Insurer American International Group Inc has asked a court to block Maurice “Hank” Greenberg’s efforts to sue the U.S. government on AIG’s behalf, saying its former CEO has not proven he should have the right to do so. Earlier this year, AIG drew sharp criticism from members of Congress and an outraged public when the firm considered the possibility of joining Greenberg’s lawsuit, which challenges the terms of the insurer’s $182.3 billion bailout by the federal government in 2008. AIG said Greenberg had forced its hand in even deliberating the prospect, but that ultimately it did not want to sue anyway amid a public backlash. Absent AIG’s participation, Greenberg is pursuing a derivative claim, seeking to sue the U.S. government on AIG’s behalf over the terms of the $182.3 billion rescue. Greenberg and his company Starr International, which owned 12 percent of AIG before the rescue, are also suing the government directly.
Hank Greenberg
Hank Greenberg: still at it! My lord. Remember when AIG was going to sue the government along with him, and everyone freaked out, and then it didn’t, and everyone was all “whew, glad that’s over”? Hahaha yeah. Not over.
Greenberg filed his amended complaint in his lawsuit against the government today, and in addition to sort of doubling down on his damages claim,1 he makes a whole lot of hay out of the fact that when he asked AIG to join his lawsuit, people made fun of him. Also I guess some other stuff:
The Government also threatened the AIG Board with the purpose and effect of intimidating AIG and its directors into acting to halt this litigation. The United States indicated it would wage a negative public relations campaign against AIG and its directors, terminate any cooperative relationship with AIG, and heavily scrutinize AIG’s SEC, tax, and other filings from the 2008 to 2010 period when Defendant controlled AIG.
Government officials mounted a campaign, including in the days immediately preceding the Board meeting to consider Plaintiff’s demand, to intimidate the AIG Board that condemned the AIG Board for even considering, much less accepting, the demand. …
As a result of the various factors that had compromised the independence and due care of the demand process, the AIG Board did not take the several weeks it had stated to this Court it would take to make a considered decision following the presentations to it on January 9, 2013, but rather rejected the demand the same day, less than three hours after those presentations ended. The AIG Board had in fact made its decision to reject Starr’s demand even before the presentations were made.
We talked about this when it happened, and I pointed out that this stuff matters.2 Greenberg is mostly – not entirely but mostly – suing on behalf of AIG. In particular, the extra $32 billion that he found in the lawsuit’s couch cushions this time around is entirely AIG’s claim: the shareholders never had that money; the company did. Read more »
Maurice “Hank” Greenberg, the former American International Group chief executive, has more than doubled the size of his class-action lawsuit against the United States over the insurer’s bailout to roughly $55.5 billion from $25 billion. In an amended complaint filed late Monday in the U.S. Court of Federal Claims, Greenberg’s Starr International Co said it is now seeking damages over Maiden Lane III LLC, a vehicle designed to rid banks of toxic debt underlying transactions with AIG. The claims are in addition to claims that Starr previously asserted over the government’s taking of a 79.9 percent stake in AIG in September 2008, which was eventually swapped for 562.9 million common shares. In the amended complaint, Starr said it is seeking to recover, on behalf of shareholders and the company, $23 billion over the government’s 79.9 percent stake, plus as much as $32.5 billion of collateral it said was given away through Maiden Lane III. It is also seeking unspecified damages related to AIG’s 1-for-20 reverse stock split in June 2009. [Reuters]
The Greenberg of The AIG Story is a cross between Henry Ford, Henry Kissinger and James Bond. When some ski gondolas come loose on a Vermont mountain that he later turns into “one of America’s leading resorts”, he skis down “to warn others and prevent injuries.” When he flies to Vietnam after a hotel fire in Ho Chi Minh City “the victims and their families [are] moved by Greenberg’s presence”. He selects where to put the ashes of Cornelius Vander Starr, the founder of AIG, and builds an 18-hole golf course at his mentor’s country house “in response to requests from guests.” He is barred from AIG’s headquarters, and denied access to personal material including letters from his mother “and medical files for his dog, Snowball”. [FT]
Have you ever wanted to hold a mock trial of Hank Greenberg’s lawsuit over the AIG bailout from the comfort of your own home? If so, you’re in luck, because yesterday AIG filed with a federal court the complete AIG Mock Trial Deluxe Kit. It’s all here:
- A written protocol for conducting the mock trial
- Briefs, reply briefs, and sur-reply briefs from Hank Greenberg’s investment vehicle Starr International, the Treasury, and the New York Fed
- A polite letter from the Department of Justice declining the invitation to attend1
- PowerPoint presentations of both sides2
- A transcript of highly respected lawyers arguing both sides
The mock trial was, of course, conducted by AIG’s board a few weeks ago as part of the board’s consideration of whether to join Greenberg’s lawsuit against the government claiming that AIG’s bailout was an unconstitutional taking of shareholder property. The board, unsurprisingly, went with no, and yesterday it filed the full mock trial kit with the court hearing Greenberg’s claims.
The transcript is a very good read; I will mostly pick out a few amusing points but that shouldn’t detract from the facts that (1) there is a legitimate serious interesting issue here, beyond the “ooh look at the ingrates” surface, and (2) both sides did a good job of arguing it. David Boies, Greenberg’s lawyer, has the harder case – that the government unconstitutionally took 80% of AIG’s equity by entering into a voluntary credit agreement approved by AIG’s board that included a grant of equity – but he does a good job with it, resting his argument largely on Section 13(3) of the Federal Reserve Act (which permits the Fed to lend to non-banks but which does not on its face allow the Fed to, for instance, punitively demand lots of equity in excess of what it needs to compensate it for that lending) and on public statements by government officials to the effect of “AIG’s bailout was harsh because we wanted to make an example of them.” Read more »
Did Hank Greenberg Get Anything Out Of AIG’s Decision Not To Sue The Government With Him?
By Matt Levine
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 »
AIG Directors Could Barely Get Through A Morning Of Pretending They Might Sue The Government
By Matt Levine
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 »
Is AIG going to sue the government for bailing it out? Hahaha no of course not, come on, that would be nuts. So what is this?
The board of A.I.G. will meet on Wednesday to consider joining a $25 billion shareholder lawsuit against the government, court records show. The lawsuit does not argue that government help was not needed. It contends that the onerous nature of the rescue — the taking of what became a 92 percent stake in the company, the deal’s high interest rates and the funneling of billions to the insurer’s Wall Street clients — deprived shareholders of tens of billions of dollars and violated the Fifth Amendment, which prohibits the taking of private property for “public use, without just compensation.”
I say unto you that this meeting is not for “consider[ing] joining” that lawsuit, which is one part of former AIG CEO Hank Greenberg’s so-far-not-particularly-successful campaign to get his $25 billion back from the government. (This part, in the Court of Federal Claims, is still going, unlike the part in a New York federal court that was dismissed.) Rather, it is for humoring Hank Greenberg, and the way you humor people who have lots of high-priced lawyers is by giving their high-priced lawyers a chance to talk to other high-priced lawyers for a long time, with PowerPoint. This paragraph in AIG’s court filing is less “we may join the suit” and more “see Hank we are listening to you really carefully and care deeply about what you have to say now, please, go on, this is a safe space”: Read more »
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 »
A Company Is In The Hole For $182 Billion, Hank Greenberg Can See The Merit In A Congressional Hearing But $2-9BN? Beat It
By Bess Levin
“Many companies have transactions that go bad,” Greenberg said today on “In the Loop With Betty Liu” on Bloomberg Television. “Everybody’s not paraded down to Washington to testify.” “He handled it OK,” Greenberg said of Dimon, 56. “It was really outrageous to have the CEO come down and testify before Congress because of a transaction that didn’t work out well.” [Bloomberg, related]
For Valentine’s Day this year, Fortune put together a slideshow of various executives, analysts, fund managers, and disgraced AIG CEOs posing with their one true loves– their dogs. For the big names who missed the deadline to submit photos, fear not– this feature is clearly going to become an annual thing. For those already mentally directing a photoshoot of yourself and Jamie the Younger, maybe running down Park Ave or shooting hoops at the Garden, you might first consider looking to this year’s pioneering efforts for inspiration.
For instance, in addition to putting your love for each other on display, why not use the opportunity to showcase your credentials, as “Fortune All-Star Analyst” Mike Mayo does here? Read more »
- Use the Bloomberg command
NH BLG_DEALBREAKER <GO>
to access Dealbreaker
