AIG Drops Government Lawsuit Over 2008 Bailout
by Evelyn Robinson
We all remember the economic downtown that occurred during 2008. At the height of this time was the financial crisis, during which stock markets around the globe took a tumble for the worst while the Federal Government bailed out many of the largest financial institutions with the biggest amounts of business liability . One institution, the insurance corporation
AIG’s Potential Government Lawsuit
AIG is no stranger to working out deals with the government, but apparently negotiations in the past were simply not enough. As recently as Tuesday January 8th, it was reported that AIG was considering entering into a major lawsuit that would sue the Federal Government over the 2008 bailout. AIG’s reasoning was that the bailout ended up hurting their shareholders instead of helping them.
This lawsuit stems all the way back to 2011, when Starr International, a financial services company and former larger shareholder in AIG, decided to sue the Federal Government for $25 billion. Potentially joining Starr International in a joint lawsuit against the government was former AIG CEO Maurice Greenberg, who claims that the bailout not only harmed shareholders, but also went against their Fifth Amendment rights.
Just two weeks ago, AIG had finished paying off the original $182 billion bailout loan. And with Greenberg’s statements about joining this potential lawsuit, many were quick to criticize him. Many believe that Greenberg played a key role in the collapse of AIG, and suing the Federal Government after being helped out by taxpayer money is thought, by many, to be not only a selfish act, but also an outrageous one.
AIG Drops Government Lawsuit after Facing Tough Criticism
Interestingly enough, just one day later on January 9th, the AIG board of directors has come out with their decision not to sue. According to many reports, criticism towards AIG came not only from citizens, but also from lawmakers and Congressmen.
Financial experts such as Timothy Massad, who works for the Treasury Department as the Assistant Secretary for Financial Stability, believes that this was the best move the company could decide to pull off. According to Massad, AIG is working as hard at it can right now to try and rebuild the company and earn back its former reputation.
AIG recently began running a slew of advertisements thanking taxpayers for their help in saving the company from going under during the financial crisis. Advertisements like these helped the company to pull in extra money that helped in paying back what they still owed from their bailout loan. The “Thank You America” campaign is what AIG is currently circulating on television sets around the U.S.
Despite AIG’s meeting over the lawsuit being held only a day after reports came out that they were considering joining this lawsuit, sources close to current AIG CEO Robert Benmosche say that the insurance giant was already planning on not joining the lawsuit before the meeting had even begun. Reports also make note that Starr International’s lawyers had difficulty answering certain questions regarding the suit when asked by AIG’s board of directors.
Has AIG’s Reputation Been Tarnished Yet Again?
With all of the media coverage that has been attacking AIG over the past few days, many experts believe that AIG has received a tarnished reputation yet again. Although they have been blamed for being one of the main causes of the financial fiasco of 2008, AIG has a different CEO and has made good on the promises that they made four years ago.
The main thing that AIG has going for it at the moment is its “Thank You America” campaign. Back in December, the Treasury Department was able to sell off their last remaining shares of stock which allowed for full repayment of the bailout loan. The main number that AIG has been promoting is the fact that the Government’s investment allowed them to make back $22.7 billion in additional profit.
With no signs of a lawsuit towards the Federal Government from AIG, many will be following Starr International to see how their case ends up proceeding in court throughout 2013.