Bailed out AIG considers joining lawsuit against U.S.

Dan Kitwood/Getty Images

NEW YORK American International Group (AIG) said Tuesday its board of directors will weigh whether to take part in a shareholder lawsuit against the U.S. over the government's $182 billion bailout of the insurer.

If AIG decides to join the complaint, which seeks $25 billion in damages, it would pit the company against the government that rescued it in 2008 from collapsing under the weight of huge losses on mortgage-backed securities and other toxic assets.

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AIG said that its directors will take up the matter on Wednesday and expects they will have a decision by the end of the month.

Starr International, the investment firm of former AIG CEO Maurice Greenberg, filed the lawsuit in November 2011 on behalf of the firm and AIG shareholders.

The complaint, filed in the U.S. Court of Federal Claims and the U.S. District Court for the Southern District of New York, asserts that the government didn't provide shareholders fair compensation when it took a nearly 80 percent stake in the insurer as part of its bailout. As a result, the government violated the Constitution, Starr claims.

AIG said that, by law, its board must consider three options: take over the lawsuit and pursue the claims on its own; attempt to prevent the claims from being pursued by Starr; or, allow Starr to continue to pursue the complaint on AIG's behalf.

The insurer noted that, should it elect not to let Starr pursue its claims on the company's behalf, Starr would likely challenge the move. In such a scenario, should Starr prevail in the case, AIG would not receive any damages or portion of a potential settlement.

The Court of Federal Claims denied a request by the U.S. to dismiss the lawsuit, which means the case will go forward regardless of AIG's participation.

The government came to the rescue of AIG in September 2008, at the depths of the financial meltdown. The New York company did business with hundreds of firms around the world, and officials feared its collapse would wreck the financial system.

All told, AIG's bailout was the largest of the Wall Street rescue packages.

Since the financial meltdown, AIG has undergone a significant restructuring which has cut the size of the company nearly in half aimed at focusing on its core insurance operations.

In 2010, the company spun off Asian life insurer AIA Group in Hong Kong's biggest ever initial public offering to raise $20 billion, which was used to pay bailout debt.

In November, AIG reported a third-quarter profit of nearly $2 billion thanks to strength in its insurance operations and investment returns. In the same period a year earlier it lost $4 billion.

The Treasury Department announced last month that it sold all of its remaining shares of AIG, ending up with $22.7 billion more than it funneled to the company during the height of the financial crisis.

Shares of AIG ended regular trading down 28 cents at $35.65. Over the last 12 months, however, the stock is up more than 50 percent.

[hypnotoad72]

They should sue the admin that bailed out in the first place... and the one who ran it. Where's Bush?

Or, if Bush was just a figurehead, why aren't they suing themselves since they're the ones who bought government in the first place?

[TSW7207]

I would like a list of the companies joining in the lawsuit. I will not support any of those companies. This is totally wrong. The American taxpayers rescued you all from the brink of bankruptcy and this is how you act. You all are like spoiled ungrateful children. You should be ashamed. There should be a complete boycott of all the companies that are suing.

[mecury69]

Wow, what have we created in this country with 'entitlements'? Even the wealthy think they are entitled to not have to pay for their mistakes.

This is a scum bag move.

I hope the board rejects this, otherwise, I personally will rail against them at every opportunity just as I do Wells=Fargo and other banks that went to Vegas after their bail outs.

[hypnotoad72]

On other forums, some people are saying "'if corporations are people too' is true, then where is the executioners?"

Those who create the problems should not be bailed out.

Those caught in the middle I'm far more lenient toward and supporting of. These are the same companies that offshored jobs, pocketed the difference in pay as "profit", then as fewer people could buy because wages for remaining jobs plummeted due to these market forces, these companies then needed to be bailed out.

They profiteered, reengineered, at our expense, and now this.

Never mind subsidy they received before all that happened...

[BCSaugerties]

From the MetLife days Bob Benmoche's favorite expression was "No good deed goes unpunished" . Let's see if he makes it a self fulling prophecy .

[Hadenoughuc1220000]

they could have given every American at least 25,000 instead of bailing these idiots out and we would be better off today .

[hypnotoad72]

10,000% agreed.

[WhereisOT]

Thanks America....and "we" really really mean that...
Now bend over says maurice gree.....whatever the **** the Insult to the American Peoples name is..

Less the greed driven soulless ***** has figured out how to live forever..
Best spend all that "wealth" he has now....
Time runs out, even for the "elites"...Even at such an old age, greed is the driving force...
Its how they are made...

One things for certain, $ does nothing where he's headed..

FYI no big bank rolls, investing, buying selling, fast profits nor stealing on the "top floor" neither...Not that he has to worry much about that...

[head_scratcher]

It makes total sense...

1. Borrow $$$ to save your existence because of how careless and irresponsible the $$$ was spent.

2. Once the $$$ are repaid and to show appreciation for the momentous gesture it was, then file suit against the lender for more $$$ entitled to. The same $$$ that would not of had existed if your existence had ended.

Has anyone seen AIG's website thanking America for the bailout and it contribution back to us?
What delusional f&*#ing universe do we live in?

[johnlockesghost]

Right! If the government hadn't bailed out AIG the shareholders would have received nothing. Now, this idiot investment firm wants to sue? Screw you!

[A_Canadian_Opinion]

The level of greed and entitlement on Wall Street is unfathomably egregious. I wouldn't do even a dimes worth of business with AIG! They're just a bunch of men sucking their thumbs because the top marginal tax rate just went up a few points.

[teb13]

Those ungrateful greedy bas$@#rds!

[teb13]

Are you Kidding me????!!!!!