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Old 01-08-2013, 11:59 AM   Topic Starter
Msmith Msmith is offline
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Bite the hand that saved you -- AIG plans to sue US bailout

It's been almost five years since AIG's stock dropped 60 percent in a day leaving the company doomed to failure, when Uncle Sam swooped in with $182 billion to rescue it. But AIG must have a short memory, because on Monday night news emerged that the insurance company is actually thinking about suing the U.S. government over the bailout that saved it. The board will discuss the idea with shareholders at a meeting on Wednesday.

It's not so much that AIG's mad the government bailed them out. (They wouldn't be around to be mad if it hadn't.) They just wish they'd done it a little bit differently. "The lawsuit does not argue that government help was not needed," The New York Times reports. "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.'" Does that kind of bad attitude count as "looking the gift horse in the mouth" or "biting the hand that feeds you?" Or both? ...


As I recalled, didn't the AIG reward their executives with huge bonus for obtaining the bailout from the government? Shouldn't those exec be fired first?

Link: http://news.yahoo.com/aig-thinking-s...--finance.html
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Old 01-08-2013, 12:05 PM   #2
blaise blaise is offline
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Whatever. They'll have their say in court. I don't know what the execs bonuses have to do with it, though.
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Old 01-08-2013, 01:15 PM   #3
Msmith Msmith is offline
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Originally Posted by blaise View Post
Whatever. They'll have their say in court. I don't know what the execs bonuses have to do with it, though.
After the US government signed the money over for bailout, the top level exec from AIG all received $1 million USD each.

Link: http://en.wikipedia.org/wiki/AIG_bon...ts_controversy
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Old 01-08-2013, 01:34 PM   #4
blaise blaise is offline
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Originally Posted by Msmith View Post
After the US government signed the money over for bailout, the top level exec from AIG all received $1 million USD each.

Link: http://en.wikipedia.org/wiki/AIG_bon...ts_controversy
Ok, so what? Why would that have anything to do with the terms of the bailout, and whether AIG has a case?
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Old 01-08-2013, 12:06 PM   #5
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Old 01-08-2013, 01:35 PM   #6
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Yeaaaa good luck with that one guys.
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Old 01-08-2013, 04:56 PM   #7
Garcia Bronco Garcia Bronco is offline
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Old 01-08-2013, 10:00 PM   #8
ChiliConCarnage ChiliConCarnage is offline
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That article isn't really representative of what is happening but I'm sure it's written that way in order to create interest.

AIG isn't looking to file a lawsuit.

A minority stake holder in AIG (12%) has filed a lawsuit because he disagrees with the terms of the buyout and his dilution of shares, etc.. Awkwardly, it's an Investment Group owned by the former CEO.

They've been asked to join that lawsuit. That leaves AIG in a pretty tenuous position.
Technically, AIG has no legal responsibility to the government but they are responsible for protecting their share holders rights. They have to weigh whether his case has merit.
They could end up missing out on a big settlement and being sued by their share holders
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Old 01-09-2013, 04:24 PM   #9
Msmith Msmith is offline
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I guess AIG accepted the general trend:

Facing anger from Congress and the American people, AIG Inc said on Wednesday it would not sue the U.S. government over terms of the company's multi-billion dollar bailout.

Insurer American International Group had been weighing whether to join a lawsuit filed by its former Chief Executive Hank Greenberg and his company Starr International, which owned 12 percent of AIG before its $182 billion (114 billion pounds) rescue that started in 2008.

Greenberg claims the rescue was unfair to shareholders and that the Federal Reserve Bank of New York charged an excessive interest rate on its initial loan. He is seeking billions of dollars in damages.

AIG said its board had carried out its legal and fiduciary duty to consider joining Greenberg's lawsuit before making its decision. Greenberg has a case pending in the Court of Federal Claims in Washington, D.C., and is also appealing the dismissal of a lawsuit in the federal court in New York.

AIG's Chief Executive Bob Benmosche said in an interview with CNBC that ultimately the public had to trust the company.

"It is not acceptable socially for AIG to have taken this money and to think we can go back and sue the government," Benmosche said.

AIG said it would not pursue Starr's claims nor would it allow Starr to pursue them on AIG's behalf, setting the stage for a fresh legal fight between Greenberg and the company...


Link: http://news.yahoo.com/aig-says-not-j...--finance.html
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Old 01-09-2013, 04:28 PM   #10
BucEyedPea BucEyedPea is offline
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Someone gave them a wake up call. There's a video on C-Span showing Greenberg saying the AIG bailout was not necessary and that bankruptcy was a valid option without a financial meltdown.
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