AIG Considering Suing Government Over Bailout
- January 7, 2013
- The Frankowski Firm
The Board of American International Group, Inc. (AIG) soon will meet to decide if the company, who just paid off their $182 billion bailout debt, will join a $25 billion shareholder lawsuit against the government, according to an article in the NY Times Dealbook. The lawsuit in question was filed in 2011 by Maurice Greenberg, AIG’s former chief executive for almost forty years. According to the article, Greenberg claimed the government deprived shareholders of tens of billions of dollars and violated the 5th Amendment when it bailed out the large insurance company. Greenberg filed suit against the government in the federal courts of New York and Washington. The New York case was dismissed and is on an expedited path for review at the Court of Appeals for the Second Circuit while the Washington Court declined to dismiss the case. The Washington Court is now waiting on AIG’s decision. Greenberg alleges that when the government bailed out AIG, which even he admittedly agreed the company needed, the government improperly used AIG funds to provide a “backdoor bailout” of Wall Street. He also claims, according to the NY Times Dealbook article, that the government violated the 5th Amendment prohibiting the government taking private property , i.e. AIG shareholder funds, for public use. Greenberg also claims the bailout plan took a “punitive” interest rate of 14 percent or more while also diluting the holdings of investors, according to the article . A spokesman for the Federal Reserve Bank of New York stated that the alternative to the bailout for AIG was to file bankruptcy. Potentially joining the litigation must be brought to the shareholders due to AIG’s business responsibilities and the fiduciary duties AIG owes their shareholders. It would be improper for the board members to not consider the lawsuit at all, due to the duty they owe the shareholders. On January 9, 2013, the board of directors will meet with Greenberg’s current company, Starr International. Afterwards, the Treasury Department will make a presentation and then both parties will be allowed time for rebuttal. It is not known when the board will make a decision regarding joining the suit. The article states that while discussions were already scheduled for board meetings, it is rare for the entire board to meet over a question of joining a single litigation. If you or someone you know has lost money as a result of an investment, please contact Richard Frankowski at 205-747-1903 to discuss your potential legal remedies.