Once again proving that no good deed goes unpunished, insurance giant American International Group (AIG) is considering suing the federal government as a “loan shark” for the $182 billion bailout that saved it from bankruptcy. Here is the story from Reuters:
Chief Executive Bob Benmosche has complained that the company and its management have not gotten enough credit for avoiding a collapse, turning the business around and returning to profitability.
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.
Because the U.S. government saved AIG, it is now profitable again and its shares are trading at aroudn $35. It is extremely doubtful, if not impossible, for AIG to have achieved this without the bailout.
The Federal Reserve responded by declaring that no one forced AIG to take the bailout. They could have gone into bankruptcy. Of course, that option would have wiped out the shareholders’ stakes.
It is almost humorous to see Benmosche claim that AIG management prevented a collapse and turned the company around. Without the $182 billion that would have been a business miracle. Benmosche conveniently forgets that it was the management that brought AIG to collapse. It wasn’t management that saved it. It was the feds.
This is the exact hubris that put AIG into a position of collapse four years ago.
Ironically, this follows the release of a commercial released a couple of weeks ago titled, “Thank You, America.” AIG thanks Americans for bailing it out and proudly states that it repayed everything back with a profit.
Thank you. Now we are going to sue you.