U.S. Politics

AIG backs down, won’t sue the government

An AIG sign is shown. | AP Photo

Apparently the Board of Directors at AIG looked at the bigger picture down the road and saw the proverbial “Scarlet G”  (for greed) that would have marked their brand for a very long time.


That didn’t take long.

In the face of furious criticism from Washington and elsewhere, American International Group’s board of directors announced Wednesday the firm would not participate in a shareholders lawsuit against the government over the terms of a taxpayer bailout that saved the company from ruin.

AIG took a $182 billion bailout during the financial crisis, and the idea that it would join a lawsuit arguing the terms of taxpayers’ largesse were unfair sent steam coming out of the ears of many lawmakers and government officials.

(See also: AIG press release)

“[R]emember the crook that broke his leg robbing a house then sued them for negligence on safety? yes, well he’s now AIG’s gen counsel,” Austan Goolsbee, the former top White House economist, said on Twitter early Wednesday.

Members of Congress were equally furious, with some sending letters to the company demanding an explanation.

“There’s an old joke about [comedian] Jack Benny,” newly retired Rep. Barney Frank (D-Mass.) told POLITICO on Tuesday. “One of the great jokes was that he had a show — where he’s walking and some guy comes up to him and sticks a gun in his face and says, ‘Your money or your life.’ And he says, ‘I’m thinking, I’m thinking.’ I mean, that’s AIG.”

One former senior administration official who worked on the AIG bailout joked Wednesday, “To paraphrase Churchill, the board did the right thing after having exhausted every other alternative.”

Lawmakers expressed a similar reaction.

“I’m pleased to hear that after receiving the largest bailout by the government to a private company in United States history, AIG has decided not to sue the taxpayers who provided it,” Rep. Elijah Cummings (D-Md.), the ranking member of the House Oversight Committee, said Wednesday.

The outrage was unleashed after news broke late Monday that AIG’s board was meeting to 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.

The suit is being led by Starr International, once one of the largest investors in AIG that is led by former AIG CEO Hank Greenberg, which asked AIG to join its legal action.

The company argued it had to consider joining the legal action as part of its “fiduciary and legal obligations.”

A source familiar with the matter said AIG CEO Robert H. Benmosche told Treasury officials after the board meeting that the company always planned to reject joining the lawsuit.

The source also said lawyers for Starr International had trouble answering questions about the merits of the suit from AIG directors during the meeting.

“In considering and ultimately refusing the demand before us, the board of directors properly and fully executed our fiduciary and legal obligations to AIG and its shareholders,” Robert Miller, chairman of the AIG board of directors, said in a statement Wednesday. “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.”

Now, the question is how much damage the company has done to its reputation both in the marketplace and with officials in Washington.

“Interesting that despite all they’ve been through, the company still can’t seem to gauge the headline and regulatory risk inherent in their post-2008 status,” said Paul Equale, a Washington attorney and consultant. “The board plugged the hole, but it was the executive leadership that teed up the issue in the first place. Those same execs now need to do some quiet repair work in Washington.”

The controversy followed soon after what had been good news for the company: Last month the Treasury Department sold its remaining shares in AIG.

In recent weeks the insurer has been airing ads that say “thank you” to Americans for the rescue — a sentiment 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.

Politico top quotes of the week

The week in one-liners: T-Paw, Michelle, Cleaver

The top political quotes this week …

“I’m going to defeat it.”— GOP presidential candidate Tim Pawlenty on what he’s going to do to Washington.

“I just feel bad the president has to stay there.” — Outgoing White House economic adviser Austan Goolsbee on leaving D.C.

“…he’s earning every last one of those gray hairs.” — First lady Michelle Obama writing about the president’s birthday.

“Obama’s hip-hop bbq didn’t create jobs.” — A Fox News headline about the president’s birthday bash.

“I’m tired of dealing with the crazies.” — New Jersey Gov. Chris Christie getting frustrated.

“He’s below the dignity of anybody.” —Republican 2012 hopeful Rick Santorum’s feelings about Dan Savage.

“A sugar-coated Satan sandwich.” — Rep. Emanuel Cleaver describing the debt deal.

GOP Agenda · GOP Radicalism · Government Debt · Government Spending

The Debt Ceiling Issue

Debt Ceiling 101

Question: What is the debt ceiling?

Answer: The debt ceiling is a statutory limit on the amount of U.S federal debt held by the public and the government’s own accounts. The debt ceiling became law with the Second Liberty Bond Act of 1917, which helped finance the United States’ entry into World War I.

Question:  What happens if The Congress votes not to raise the debt ceiling?

On This Week with Christiane Amanpour, Jake Tapper interviews Obama economic advisor Austan Goolsbee about the upcoming vote on the National Debt ceiling, and wonders what will happen if the new Republican Extremists successfully keep it from being approved.


There has been a lot of talk about “The Debt Ceiling” lately.  The Tea Party influenced GOP in congress want to place a limit on the out of control debt spending by capping the “debt ceiling”. 

Most Dems (and some Republicans of a more moderate stripe) want to follow the status quo and continue to raise the debt ceiling as borrowing expands.  The GOP want to cap the ceiling.

Of course, Washington being what it is, some GOP members wouldn’t mind voting in favor of raising the debt ceiling as long as Congress produces serious limitations on future spending.  That would mean Medicare and Social Security cuts will have to be in the offing.

Yes, that’s right!  They are playing their little blackmail game yet again, using Social Security and Medicare as the perineal sacrificial lambs in order to agree to raise the debt ceiling.  

Now, in all honesty, I do see a need for cutting the debt but the experts all agree that doing so would be catastrophic to the American economy as well as global economies.  Borrowing money to pay for tax cuts for the wealthy is not a problem for the GOP/Tea Party.  However, cutting entitlement programs to our country’s most vulnerable segment, senior citizens is in my opinion heartless.  There’s got to be a better way.

There are some serious GOP pundits like George Will and some Fox News pundits who totally disagree with capping the debt ceiling.

It’ll be interesting to see how this “game of chicken” plays out.

Lawrence O’Donnell of MSNBC’s The Last Word does a better job of explaining the consequences of not raising the debt ceiling than I ever could:

GOP Agenda · GOP Greed · GOP Hubris · GOP Hypocrisy · GOP Lies · GOP Obstructionism · Senate '10 · Senate Dems · Senate Republicans

Extending Bush Tax cuts Adds $700 Billion to Deficit

Yep, $700 billion additional dollars to the deficit! 

The White House has released a very easy and simple explanation about the tax cut fight in congress.

Remember, the Republicans will not even discuss the tax cuts for small businesses unless the Dems include the Bush tax cuts for the rich in their plan…