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Old 01-08-2013, 09:12 AM   #1
Bill Davies
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AIG may join bailout suit against U.S. government

Talk about biting the hand that feeds you...


(Reuters) - American International Group Inc , the insurer rescued by the U.S. government in 2008 with a bailout that ultimately totalled $182 billion, may now join a lawsuit against the government alleging the terms of the deal were unfair, the company said on Tuesday.

The news prompted a swift reaction from one of AIG's saviours, with the Federal Reserve Bank of New York saying the insurer could have just as well chosen bankruptcy four years ago and wiped shareholders out entirely.

The move would be something of a shock, given that AIG just launched a high-profile television ad campaign called "Thank you, America," in which it offers the public its gratitude for the bailout.

"If AIG enters this suit it would be the equivalent of a patient suing their doctor for saving their life," said Mark Williams, a former Federal Reserve bank examiner who teaches in the finance department at Boston University.
"AIG needs to look at only itself as a company that recklessly engaged in excessive risk taking. Government action gave AIG a second life," Williams said.

AIG confirmed on Tuesday that its board would meet Wednesday to discuss joining a lawsuit filed against the government by the insurer's former chief executive, Maurice "Hank" Greenberg.

Greenberg, whose Starr International owned 12 percent of AIG before its near-collapse, has accused the New York Fed of using the rescue to bail out Wall Street banks at the expense of shareholders, and of being a "loan shark" by charging exorbitant interest on the initial loan.

A federal judge in Manhattan dismissed Greenberg's suit in November; it is being appealed. A separate suit under different legal theories is still pending in the U.S. Court of Federal Claims.

In his ruling, dated November (Xetra: A0Z24E - news) 19, Judge Paul Engelmayer said AIG had notified the court it would hold a board meeting January 9 to discussing joining one of the suits, with a decision expected by the end of the month.

An AIG spokesman declined to comment beyond confirming that the board would meet as planned. The deliberations were first reported by the New York Times.

The New York Fed said Tuesday there was no merit to any allegations that the bank harmed AIG.

"AIG's board of directors had an alternative choice to borrowing from the Federal Reserve and that choice was bankruptcy. Bankruptcy would have left all AIG shareholders with worthless stock," a representative of the bank said Tuesday.

The U.S. Treasury declined to comment. It completed its final sale of AIG stock in mid-December, concluding the bailout with what Treasury called a positive return of $22.7 billion.

AIG shares fell 1.6 percent to $35.35 in morning trade. After losing half its value in 2011, the stock rose more than 52 percent in 2012, tripling the gains of the broader S&P insurance index .

(Reporting By Ben Berkowitz and Jonathan Spicer in New York; Editing by Nick Zieminski)
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Old 01-08-2013, 09:27 AM   #2
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Just another reason why government should not be picking winners and losers with taxpayer money.
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Old 01-08-2013, 09:42 AM   #3
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All I can do is LMMFAO!
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Old 01-08-2013, 09:55 AM   #4
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Typical corporate greed!!! It's the American way !!!

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Old 01-08-2013, 10:30 AM   #5
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I don't know the details of the terms that AIG is contesting. But the doctor metaphor isn't exactly right. If a doctor saves your life, but charges you $500,000 when the going rate is $100,000, you can be grateful for his life-saving efforts, but upset about his outsized fee. I have no idea if there is merit to AIG's concerns or not. But to dismiss them because they chose to take the only reasonable offer available at a point where extinction was imminent is being kind of shallow. It looks like the bailout ultimately cost AIG about $23B. Maybe in hindsight, they were fleeced even though it saved their bacon. If so, there is nothing wrong with seeking redress.
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Old 01-08-2013, 10:41 AM   #6
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Capitalism would have deemed them to broke to bail.

State-Capitalism deemed them too big to fail.

Cronyism fleeced them.
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Fascism is a religion of the state. It assumes the organic unity of the body politic and longs for a national leader attuned to the will of the people. It is totalitarian in that it views everything as political and holds that any action by the state is justified to achieve the common good. It takes responsibility for all aspects of life, including our health and well-being, and seeks to impose uniformity of thought and action, whether by force or through regulation and social pressure. Everything, including economy and religion, must be aligned with its objectives.
Old 01-08-2013, 11:44 AM   #7
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Quote:
Originally Posted by Vette_Newb View Post
Capitalism would have deemed them to broke to bail.

State-Capitalism deemed them too big to fail.

Cronyism fleeced them.


Well said!
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I'm taking care of my procrastination issues, just you wait and see.
Old 01-09-2013, 12:01 PM   #8
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Fascism is a religion of the state. It assumes the organic unity of the body politic and longs for a national leader attuned to the will of the people. It is totalitarian in that it views everything as political and holds that any action by the state is justified to achieve the common good. It takes responsibility for all aspects of life, including our health and well-being, and seeks to impose uniformity of thought and action, whether by force or through regulation and social pressure. Everything, including economy and religion, must be aligned with its objectives.
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