One of the more infamous bailouts from the 2008 crash was the rescue of AIG, which saw its reputation severely tarnished during the crisis. With AIG now back on its feet, the insurance giant is spending a fair amount of money on an advertising campaign, running ads like these thanking America for saving the multi-billion dollar company.
There is, however, a little detail that the ad campaign doesn't mention: AIG is considering a lawsuit against the same United States government that saved it from collapse.
Behind the scenes, the restored insurance company is weighing whether to tell the government agencies that rescued it during the financial crisis: thanks, but you cheated our shareholders.
The board of A.I.G. will meet on Wednesday to consider joining a $25 billion shareholder lawsuit against the government, court records show. The lawsuit does not argue that government help was not needed. It contends that the onerous nature of the rescue -- the taking of what became a 92 percent stake in the company, the deal's high interest rates and the funneling of billions to the insurer's Wall Street clients -- deprived shareholders of tens of billions of dollars and violated the Fifth Amendment, which prohibits the taking of private property for "public use, without just compensation."
There are financial experts who can speak with more authority than I about the merits of the case. But at least on the surface, if AIG is concerned about its standing with the public, suing the United States because the insurer isn't satisfied with the way in which the government rescued the company probably isn't a great strategy.
Indeed, had it not been for the bailout AIG now sees as overly onerous, there wouldn't be an AIG to file a lawsuit at all.
Readers more familiar with finance litigation are invited to weigh in below, but from a distance, it appears AIG is pushing its luck. As Matt Yglesias added, "Common sense says that absent the bailout, AIG shareholders would have nothing at all today so they don't get to complain that they end up with less than they might have gotten under some alternate bailout. But obviously the law doesn't always follow common sense so I can't entirely exclude the possibility that there's a real case here."
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Somehow you get the idea AIG is lead by Republicans.
I am not sure where it says that its led by republicans, most of those major banks and corporations butter both sides of the bread with donations so they can't lose.
Jan-21270, I believe, DiguestedWithItAll was talking about how similar AIG's response to the aide from the government was to the response of the GOP over the aide they received through the stimulus package. In the elections the GOP raked the President over the coals for the stimulus money he gave out, but 100% of them took the stimulus money for their states.
What gives you that idea. The fact that they are a**holes?
Further proof we need to take the top 50 of these Wall Street Putzes out and charge them with conspiracy, and then shove their asses into jail. You can bet the rest of the shiny little Schmucks will get the message.
They're like the guy who killed his parents and then asked the court for mercy on the grounds he was an orphan.
Open-heart surgery saved the patient who then sued the doctor for ruining her bikini body with a big scar. Hell let them sue while investigating them for consumer fraud.
Yet another company more focused on their shareholders than on customers.
Needless to say, I'll never buy anything from AIG.
How much is Exxon spending on it's we need to pay teachers better campaign vrs how much it is actually putting into the better teacher fund? Their site says 125 million committed,, is that the same as donated?,, that's less than 1/4 of what they've spent advertising how great they are?
Thanks America. Now bend over.
that screen grab says it all -- "$205bn from AIG to America"
nevermind the multi-trillion dollar hole blown in the global economy due to the financial collapse lead by criminals like AIG. we gave you a penance, now can't you give us our corporate welfare?
i only hope this opens up the possibility that the government finds it's balls and starts charging these sociopaths like they should have in 2008.
AIG should have gone to Pain Capital for their bailout. I'm sure that the softies at Pain would have given them a much better bailout deal than they got from Uncle Sam's meanies. Private Enterprise, don't ya know.
As I recall, the expectation at the time was that Uncle Sam was unlikely to get his money back from the bailout, but the bailout was necessary anyway to prevent the wider calamity that AIG's collapse would cause.
Folks, I do believe that we have a new exemplar of "chutzpa." We can retire the "orphan" anecdote.
The fact that the board of directors is considering joining the lawsuit is unremarkable. They have a fiduciary duty to consider whether to join the shareholders' lawsuit, and could be sued themselves if they failed to consider it. I would fully expect them to listen politely to the shareholders' presentation and the government's rebuttal, then vote (sometime later) in favor of a resolution rejecting the lawsuit based on one or more reasons that qualify for the protection of the business judgment rule -- i.e., reasonable explanations of why the lawsuit would not be good for the company's business.
As to the merits of the lawsuit itself, it sounds pretty baseless to me. I can't see how there could possibly be a "taking" or a lack of "just compensation" when the company voluntarily agreed to the terms offered by the government. It would be like a landowner agreeing to sell a portion of his property to the government for $100k so the county can build a new road, then complaining that it was an unconstitutional taking because he was desperate for cash at the time of the sale.
Sue AIG for lack of due diligence.
"Due dilgence" is exactly what the board is doing by considering the shareholders' proposal. As stated above, the board will undoubtedly listen to everything the shareholders have to say before rejecting their lawsuit, leaving the shareholders to try to pursue it on their own.
Seriously, this is a non-event.
I agree with you Law. Shareholders will have to pursue the case.
Would love to serve on that jury!
@daniel Shareholders are pursuing this case, the company itself is looking at joining the case.
I agree with Law-talking. AIG should consider then reject the case as bad for business and let the shareholders attempt to find "taking" and waste even more of the public's money which they should then be charged for.
Can WE the PEOPLE sue AIG's CEO and others that were responsible for their reckless indifference and avarice? The nerve!
No. The entire board of directors, including the CEO, were fired the moment they took the bailout. There literally is no one left in the company that had anything to do with the shenanigans that led to the 2008 crash. Unfortunately, the last CEO was the least responsible for the AIG failure as stock prices were falling prior to his election. He was only in charge for a few short months prior to September of 2008.
The shareholders were morons who committed lack of due diligence when they stupidly invested in a company that was running itself on a set of rules that guaranteed complete failure on the day the insurance they were selling came due? The courts are not there to protect fools.
These "shareholders" are further proof that when it comes to American high finance, there is no connection between the brain and the billfold.
But but but... corporations are people my friend... OK, I'll admit... maybe they are not people in the sense of someone to watch a ballgame with...
AIG is full of it! Considering suing the US for the bailout terms they agreed to? Such BS! Let's talk about a full scale class-action suit from your shareholders and any other people or entities you deceived. AIG got off easy. Whining MF's!
No disrespect to Maddow Blog people. I just get so tired of this ridiculousness.
This is absolutely RIDICULOUS and I hope they all get thrown out on their asses period. I am not usually one to take extreme views without hearing full evidence of both sides, but lets do a quick breakdown.
> AIG finds out the law that stopped them from doing what is obviously morally VERY wrong [take say someone's retirement investment and use that to throw out a bet on some rnadom stock being shorted or better yet to bet on a mortgage holder's failure [which begs me to think they KNOWINGLY made bad mortgage loans so then they knew who to short and thus in their eyes brought their chances of a winning bet higher while risking the ENTIRE country's financial status ]
> After making what they knew for years were bad market moves only because it recently became legal but had already caused our first great depression in the 1920s [so they can't say they didn't know what would happen it was almost a carbon copy of the great depression all they had to do was read a finance/investment 101 textbook] they are not even brought up on criminal charges.
> Not only were they let go with no penalties [AND their companies saved from utter bankruptcy [we really shouldn't have helped mind you]] most of the higher echelon people who were the most involved received millions of dollars STILL as "bonuses for good work" [their basic reasoning which blows me away] and HUGE multi-million "Golden Parachutes" if they left [which was mostly funded using public tax payer money DURING the bailout [I Wonder can I sue them for miss-appropriating public funds and using them for unsanctioned or not allowed private expenses since this was tax payer money after all? Oh wait our own government did just give them a blank check pretty much so thanks again those who are supposedly in public office to "work for the people"].
> Then not only that, when we as a people scream for legislation and other means to ensure this sort of thing doesn't happen they then complain and use that same public money to then fund campaigns and lobbyists to defeat or neuter any and all meaningful legislation, or any other means of the people trying to protect ourselves from the same exact type of financial ruin in the future [mind you we haven't clamored too loudly for criminal trials [though we should].
They now not only want to take all the money they were given by the citizens of the United States, to use it to pay for bonuses for good work to those who have been shown to have been the same ones that caused us this problem in the first place, to then avoid any and all penalties for their actions [I for one was raised to believe if you do choose to do something that is shown to be wrong later [even if you thought it was right at the time] you are supposed to stand up, be an adult, and accept any and all penalties for your actions.
All this crap reminds me of 10 year olds on a playground. These guys beat us up, then when they got caught told the teacher they needed the money because they themselves had no lunch money, then not only got to keep what they took, the teacher then said because they are soo poor and can't afford lunch the rest of you should be charitable and give them enough money so they never have to worry about buying lunch again, AND NOW they want us to go to detention because our bodies got in the way of their punches and kicks and because of that they are now going to go to our parents and ask them to be paid for pain and suffering since we didn't just give them all our money when they walked up to us.
Just a little word to the wise, realpariah, if you want us to read your comment it shouldn't be longer than the article you are commenting on. IJS ;)
Here's the thing. I'm not sure if the case is without merit. While I join in the outrage that a bailed out company is considering suing, the fact is that they happen to gain more than lose with this lawsuit. Not to mention the fact that it was done so quickly that there probably was errors in the end. I'm not happy about it, but I could understand why they'd consider it.
If the morons who invested in them were stupid enough not to look at what they were doing and what would happen the day the piper came calling for the pay-up, then let them go to the chaplain and get their T.S. card punched. To hell with them and too damn bad we can't finish them off. The world is overpopulated and removing morons this stupid would only improve the species.
It's too bad the ongoing political strife makes it difficult to not think "it's only politics" Republican hierarchy will do anything to make Pres. Obama look bad. Need I say more?
Wait a minute. Didn't the government also bail out auto, airline and banking industries? Does the government have a 92% stake in the companies of those industries as well? I don't think so. AIG has a legitimate beef about how this bailout was structured and the end result. Just because you go to the hospital for emergency treatment doesn't mean the hospital should own your house, car and bank accounts and future earnings. Let's be fair. The government bailout is intended to provide the company the space and time to restructure to be able to resume its operations and cover its obligations. Bailouts aren't intended to provide the state the opportunity to obtain ownership of the companies. If that were the case China would own our country because of the outstanding debt obligation.
Roberta Chamberlin, that is exactly what happens when you go to the hospital and can't pay for your treatment. They [the hospital] will take out a lien or full out ownership of whatever assets you have to collect on the debt. And if AIG went to a private equity firm for the money they would loose equity to the investor also. So...
Roberta, read the article. AIG is not suing, their share holders are. I would think that the Board should be liable for accepting the offer or at least liable for not operating the company in a responsible manner making the bailout a necessity. The share holders should get exactly what they would have gotten without the bailout, Nothing!
Your girlfriends in Stepford are calling, bimbo.
If AIG wants to come and play in USFED Courts, against the USFED DoJ, financed by the entire USFED tax base while cheerfully pissing off the entire Citizenry of the USA...who's to mind? Start with a nice little Senate Committee Investigation of the matter via the new Banking Committee...now, wouldn't that just be too much fun to even miss for a second? I can't even imagine the size of the warm and welcoming smile from Senator E. Warren (D) Mass as AIG is sworn directly in front of her. "Let the Games begin!"
What amazes me is the fact that we appear to have a legal system that essentially will stop at nothing to attempt to fit as many "angels on the head of a pin" as it can! No matter how improbable and how utterly immoral the issue may be, our system makes a play for it for gambling has become our biggest obsession! Of course AIG could not give a hootr about the customers! All it considers sacrosanct is to play up to its stockholders! Long, long ago, perfectly sane and mutual companies that were supposed to let it all belong to its customers and its insured were told to gamble and get biggggg by going public and the madness has not ceased still! Instead of trying to figure out what the right size of things is, we plunged into the madness of BIG! Big is going to destroy us and too big to fail is going to speed up that destruction and destroy a good thing! That's what happens when gambling replaces common sense and old fashioned smarts.
The legal basis for the suit is simple really. Moral hazzards are for the little people. And the investors in AIG are not little people. If there is a buck to be made they are the deserving job creators. Just don't ask them to actually - you know - create any jobs with their vast wealth.
Aig should think twice before doing this- or any company should for that matter who received money to stop them from having their buisness flushed down the toilet. I say this because as far as I have heard they have not revamped their buisness practices all that much so it just stand to reason maybe not this year but say 5-10 yrs from now they will be looking for another hand out and I hope the gov. gives them the finger along with a big giant NO sign. How about all the people in the US counter sue because I am sure part of my tax dollars went to give them a bail out and I am not even a customer that would be the same for anyone else paying taxes. Like the saying goes DONT BITE THE HAND THAT FEEDS. And the people running this company are supposed to be smart HAH!
So typical of a Billion dollar Corporation. Screw the American taxpayers again...This Billion dollar Company needs to pay back this money to the AMERICAN TAXPAYERS THEY SCREWED OVER. NOW................CJHamilton
Here are some places that you might like to avoid.
Insurance holdings by state
[edit]California
AIG owns more than two dozen companies licensed to offer insurance in California, according to the California Insurance Commissioner. They include 21st Century Casualty Co.; 21st Century Insurance Co.; AIG Casualty Co.; AIG Centennial Insurance Co.; AIG Premier Insurance Co.; AIU Insurance Co.; American General Indemnity Co.; American Home Assurance Co.; American International Insurance Co. of California Inc.; Birmingham Fire Insurance Co. of Pennsylvania; Commerce And Industry Insurance Co.; GE Auto & Home Assurance Co.; GE Indemnity Insurance Co.; Granite State Insurance Co.; Hartford Steam Boiler Inspection and Insurance Co.; Insurance Co. of the State of Pennsylvania; Landmark Insurance Co.; National Union Fire Insurance Co. of Pittsburgh, Pa; New Hampshire Insurance Co.; Pacific Assurance; Putnam Reinsurance Co.; Transatlantic Reinsurance Co.; United Guaranty Commercial Insurance Co. of North Carolina; United Guaranty Credit Insurance Co.; United Guaranty Residential Insurance Co.; and Yosemite Insurance Co.[6]
[edit]Pennsylvania
Twenty AIG subsidiaries are licensed to do business in Pennsylvania, including National Union Fire Insurance Co. in Pittsburgh, believed to be the second largest AIG underwriter in the nation. Other subsidiaries include New Hampshire Insurance, Insurance Company of the State of Pennsylvania, Granite State Insurance and New Hampshire Indemnity.[7]
[edit]West Virginia
AIG writes property and casualty insurance, life and annuity, and workers' compensation insurance in West Virginia. It has 4.7% of the life insurance market and 2.7% of the property and casualty market, as of the end of 2007.[8]
[edit]Holdings
[edit]Aerospace
AIG owns International Lease Finance Corporation (ILFC), the world's largest aircraft leasing company, with hundreds of aircraft including the full range of Boeing and Airbus jetliners, as well as theMcDonnell Douglas MD-11 and MD-80 Series. Total assets under lease are $55 billion as of June 30, 2008. Estimates of its value range from $5 billion to $14 billion based on a comparison with rivals.[9][10]
[edit]Real estate
AIG/Lincoln was established in 1997 as a strategic partnership between AIG Global Real Estate Investment Corporation, New York, a subsidiary of AIG - American International Group, New York, and Lincoln Property Company, a Dallas based commercial real estate manager...[11][12] It has developed or is currently developing over 2.2 million square meters of real estate in Poland, Hungary, Romania, Czech Republic, Germany, Italy, Spain, Switzerland, Austria and Russia.[citation needed]
[edit]Skiing
AIG owns Stowe Mountain Resort, its only ski business.
AIG's connection to Stowe started when C.V. Starr, the company's founder, invested in the resort in 1946. A $300m, 10 year expansion was started in 2005.[13]
[edit]Other holdings
AIG owns Ocean Finance, a British provider of home owner loans, mortgages and remortgages.[14]
AIG was the principal sponsor of English football team Manchester United[15] and the Japan Open Tennis Championships[citation needed].
[edit]Subsidiary Holdings
I'd say just compensation has been made in the fact that AIG is still around and that the shareholders didn't lose out entirely. Therefore no 5th Amendment breach.
Ah, how about....a 26 billion dollar counter-lawsuite called, the American People vs AGI?
Re: After all they are trying to sue us, since WE ARE the government.
Let's not forget about what happen during that bailout, FIRST it took place in early 2008 ..... And we also need to look back and consider the actions, which were very publicized where the top management of all the companies POCKETED, in bonus, a large amount of the bailout funds .... Americans were outraged over it .... and now, they want to complain, they lost.... NOT... how about counting the MILLIONS taking by upper management for PERSONAL gains ..... with that in mind, they GOT A GREAT DEAL!!
Break Up AIG!
"...deprived shareholders of tens of billions of dollars and violated the Fifth Amendment, which prohibits the taking of private property for "public use, without just compensation."
How convenient to forget that those same shareholders would be BROKE if public money wasn't used to save their sorry private asses.