Former AIG CEO sues feds for taking over company
The Wall Street Journal reports that the former CEO of American International Group is suing the U.S. government. Maurice “Hank” Greenberg and his new company Starr International Company filed a $25 billion discrimination lawsuit Monday against the government because Greenberg believes AIG should have received a bailout rather than having been the subject of a government takeover.
Government overstepped its bounds
The lawsuit filed in the U.S. Court of Federal Claims in Washington, D.C., asserts that the government overstepped its bounds when dealing with AIG.
“The government is not empowered to trample shareholder and property rights even in the midst of a financial emergency,” reads the suit.
In addition to bringing suit against the federal government, Greenberg and Starr filed a separate suit against the Federal Reserve Bank of New York in federal district court in Manhattan, says CNN Money.
Lawsuit claims ‘without merit’
U.S. Assistant Secretary for Financial Stability Tim Massad justified the government’s actions in the wake of the Hank Greenberg/Starr lawsuit.
“It is important to remember that the government provided assistance to AIG — and stopped it from collapsing — in order to prevent a meltdown of the entire global financial system,” Massad said in a written statement.
The New York Fed also says the lawsuit levied against it is without merit.
“AIG’s board of directors had an alternative choice to borrowing from the Federal Reserve and that choice was bankruptcy,” said the organization in a statement.
Starr was largest AIG shareholder
Starr, which was AIG’s biggest shareholder when the U.S. government takeover occurred in September 2008, accuses the government of seizing 80 percent interest in AIG’s common stock, then using the company to bail out other companies. This occurred after the government denied AIG loans and assistance it was providing other finance and insurance companies.
“Rather than granting AIG the same access to liquidity assistance that it granted to numerous other institutions, including various foreign companies, the government instead chose to use the difficulties faced by AIG to implement a takeover of the company without just compensation,” reads the lawsuit.