AIG

There’s a lot to choose from but I’m going to say that the very best thing about AIG’s pretending it might sue the government last week, and then not doing it, is that then it actually sued the government:

American International Group Inc. filed a lawsuit against a Federal Reserve vehicle created during AIG’s bailout that held some of its troubled mortgage bonds, in a dispute over rights to sue over the bonds. … At issue is whether AIG, in selling billions of dollars in troubled mortgage bonds to the New York Fed in late 2008, transferred its rights to sue for losses it incurred on the securities.

So it’s not quite as big as the Hank Greenberg give-me-back-my-$25-billion lawsuit that AIG opted out of, but it’s pretty big; AIG thinks it has over $7 billion in damages against Bank of America/Countrywide alone. If it’s right, either AIG or the Fed should be entitled to about $7bn of BofA’s cash. So call this 1/4 as big as joining the Greenberg suit, though considerably less than 1/4 as offensive.

One way to resolve this dispute amicably might be to conclude that both AIG and the Fed should be entitled to $7bn of BofA’s cash. After all, who decided that only one investor gets to sue BofA per mortgage? We’ve talked before about the fact that BofA’s liability for Countrywide mortgages does not seem to be limited by the amount of mortgages that Countrywide wrote; several lawsuits now cover overlapping pools of mortgages. How much BofA ends up paying for those mortgages will depend on political and PR factors, on the existence of embarrassing emails, on technicalities of contract drafting and legal doctrines, and on how much money BofA, y’know, has, but it seems unlikely that it will depend on some sort of one-mortgage-one-lawsuit principle. You write enough bad mortgages and you give up your expectations of tidiness. Read more »

I know it’s almost time to forget about former AIG CEO Hank Greenberg’s lawsuit against the government, since AIG yesterday decided not to join it, but I find myself unable to let go. Over the past couple of days of swirling outrage I’ve spent a lot of time with Greenberg’s complaint, and the Court of Federal Claims opinion refusing to dismiss it, and: the whole thing is so kooky and weird! And not crazy, either; probably wrong, but not nuts. How can we consign it to oblivion just because AIG refused to enrage everyone by backing the lawsuit? Fortunately Greenberg’s lawyer David Boies is running around keeping everyone enraged so I guess we have an excuse:

David Boies, the attorney suing the U.S. over American International Group Inc.’s bailout, said the firm’s takeover was an abuse of authority similar to firefighters seizing possessions they rescued from a flood.

“The fire and rescue people say we’re going to cart them out, we’re going to protect them, but we’re going to take 80 percent of them for the firehouse,” Boies said in an interview today on CNBC. “Everybody would know that was wrong. It’s also illegal.”

Hahaha enraging. But basically harmless enough. It’s the next thing he says that’s really weird: Read more »

Remember yesterday when AIG was going to sue the government for bailing it out? Hahaha yeah that was never going to happen, and today it didn’t:

American International Group Inc.’s directors decided Wednesday not to participate in a lawsuit that accuses the U.S. government of taking advantage of the company in its rescue from the financial crisis. … “The AIG Board has determined to refuse Starr’s demand in its entirety, and will neither pursue these claims itself nor permit Starr to pursue them in AIG’s name,” the company said in a release. …

Mindful of the potential backlash, a number of AIG directors entered Wednesday’s meeting leaning toward rejecting Starr’s request to join its suit, two people familiar with their thinking said

YOU THINK?

If you read as much of the Internet as I do, you probably noticed that a lot of people yesterday freaked the fuck out over the pseudo-fact that AIG was considering joining the lawsuit, brought by its ex-CEO Hank Greenberg and his investment company Starr International, against the U.S. government for basically being too mean in bailing out AIG. Some of these people were regulators, Senators, and Congressmen, three of whom penned this cheery missive to AIG: Read more »

  • 11 Dec 2012 at 5:47 PM

AIG’s Remaining Bailout Reduced To Rounding Error

A while back I built a spreadsheet to do math about AIG, and it took me a long time and led to basically one short post with what I still think was a rather lovely blobby picture, so I’m just going to shamelessly reuse that spreadsheet with slight updates and be all OOH LOOK AN IRR:

So yeah: as the AIG bailout saga comes to its sort-of conclusion, we can sort of conclude that the government made a 5.6% return on its money. Assumptions etc. in the original post; the accounting profit ties out reasonably well, if you squint, with the Treasury’s official math.

Herewith some random observations and questions on AIG:1 Read more »

Robert Benmosche: We Showed This World A Thing Or Two

“Dear Colleagues,” Robert Benmosche wrote in a memo to AIG employees today. “We come together as a company to celebrate in good times and we draw together in times of shared crisis. Today warrants a celebration like no other in AIG’s history and places well in the past a crisis none of us will ever forget…Today the US Department of the Treasury has priced an offering of approximately 234.2 million shares of AIG common stock at a price to market of $32.50 per share. Upon the closing of this transaction, expected this Friday, Treasury will have sold the last of its remaining shares of AIG common stock, receiving proceeds of approximately $7.6 billion from the sale. The closing of this transaction will mark the full resolution of America’s financial support of AIG…It is one of the most extraordinary - and what many believed to be the most unlikely– turnarounds in American business history. And you did it…You did this. Every single man and woman at AIG did this remarkable thing. There is a saying in American life, there are no second acts. Well, take a bow, because today marks our second act.” [Dealbook]

What’s good about the dismissal of Hank Greenberg’s AIG lawsuit today is that there’s all this roiling weirdness under the basic story of:

  • The government seized AIG because it was garbage,
  • AIG shareholder, ex-CEO, and general fanboy Hank Greenberg sued the government for destroying the valuable valuable value of his AIG stock, and
  • he lost.

Duh he lost! It’s AIG, it’s become a byword for financial failure. “Don’t pull an AIG,” bankers say to each other, in my lazy imagination. You don’t need to be a lawyer to know that a lawsuit claiming that the government’s bailout stole massive value from AIG shareholders was not going to work. It didn’t! The end.

But there actually was all sorts of crazy nefarious stuff going on; your sympathies may vary but I was ever-so-slightly moved by two of Greenberg’s claims: Read more »

“People are angry because they want to blame somebody else. They don’t take responsibility for their own goddamn lives. ‘I’ve never been promoted, because they don’t like me and there were these guys at AIG, look at them they have free lunches and EZ Pass and look at me I don’t get a free lunch.’ These people make me nuts. Get off your goddamn ass and do something. That’s what the people at AIG did, They picked up their asses and went to work.” [Pressler, related]