One of Wall Street’s biggest beneficiaries of a U.S. taxpayer bailout at the height of the country’s 2008 economic downturn says it will not take part in a lawsuit against the government that claimed terms of the rescue were too tough.
The board of giant insurer American International Group decided Wednesday against joining a $25 billion suit being brought by its former chief executive, Maurice “Hank” Greenberg. It contends that the government takeover of the company diluted the value of stock held by shareholders.
Lawmakers in Washington reacted angrily this week at the prospect that AIG might try to recoup some of the costs it incurred in the government’s $182 billion bailout. The rescue came at a time when the company teetered on the brink of collapse.
Maryland congressman Elijah Cummings said the thought of an AIG suit against the government is “an unbelievable insult to our nation’s taxpayers.” He said it was “like suing the paramedic who just gave you CPR because he didn’t give you a pillow.”
The U.S. rescued AIG on fears that the company’s demise would imperil the world economy. The U.S. just recently sold the last of its one-time 92 percent stake in the company — and ended up with nearly a $23 billion profit.
The AIG bailout was highly contentious at the time, with numerous U.S. political critics saying the firm was a prime example of Wall Street greed and that its investment mistakes were self-inflicted, undeserving of a taxpayer rescue.
With the government’s sale of the last of its AIG stock, the company has been airing television ads saying, “Thank you, America.” But the ads have not mentioned the possibility AIG might sue the government.
AIG’s current chief executive, Robert Benmosche, said the board had a financial and legal responsibility to consider the request to join Greenberg’s suit.