AIG Executive Sues Government for Bailout

No, that's not an Onion headline. Former AIG CEO Hank Greenberg is suing the government for the bailout.

Starr International, the company run by the former head of insurance giant American International Group (AIG), has filed a $25 billion lawsuit against the federal government, arguing that the takeover of the insurance company at the height of the financial crisis was unconstitutional.

When the government took an 80 percent interest in AIG during the financial crisis, it did so without “due process or just compensation,” in violation of the Fifth Amendment of the Constitution, according to the suit filed Monday in the U.S. Court of Federal Claims.

So not only was AIG too big to fail, but it's also too big to be rescued. That's the ultimate absurdity of this lawsuit. It's too big for both failure and rescue. Meanwhile, Greenberg is seeking another $25 billion from the government (the lawsuit claim) on top of the $70 billion bailout.

Evidently, Greenberg is also seeking to be the most hated CEO in America.

  • D_C_Wilson

    I guess his golden parachute for running AIG into the ground wasn’t enough for him.

  • JWheels

    Wasn’t the 80% share of AIG a quid pro quo for the government stepping in in the first place with rescue funds? I’m pretty sure the Constitution doesn’t legally prohibit a company from being controlled by its largest shareholder a.k.a. the US government at the time. Plus didn’t AIG possibly get an extra $100 billion or something indirectly through Goldman Sachs as a counterparty to the credit default swaps? Or was that Goldman Sachs that got tens of billions of dollars as a counterparty to AIG. I get my nauseating facts mixed up sometimes. But talk about corporate greed, $25 billion more? For a company that would not exist at all to be able to sue if the US government hadn’t done what it did. That sounds fair.

    • Guest

      Goldman Sachs got tens of billions of dollars besause they sold mortgage backed bonds with several tiers of mortgages, then used credit default swaps to bet against the default of those bonds. AIG was the insurance underwriter so they got paid premiums from Goldman Sachs as long as the bonds held their value as they were bought and sold. As soon as some of the mortgages in the lower tier went into default, the the entire bond became worthless. The top tier of mortgages might not have been in default. Then Goldman Sachs had to undo the bond to figure out what part was in default and AIG had to undo the credit default swap for that bond. Get it? It’s a mess. They are still in the process of undoing. That is why it is taking so long for some houses to be foreclosed and repossessed.

      • JWheels

        Thank you for breaking that down. It’s a very complex situation, a lot of people don’t even have a basic understanding of what actually happened. Of course knowing the truth if anything only makes it more nauseating.

        • dildenusa

          What is really screwed up is that this is what happened with Enron in 2001. So it wasn’t as if the financial regulators didn’t know that this shit could blow up the financial system.

          With Enron it was derivatives based on buying and selling electric power and data processing contracts. The thievery at Enron led to the collapse of thousands of Internet startups in 2001-2002 and was the precursor to the mortgage meltdown.

  • dildenusa

    This guy is simply a shameless self promoter who got caught with his hand in the cookie jar. Just like Madoff, if there wasn’t a financial meltdown in 2008 he would have gone happily along stealing money from pension funds, charities, non-profit foundations, etc. The problem was that AIG insured a steaming, stinking pile of toxic waste using credit default swaps and was in the hole for uncountable trillions of dollars. Now because shithead wasn’t compensated for his incompetence when the treasury department bought out AIG at the inflated price of 80 billion dollars, he wants his “just compensation.” Just compensation for thieves is called jail.

  • JackDaniel07

    Most hated my ass…there’s a great chance that every teabagger, wing nut, and born-again-Independent will rally to his side in their knee jerking fit to support anything negative that makes headlines for this Administration. Cue FOXNews commentators blaming Obama for TARP in t-minus 5…4…3…

    • D_C_Wilson

      He’ll be portrayed as striking a blow against Obama’s efforts to impose “European-style socialism” on us.

  • agrazingmoose

    Why can’t we simply fire him?

    • villemar

      Guillotines are nice.

    • D_C_Wilson

      He’s already been ousted as CEO of AIG.