In the AIG bailout lawsuit, American International Group (AIG), too-big-to-fail insurer/banker, took a $182 billion bailout in 2008 in lieu of entering bankruptcy. Former CEO Hank Greenburg, is suing the government and demanding that AIG join the suit.
The 87-year-old Greenberg, long known for being irascible in his dealings with all comers, and for not suffering disagreement happily, has called the Government a "loan shark" for the conditions under which it loaned nearly $200 billion to a single private entity. Although no longer CEO of AIG at the time of the bailout, Greenberg has sued the government in two separate courts under two different theories of law. One suit has been dismissed, but the other is going forward, and now AIG is faced with a demand from Greenberg that they join him in the suit. Joining the suit is alleged to be the only way to protect the interests of present and past shareholders, should Greenberg win.
Meanwhile, the Treasury Department and Congress are less than pleased at the suit itself, and at the tone of disdain and insult behind it. "AIG could have entered bankruptcy and come out of it with every shareholder holding worthless shares," noted one official. "Utterly ridiculous," said one Congressman. "Insulting to the public," was the assessment of Elliot Spitzer, former New York Attorney General. It should also be remembered that Greenberg's colleagues (he had retired three years earlier in the midst of an accounting scandal) took tens of millions of those billions of dollars home with them as bonuses... as almost the very first use made of money intended to pay corporate debt and restart loans.
In an obvious attempt to perfect the skill of self-skewering by irony, AIG began only days earlier to run a national multimedia ad campaign, the heart of which was the catch phrase "Thank you, America," referring to the very bailout for which they are now considering suing America. In the ad, employees declare their pride in having paid back the entire loan, plus $22 billion in interest, for a total of $202 billion.
There were several companies caught in the maelstrom of collapsing toxic default swaps (bets on losing mortgages) that were not offered bailouts and took the bankruptcy route. Each of them sank like a stone, or was sold outright to a competitor. There were no survivors in that cohort.
This is arrogance and hubris writ broad and thick. America is being sued by the very people who trashed her economy, because they don't like the terms of their salvation, and they want their interest back. Note to the Board of Directors of AIG: just for starters, leave Greenberg out there alone. Do not file an AIG bailout lawsuit. If he wins, so be it. But do not insult the very people who hauled the nearly dead fiscal carcass of AIG from the brink of immolation by suing them for the way they did it.
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