Remember when AIG took a $182 billion bailout only to turn around and hand out seven-figure bonuses to the same guys who tanked their company?
Grab the pitchforks — it gets better.
Now the insurance organization might join a lawsuit against the U.S. government over the terms of the bailout — saying the deal that saved the company cheated shareholders.
Treasury Secretary Timothy Geithner — who faced calls for his firing over the AIG bailout — and Federal Reserve Chairman Ben Bernanke are furious, according to one Democratic lawyer. Other officials inside the agencies were angered by the news, too, sources in the department told POLITICO.
Neil Barofsky, former inspector general for the Wall Street bailout said AIG’s possible lawsuit would be a “giant middle finger to the taxpayer.”
One of President Barack Obama’s top aides agreed: “Definition of Chutzpah: AIG, saved by taxpayers, contemplating suit,” David Axelrod tweeted.
Many Treasury and Fed insiders have long believed the terms of the AIG bailout — which only wrapped in recent weeks — were far too generous, not too punitive as the lawsuit is expected to contend.
This week, the AIG board will consider whether to join a $25 billion lawsuit over whether the terms of the bailout were unfair to shareholders, who claim they were deprived of billions of dollars.
AIG began airing ads in recent weeks that say “thank you” to Americans for the rescue — a sentiment AIG’s CEO Robert H. Benmosche assured is sincere in a statement the company released Tuesday night.
“AIG has paid back its debt to America with a profit, and we mean it when we say thank you to the American people,” said Benmosche.
He went on to explain that the company has no choice but to consider suing the government. “At the same time, the board of directors has fiduciary and legal obligations to the company and its shareholders to consider the demand served on us and respond in a fair, appropriate, and timely manner. Tomorrow’s board meeting is about listening to all of the parties involved and gaining a thorough understanding of the issues. We anticipate making a decision in the next several weeks.”
The Treasury and the Fed haven’t released official responses to the news of the potential lawsuit, first reported by The New York Times.
One former administration official, who worked on the AIG bailout, was in a state of disbelief.
“I can’t imagine that they will actually do it. Because whatever recovery they might possibly gain would be totally swamped by the enormous hit to their reputation,” the former official said. “What I don’t understand is why they have not ruled it out already. They have had plenty of opportunity to do so.”
- Fury at possible lawsuit by AIG (politico.com)
- No thanks, America; AIG weighs a suit against U.S. (stltoday.com)
- AIG: Thank You America, But We May Sue You (forbes.com)
- AIG weighs action against government (cnn.com)
- Lawmakers warn AIG not to sue Washington (upi.com)
- AIG may join bailout lawsuit against U.S. government. (greatriversofhope.wordpress.com)