AIG BAILS ON BAILOUT SUIT

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When the United States governmentrescued the world’s largest insurance conglomerate from bankruptcy in September2008 to the tune of $182 billion in public taxpayer funds no one foresaw thepossibility that anyone with a financial interest in American InternationalGroup (AIG) would consider it anything other than a blessing.  However as the saying goes, no good deed goesunpunished.
Former AIG Chairman and CEO HankGreenburg whose Star International company owned roughly 12 percent of AIGprior to the bailout and now holds an approximately 9 percent stake has filedmultiple lawsuits against the government alleging that the bailout was unfairto the company’s shareholders and that the 14 percent interest rate charged bythe Federal Reserve was punitive and unfair. Greenburg also alleges that the 2008 deal which furnished the governmentwith a sizable percentage of ownership in the company equates to unlawfulseizure without just compensation in violation of the constitution.  His lawsuit is seeking approximately $25billion in damages.
Had the government sat back andwatched AIG go bankrupt, it’s highly likely that their shareholders would havelost most or all of their financial interest in the company so it’s hard to seehow the bailout was unfair to them.  A 14percent interest rate can hardly be considered excessive or punitive when manyAmerican’s pay higher rates on their credit cards each month.  In addition, it is also very hard to conceivehow $182 billion and avoidance of bankruptcy can be considered unjustcompensation for the ownership stake the government received.  Lastly, it’s not like the government forcedthe company into this deal.  AIG wasgiven the option and they accepted, plain and simple.   
In what has become a PR nightmarefor AIG, Greenburg has been attempting to convince the company’s board ofdirectors to join his lawsuit.  This ideahas caused renewed outcries across traditional and social media outletsincluding everything from political cartoons satirizing the idea, comparing itto the possibility of a drowning victim suing the lifeguard who rescued him, tomuch more vulgar and personal attacks against current AIG CEO Robert Benmosche.  For AIG to accept the bailout and then turnaround and sue their rescuer is the epitome of looking a gift horse in themouth.
To AIG’s credit however they have reportedlydeclined Greenburg’s demands to join his lawsuits and they appear to begenuinely grateful for their continued existence as a result of thebailout.  On Wednesday January 9 2013, CEORobert Benmosche stated that they had declined Greenburg’s demands but that thecompany had a legal and fiduciary duty to at least review the proposal.  The fact that they have declined to be aparty to the suit and have refused to allow Greenburg to prosecute the claimson their behalf is an indication that the company may truly be on the righttrack.
When all was said and done, theUnited States Treasury ended up with a 92 percent stake in AIG, the last ofwhich was sold in mid-December.  AIG nowagain rests completely in the hands of private investors.  AIG has completely paid back their debt tothe government, with interest amounting to $22.7 billion in profits, and hasbeen running television ads publicly thanking the American people for theirtrust and support.  AIG’s stock lost halfof its value during 2011 but gained more than 50 percent during 2012.  On Wednesday AIG stock closed at $35.76