AIG Threatens to Sue the Government for Keeping it Alive

American International Group, the mega-insurer that nearly collapsed in 2008 before being bailed out, is now considering joining a lawsuit filed by its former chairman against the federal government. The lawsuit, filed in 2011 by former AIG chairman Maurice Greenberg, contends that the federal government violated the Fifth Amendment by taking too large a share in the company and charging it excessive interest rates on the $182 billion in loans it gave the company.

Greenberg, who led AIG for nearly four decades, says the deal crushed the company’s shareholders, and he will make the same case to AIG’s board of directors to urge them to join his lawsuit, the New York Times reports:

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.”

In recent weeks, AIG has run a series of ads on network and cable television across the country thanking American taxpayers for saving it. AIG repaid the $182 billion, and the government sold its last stake in the company in August. The ads tout AIG’s role in recoveries from natural disasters, including $144 million in insurance claims it paid after the Joplin, Missouri tornadoes and $2 billion in claims it expects to pay to Hurricane Sandy victims. It also boasts that it is the “lead insurer” of the new World Trade Center and that taxpayers turned a profit on the bailout.

AIG CEO Robert H. Benmosche accompanied the ads with a letter to the New York Times, in which he wrote, “It is a result of our employees’ determination to repay America that A.I.G. not only supports our customers and employees but also contributes directly to the financial stability of the United States. Thank you, America.”

While Greenberg says the bailout hurt shareholders, government officials that spoke to the Times anonymously said the shareholders would have fared worse going through bankruptcy. And though Greenberg is correct in his reading of the Fifth Amendment, which prohibits government seizure of private property without fair compensation, AIG’s stock price at the time of the bailout was “slightly north of zero.”

Enjoy this piece?

… then let us make a small request. AlterNet’s journalists work tirelessly to counter the traditional corporate media narrative. We’re here seven days a week, 365 days a year. And we’re proud to say that we’ve been bringing you the real, unfiltered news for 20 years—longer than any other progressive news site on the Internet.

It’s through the generosity of our supporters that we’re able to share with you all the underreported news you need to know. Independent journalism is increasingly imperiled; ads alone can’t pay our bills. AlterNet counts on readers like you to support our coverage. Did you enjoy content from David Cay Johnston, Common Dreams, Raw Story and Robert Reich? Opinion from Salon and Jim Hightower? Analysis by The Conversation? Then join the hundreds of readers who have supported AlterNet this year.

Every reader contribution, whatever the amount, makes a tremendous difference. Help ensure AlterNet remains independent long into the future. Support progressive journalism with a one-time contribution to AlterNet, or click here to become a subscriber. Thank you. Click here to donate by check.