Remember the name AIG? That’s the insurance giant that was at the heart of the financial crisis. Remember that it was the single biggest bailout recipient — getting $182 billion — and that it recently paid back the government in full?
So imagine this: AIG’s board of directors tomorrow will hear an extraordinary presentation. Former CEO Maurice Greenberg will try to persuade the board to join his lawsuit against the U.S. government, alleging shareholders were shortchanged in the bailout.
“Let me just say, it is Kafkaesque,” says Phil Angelides, who chaired the Financial Crisis Inquiry Commission.
Greenberg, who is still a big AIG shareholder, first sued the government in 2011 for $25 billion. He alleges shareholders were not paid enough for the stake the government took in the company.
And, that brings us to that surreal board meeting, where government officials will also be be making a presentation, asking, in effect, “You sure you want to sue us?”
“I’d pay for first class seats to be in that room,” says Henry Hu, a law professor at the University of Texas and a former SEC regulator.
He says AIG’s board has an obligation to consider the lawsuit because of shareholder interests, “but they should also consider the costs of this in terms of their relationship with the regulators.”
Don’t forget, AIG is the company that just started running ads saying — no joke — “Thank you America.”
A spokesman for the New York Fed said the allegations have no merit because bankruptcy was AIG’s only alternative. That would have wiped out shareholders entirely.
Angelides thinks the board shouldn’t consider this lawsuit for more than a minute.
“This is a real slap at the taxpayers of the country and a real slap at the government of the United States,” he says.
AIG issued a written statement today saying it will follow the law and consider the suit. In earlier email to Marketplace, an AIG spokesman declined to comment. Though he did say Thank You.