Until today, A.I.G. was in a difficult spot, at the point of uncertainty, whether or not to join a suit against the very government that had so graciously bailed them out. In 2008, A.I.G. was faced with either bankruptcy or government bailout, and chose the latter. However, the government seized 92 percent stake in the company, charged incredible interest rates, and took billions to give to Wall Street clients. What to do? Their commercials have had the tagline, “Thank you America,” and it is better to be achy than an ingrate. That is, in fact, what they finally decided as of Wednesday, not to sue America with the others who are, to stay out of the lawsuit against their savior.
Maurice R. Greenberg, A.I.G.’s former chief executive filed the lawsuit in 2011 and urged A.I.G. to join. They wanted to bring government to settlement talks. A.I.G. had the duty to at least consider joining, for the sake of their lawsuits, for their shareholders took a hit in all this, and consider it they did.
“On the one hand, from a corporate governance perspective, it appears they’re being extra cautious and careful,” opined Frank Partnoy, a former banker and law and finance professor at University of San Diego School of Law. “On the other hand, it’s a slap in the face to the taxpayer and government.”
Rep. Elijah Cummings, a Maryland Democrat, felt the same way, saying that joining the suit would be the same as “suing the paramedic who just gave you CPR because he didn’t give you a pillow.”
A further commentator agreed. “Taxpayers across this country saved AIG from ruin, and it would be outrageous for this company to turn around and sue the federal government because they think the deal wasn’t generous enough,” said Elizabeth Warren, Wall Street Critic and U.S. Senator from Massachusetts.
It wasn’t so clear cut for A.I.G., however. They were smarting from the terms of their rescuer, and certainly there must be reasonable terms even in emergency situations. Deciding against joining the $25 billion suit was not easy, and could have repercussions with their shareholders.