AIG may join lawsuit against government over $182b bailout
NEW YORK/WASHINGTON - American International Group Inc, the insurer rescued by the U.S. government in 2008, drew angry condemnation from lawmakers on Tuesday after saying it may join a lawsuit that alleges the bailout terms were unfair.
A leading congressional Democrat called criticism of the deal's terms "utterly ridiculous," and former New York Attorney General Eliot Spitzer - who probed AIG when he was in office - called the prospect of a suit "insulting to the public."
The White House declined to comment on the potential for a lawsuit but defended the $182 billion bailout.
Meanwhile, newly elected Senator Elizabeth Warren, feared by Wall Street as a potential thorn in its side on the Senate Banking Committee, called the suit talk "outrageous" and said the company should not "bite the hand that fed them for helping them out in a crisis."
The move would be something of a shock, given that AIG just launched a high-profile television ad campaign called "Thank you, America," in which it offers the public its gratitude for the bailout. On Tuesday, the company promoted the ads on Twitter, even as it came under fire over the lawsuit.
Securities experts said AIG's board needs to consider the matter as part of its fiduciary duty, but also said it was unlikely they will actually join. AIG said its board would meet Wednesday to discuss joining a lawsuit filed against the government by the insurer's former chief executive, Maurice "Hank" Greenberg. Greenberg, whose Starr International owned 12 percent of AIG before its near-collapse, has accused the New York Fed of using the rescue to bail out Wall Street banks at the expense of shareholders, and of being a "loan shark" by charging exorbitant interest of 14.5 percent on the initial loan.
"If AIG enters this suit it would be the equivalent of a patient suing their doctor for saving their life," said Mark Williams, a former Federal Reserve bank examiner who teaches in the finance department at Boston University.