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AIG Would Be 'Hard Pressed' To Join Lawsuit Over Its Federal Bailout
Originally published on Wed January 9, 2013 5:00 pm
Update at 4:50 p.m. ET. AIG Board Confirms Its Stance:
AIG's board of directors say they've rejected calls by Starr International Company to contest part of the federal rescue of AIG in September of 2008.
"America invested in 62,000 AIG employees, and we kept our promise to rebuild this great company, repay every dollar America invested in us, and deliver a profit to those who put their trust in us," Chairman Steve Miller said. "To date, AIG has returned $205 billion to America, including a profit of $22.7 billion. We continue to thank America for its support."
Update at 3:10 p.m. ET. AIG Won't Join Suit, Wall Street Journal And Associated Press Report:
-- "American International Group Inc.'s directors decided Wednesday not to participate in a lawsuit that accuses the U.S. government of taking advantage of the company in its rescue from the financial crisis, according to two people briefed on the decision." (The Wall Street Journal)
-- "AIG, facing certain backlash, decides not to join shareholder lawsuit against the government." (The Associated Press)
Those reports are in line with our preview of the news from earlier today.
Our original post; "AIG Would Be 'Hard Pressed' To Join Lawsuit Over Its Federal Bailout":
Those are just some of the words being used by lawmakers in stories today about the news that directors of American International Group (AIG) are considering whether the company should join a lawsuit against the federal government — which, as The Associated Press reminds readers, spent $182 billion to save the insurer from collapse as the American economy teetered on the brink of disaster in 2008.
But there are reasons to think that AIG will decline to get involved.
The suit, AP writes, was filed in November 2011 by Starr International Co. Inc., "the investment firm of former AIG CEO Maurice Greenberg." It contends that " the government didn't provide shareholders fair compensation when it took a nearly 80 percent stake in the insurer as part of the bailout. In doing so, the government violated the Constitution, Starr claims."
Today, as the Los Angeles Times writes, AIG's directors will consider whether the company should join the plaintiffs.
But New York Times business reporter Michael de la Merced, who has been covering the story, told Morning Edition host Steve Inskeep today that "the board would be really hard pressed to go ahead and join this lawsuit."
The company, he said, has "definitely kept a keen eye on the politics and the public reaction" to its bailout. "You've got to assume they are very cognizant of what might happen" if AIG joined the legal action.
The reason AIG directors are at least going to discuss becoming part of the suit, de la Merced said, is that they want to make sure they're carrying out their fiduciary duty to shareholders. Indeed, in a statement AIG says "it is the AIG Board's obligation and intention to consider seriously Starr's demand and respond to it in a manner that the Board believes is in the best interest of the Company, taking into account all the relevant circumstances."
In recent weeks, the company has been running ads thanking American taxpayers for the bailout. It has reimbursed the government for the bailout. And last month, as the AP notes, "the Treasury Department announced ... 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."