Insurance giant AIG is considering suing the federal government over the “onerous” terms of its $182 billion federal bailout, even as it airs a slew of “Thank You America” ads supposedly expressing gratitude towards taxpayers. Former AIG chairman Maurice Greenberg is urging the company to join a lawsuit against the government, arguing that the company’s shareholders were “crushed” by the bailout.
The reaction amongst lawmakers and economic policy officials has been swift and, for the most part, incredulous:
– Sen. Elizabeth Warren (D-MA) said “It would be outrageous for this company to turn around and sue the federal government because they think the deal wasn’t generous enough… AIG should thank American taxpayers for their help, not bite the hand that fed them for helping them out in a crisis.”
– Federal Reserve Chairman Ben Bernanke and Treasury Secretary Tim Geithner are reportedly “furious” with the company.
– Rep. Maxine Waters (D-CA), the new ranking member of the House Financial Services Committee, said, “It is simply outrageous that the board of the American International Group, Inc. (AIG) would even consider suing the federal government after America’s taxpayers stepped up and bailed them out over their bad bets on mortgage-backed securities…I would urge the board to drop its consideration of the lawsuit, thank the American public for the $182 billion rescue package that prevented the company’s collapse, and support the reforms in the Dodd–Frank Wall Street Reform and Consumer Protection Act.”
– Reps. Michael Capuano (D-MA) and Peter Welch (D-VT) wrote in a letter, “AIG became the poster company for Wall Street greed, fiscal mismanagement, and executive bonuses — the taxpayer and economy be damned. Now, AIG apparently seeks to become the poster company for corporate ingratitude and chutzpah.”
– Former TARP Inspector General Neil Barofsky characterized the move as “the equivalent of a giant middle finger” to U.S. taxpayers.
AIG’s argument is that shareholders were unfairly hurt by the bailout, but a complete AIG bankruptcy likely would have been far worse for them. As ThinkProgress’ Ian Millhiser noted, “at the time when the federal government took a supermajority interest in AIG, the fair market value for this interest was only slightly north of zero. Rather than receiving zero dollars for AIG’s mix of toxic sludge, however, AIG received tens of billions of dollars from the American people.”
AIG has decided not to join the lawsuit.