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American International Group Inc (AIG), the insurer rescued by the U.S. government in 2008 with a bailout that ultimately totaled $182 billion, may now join a lawsuit against the government alleging the terms of the deal were unfair.
The news prompted a swift reaction from one of AIG's rescuers, with the Federal Reserve Bank of New York saying the insurer could have just as well chosen bankruptcy four years ago and wiped shareholders out entirely.
The move would be something of a shock development 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.
At the same time, Chief Executive Bob Benmosche has complained that the company and its management have not gotten enough credit for avoiding a collapse, turning the business around and returning to profitability.
AIG confirmed on Tuesday that 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 on the initial loan.
A federal judge in Manhattan dismissed Greenberg's suit in November; a separate suit under different legal theories in the U.S. Court of Federal Claims is still pending.
"There is no merit to these allegations. AIG's board of directors had an alternative choice to borrowing from the Federal Reserve and that choice was bankruptcy. Bankruptcy would have left all AIG shareholders with worthless stock," a representative of the New York Fed said Tuesday.
A source familiar with the situation said lawyers for the New York Fed expect to attend the Wednesday board meeting to argue their side of the matter.
An AIG spokesman declined to comment beyond confirming that the board would meet. T he deliberations were first reported by the New York Times.
The U.S. Treasury completed its final sale of AIG stock in mid-December, concluding the bailout with what Treasury called a positive return of $22.7 billion.
A Treasury spokesman declined to comment.
AIG shares fell 0.5 percent to $35.74 in early trade. After losing half its value in 2011, the stock rose more than 52 percent in 2012, tripling the gains of the broader S&P insurance index.
Originally posted by dc4lifeskater
and i am sure they will win back even more then they paid the gov and come out in the end with a hefty profit... bull#, they should be shut down and all money be liquidated into the gov to pay off some of our debt...
Originally posted by IkNOwSTuff
Seriously you gotta laugh........ either that or storm the boardroom with one of those semi autos you all have.
Its becoming clearer why you all want guns, now just put em to some good use for christs sake
EDIT: The above was said only to highlight my level of disgust and was not meant to be taken literally, please no one kill those people because of this postedit on 8/1/2013 by IkNOwSTuff because: (no reason given)
Originally posted by IkNOwSTuff
This isnt the last resort???
How many more resorts are there??
Its like you guys are on a massive tropical archipelago paradise and its just chock full of resorts.
Seriously if this even gets to court let alone wins em any money or concessions if you guys dont revolt Ill lose all faith in yanks.
Isnt # like this the reason you all say you want guns?
If this crap doesnt count as tyranny I dont know what does
Originally posted by jhn7537
reply to post by RedmoonMWC
Yea, it's truly sad to see a company like AIG acting like this... I hate wishing horrible things on people or companies, but in this case they deserve some bad things to happen to them...