AIG won’t join suit against USPublished: 1/10/13 @ 12:00
Facing a certain backlash from Washington and beyond, American International Group won’t be joining a $25 billion shareholder lawsuit against the U.S. government over the terms of its bailout at the height of the financial crisis.
The suit was filed by Starr International, a company headed by AIG’s founder and former Chief Executive Officer Maurice “Hank” Greenberg. It alleges that the government took nearly all of the insurer’s stock as part of its bailout without giving investors proper compensation. The $182 billion bailout of the insurer by the Treasury was the largest of the 2008 financial crisis.
The timing of the suit could hardly have been worse for AIG. The company is in the midst of a “Thank You America” ad campaign to show its gratitude for being rescued from the brink of collapse.
The prospect of the insurer’s joining the lawsuit already had triggered outrage. A congressman from Vermont issued a statement telling AIG: “Don’t even think about it.”
AIG, which legally was obligated to consider joining the lawsuit, demurred.
“The board of directors properly and fully executed our fiduciary and legal obligations to AIG and its shareholders,” Robert S. “Steve” Miller, chairman of AIG’s board of directors said in a statement Wednesday. “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.”
AIG nearly imploded after making huge bets on mortgage investments that later went wrong. Regulators were concerned that if it were allowed to fail, it would send shock waves through the financial system, which already was reeling as Lehman Brothers collapsed.