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AIG: Thank You, And F*ck You, America
By
Christopher Robbins
Published Jan 8, 2013
Modified Jan 8, 2013
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By
Christopher Robbins
Published Jan 8, 2013
Modified Jan 8, 2013
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Insurance giant AIG has paid back the $182 billion it received from U.S. taxpayers in 2008, along with a profit of $22 billion. The company unloaded the risky acquisitions that bloated and ruined its balance sheets, and is now the lead insurer of the new World Trade Center building. But something about the bailout wasn't fair: AIG should have made more money. After all, what's the point of a financial transaction if a corporation isn't the overwhelming beneficiary? So AIG is now weighing a $25 billion lawsuit against the federal government to get back that money they should have made when they were being saved.
AIG's board will meet tomorrow to consider joining a suit filed by ex-AIG CEO Hank Greenberg. His company, Starr International, alleges that the government took valuable property (money) from Starr and other AIG shareholders.
“On the one hand, from a corporate governance perspective, it appears they’re being extra cautious and careful,” Frank Partnoy, a law and finance professor at the University of San Diego School of Law tells the Times, using words that were foreign to AIG in the years leading up to 2008. “On the other hand, it’s a slap in the face to the taxpayer and the government.”
But that slap would be with a chinchilla-fur mitten lubed up with Smiles and Gratitude.
"Well," you say, brushing the crumbs of an Otis Spunkmeyer muffin off your sweater. "They did make us money. And wasn't this whole 'bailout' thing just a reason to inject money into firms like Goldman Sachs to protect them from their stupid credit default thingys that ruined everything in the first place?"
Maybe! But this is the same company that burned through $90 billion in government loans a month after they said they were solvent. A week after the first bailout, the company spent $444,000 on a retreat for employees. Weeks later, they spent $86,000 on a retreat for executives, then another $343,000 on a trip to Phoenix. Who spends $343,000 in Phoenix?
Their executives also directed employees to funnel money into the coffers of a certain Connecticut senator, and later announced it was going to pay $165 million in bonuses—guess who wrote the exception into the language of the law that allowed for them?
A federal judge in Manhattan dismissed Starr's case in November, writing that while the complaint “paints a portrait of government treachery worthy of an Oliver Stone movie,” AIG “voluntarily accepted the hard terms offered by the one and only rescuer that stood between it and imminent bankruptcy.” A government spokesman added that “A.I.G.’s board of directors had an alternative choice to borrowing from the Federal Reserve, and that choice was bankruptcy.”
The case is now at the appellate level. "A person close to Mr. Greenberg" articulated the point of view that's driving the lawsuit:
“The government has been saying, ‘We’re your friend, we owned and controlled you and we let you go.’ But A.I.G. doesn’t owe loyalty to the government. It owes loyalty to its shareholders.”
Tagged
AIG
banking
finance
rich people
too big to fail
wall street
Christopher Robbins
Christopher Robbins is a New York City reporter covering transportation, affordable housing, local politics, and criminal justice. His work has also appeared in New York Magazine, The Village Voice and The New York Times. Chris is a graduate of Patrick Henry High School in Roanoke, Virginia, and enjoys biking to Fort Tilden in the summertime.
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Gothamist is funded by sponsors and member donations
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