Home / News / Government / Report: AIG’s Board Considers Options on Suit Against U.S. Goverment
Print This Post Print This Post

Report: AIG’s Board Considers Options on Suit Against U.S. Goverment

*_UPDATE: AIG has ""refused"":http://www.aig.com/Chartis/internet/US/en/AIG%20PR%20-%20Starr%20Decision%201%209%2013_tcm3171-465902.pdf to join Starr's lawsuit and will not let the firm pursue litigation on its behalf._*

""American International Group"":http://www.aig.com/home_3171_411330.html (AIG) recently launched its ""Thank You, America"" ""advertising campaign"":http://www.youtube.com/AIG?x=us-en_showcase2_86_15 expressing gratitude for the government (and taxpayer) assistance that saved the company in 2008, but its board of directors may be considering joining a lawsuit contesting the constitutionality of the bailout.


The _New York Times_ ""first reported"":http://dealbook.nytimes.com/2013/01/07/rescued-by-a-bailout-a-i-g-may-sue-its-savior/?hp Monday that AIG's board was mulling over its options regarding a $25 billion lawsuit filed by Starr International Company on behalf of AIG shareholders and spearheaded by Maurice ""Hank"" Greenberg, a former AIG executive. The lawsuit argues that the government took too much control over the company--taking away power from existing shareholders--and set too high of an interest for repayment, in effect ""punishing"" the company.

Sources close to the situation told the _New York Times_ Starr will open with a 45-minute presentation to the board. That presentation will be followed by another [COLUMN_BREAK]

from lawyers from the Treasury and the Federal Reserve Bank of New York.

In a ""statement"":http://www.aig.com/Chartis/internet/US/en/01082013%20-%20AIG%20PR%20-%20Starr%20Statement_tcm3171-465693.pdf issued following the publication of the article, AIG notes it is obligated to consider and respond to Starr's demand for AIG to either take over the suit or allow Starr to proceed alone. The board expects to have an answer by the end of January.

The choice comes at an awkward time, to say the least. AIG finished repaying its debt--and then some--late last year and has been working ever since regain public favor.

The company has three options: It could refuse to participate (a decision that would likely be challenged by Starr and could open the company up to lawsuits from dissatisfied shareholders), it could allow Starr to proceed on its behalf, or it could take over the suit--a step that might appease shareholders but would do no favors for the company's reputation.

The fact that the company has not rebuffed the lawsuit already has drawn ire from some politicians. On Twitter, former Obama advisor ""David Axelrod"":https://twitter.com/davidaxelrod/status/288720562866495488 called AIG's behavior the ""Definition of Chutzpah,"" and Treasury Secretary Tim Geithner and Fed chairman Ben Bernanke are reportedly ""furious,"" according to ""Politico"":http://www.politico.com/story/2013/01/washingtons-jaw-drops-at-possibility-of-aig-lawsuit-85924.html.

However, AIG president Robert Benmosche says the company has a duty to its shareholders to at least hear the presentations and consider every angle.

""AIG has paid back its debt to America with a profit, and we mean it when we say thank you to the American people,"" said CEO Robert Benmosche. ""At the same time, the Board of Directors has fiduciary and legal obligations to the Company and its shareholders to consider the demand served on us and respond in a fair, appropriate, and timely manner.""

About Author: Tory Barringer

Tory Barringer began his journalism career in early 2011, working as a writer for the University of Texas at Arlington's student newspaper before joining the DS News team in 2012. In addition to contributing to DSNews.com, he is also the online editor for DS News' sister publication, MReport, which focuses on mortgage banking news.

Check Also

Hurricane Ian’s Potential Housing Impact

Despite being downgraded to a tropical storm while passing over Florida, Ian has intensified into a hurricane again as of press time, barreling towards the coast of South Carolina. Here’s what CoreLogic experts previously projected regarding potential reconstruction cost values of all homes impacted by Ian’s destructive path.