So let me get this straight. The Government bails out AIG via TARP during the sub-prime mortgage meltdown, and they reluctantly agree. Now they're suing the federal government for not paying their shareholders? Is that the gist of it all? Because I really don't understand the logic behind the lawsuit. Edit: AIG. Sorry.
Not quite. First of all, an important distinction: AIG is suing no one yet. The former CEO of AIG, Maurice Greenberg, is suing independently on behalf of shareholders. This backs AIG into a delicate position: Should Mr. Greenberg snare a major settlement without A.I.G., the company could face additional lawsuits from other shareholders. Suing the government would not only placate the 87-year-old former chief, but would put A.I.G. in line for a potential payout. Unfortunately for AIG, this would probably be seen as the worst PR move by a corporation since Exxon-Valdez. Sort of. Specifically, shareholders are not held liable for the actions of a company, and what the government did to AIG is a bit like eminent domain ... they just took over majority (google terms of AIG bailout for some info). They're going to argue private property seizure, and probably misuse of stockholder's investments ... and I'm not sure how that will work, because there ought to be a precedent somewhere -- there've been bailouts before, after all. I'm assuming they'll get more or less laughed out of town, but you can't underestimate money.If the [AIG] board does not give careful consideration to [suing alongside him], Mr. Greenberg could challenge its decision to abstain.
Now they're suing the federal government for not paying their shareholders?
I see. So basically the former chief is forcing AIGs hand. Even though it will be a PR nightmare they payout is too big to ignore so they might just go ahead and join the lawsuit since the alternative is to get caught in a lawsuit of their own later on down the road. Talk about being stuck between a rock and a hard place. It's stupid if you ask me but then again, that is a lot of cash we're talking about.
So they're going to try to recoup some of the money they paid back and pocket it. Isn't life grand? AIGs shareholders are trying to pocket 25 billion from the Federal Government. Money that it can use to fund education or fix roads. Hell I'd rather they build a few more submarines with that money instead of giving it to some old rich guy who is about to kick the bucket.