crisis that led to the recent recession.
Fresh from paying back a $182 billion bailout, the American International Group Inc. has been running a nationwide advertising campaign with the tagline “Thank you America.”
Behind the scenes, the restored insurance company is weighing whether to tell the government agencies that rescued it during the financial crisis: thanks, but you cheated our shareholders
The board of A.I.G. will meet on Wednesday to consider joining a $25 billion shareholder lawsuit against the government, court records show. The lawsuit does not argue that government help was not needed. It contends that the onerous nature of the rescue — the taking of what became a 92 percent stake in the company, the deal’s high interest rates and the funneling of billions to the insurer’s Wall Street clients — deprived shareholders of tens of billions of dollars and violated the Fifth Amendment, which prohibits the taking of private property for “public use, without just compensation.”
I have nothing to add. AIG concedes the bailout was needed. The bailout saved the company from bankruptcy. AIG's managment earned huge bonuses for nearly destroying the world's economy, but some shareholder believes he didn't get his cut so he wants to sue. Since words fail me, I'll use these paragraphs to conclude. (emphasis mine.)
Some government officials are already upset with the company for even seriously entertaining the lawsuit, people briefed on the matter said. The people, who spoke on the condition of anonymity, noted that without the bailout, A.I.G. shareholders would have fared far worse in bankruptcy
“On the one hand, from a corporate governance perspective, it appears they’re being extra cautious and careful,” said Frank Partnoy, a former banker who is now a professor of law and finance at the University of San Diego School of Law. “On the other hand, it’s a slap in the face to the taxpayer and the government.”






No comments: