Elizabeth Warren is slamming AIG for considering a lawsuit against the U.S. government that gave it a $182 billion taxpayer bailout back.
“AIG should thank American taxpayers for their help, not bite the hand that fed them,” the Massachusetts senator-elect and banking bête noire said in a statement.
The New York Times reports that the insurance giant’s board will meet Wednesday to consider joining a $25 billion shareholder lawsuit against the federal government. The suit was originally filed in 2011 by Hank Greenberg, 87, the firm’s former longtime CEO, who remains a major investor and is urging AIG to join the case.
The board is essentially obligated to consider Greenberg’s request. “The A.I.G. board of directors takes its fiduciary duties and business judgment responsibilities seriously,” a spokesman told the paper.
The suit argues that although the bailout was needed, the government deprived shareholders of billions by essentially using AIG to provide a “backdoor bailout” for some of its Wall Street clients, including Goldman Sachs and JP Morgan.
Frank Portnoy, a professor of law and finance at the University of San Diego School of Law, told the New York Times that the lawsuit is “a slap in the face to the taxpayer and the government.” A federal judge in New York has already dismissed Greenberg’s suit, while one in Washington D.C. allowed it to proceed. Back in 2008, AIG nearly collapsed after its traders used the notorious “credit default swaps” to place a series of risky bets on the housing market. That led the Bush administration to undertake a $182 billion rescue, which involved taking a major stake in the company. AIG eventually repaid its bailout money, with taxpayers turning a $22 billion profit.
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