Remember a couple of months ago when former AIG CEO and current dog fancier Hank Greenberg sued the government for $25 billion because it had stolen AIG from him? We all had a good giggle at that but some people think he wasn’t entirely crazy. One of those people is friend of Dealbreaker and Stanford GSB student Ed Couch, who feels Hank’s pain but also has some doubts about his lawyers’ efforts on the case. We pass along his views on the complaint in case you are (1) Hank’s lawyers (give Ed a call!), (2) particularly keen on Hank getting or not getting, as the case may be, his deserved or undeserved $25bn from AIG’s government captors, or (3) just generally interested in the wonky mechanics of equity-linked voting and exchange procedures, which YOU DAMN SURE KNOW I AM but the rest of you can keep your own counsel. Here’s Ed: Read more »
The complaint in Hank Greenberg’s lawsuit against America is now online, and strange and entertaining in equal measures. I’m pretty sure Occupy Wall Street will be interested to hear his theory that the Constitution allows Fed bailouts of struggling financial institutions, but requires those bailouts to be much gentler than the one handed to AIG.
There is some sensible stuff here. Greenberg’s suit makes good use of the SIGTARP report finding that the government didn’t exactly conduct hard-nosed negotiations with AIG’s CDS counterparties. Instead, it bought off the assets covered by CDS at par (even though some of the counterparties might have accepted a haircut), tore up the CDS contracts, and waived any claims AIG might have against those counterparties. And the description of how the government avoided and ignored legal requirements to get a shareholder vote to authorize new shares for the government, and kind of maybe lied about it a bit in disclosure documents, is kind of interesting for shareholder-voting nerds, of whom there are about five and I am one.
But that’s all just a political smoke screen: lots of people are good and mad that the government funneled too much money through AIG to Goldman Sachs or Deutsche Bank or whatever, but pretty much zero of them think that money should have gone to Hank Greenberg instead. And lying in disclosure documents, like insider trading, isn’t a crime if the government does it.
Greenberg’s case really boils down to two claims. First is the constitutional argument that the bailout-in-exchange-for-equity was unconstitutional because “everyone else got a no strings attached bailout, so we should have gotten one too.” And “everyone” included “Libya”:
Throughout the global financial crisis, the Government allowed many domestic and foreign institutions access to the discount window. … [D]iscount window loans peaked at about $110 billion at the end of October 2008. Foreign banks borrowed approximately 70% of that amount; for example Dexia SA of Belgium borrowed about $33 billion; Dublin-based Depfa Bank, Plc, subsequently taken over by the German government, received approximately $25 billion; Bank of Scotland borrowed $11 billion; and Arab Banking Corp., 29% owned by the Libyan Central Bank at the time, received 73 different loans. Wachovia also borrowed $15 billion, and numerous investment banks were also granted access. At no time did the Federal Reserve Board require that it be given control of, or an equity stake in, these institutions. … If AIG had been given similar access to the Federal Reserve’s discount window or other sources of liquidity like these other institutions, AIG would easily have met its liquidity needs.
Well, okay. Maybe! The legal theory of “the constitution requires that anything you give to Libyans you have to give to me” is a bit untested – if true, I am planning to assert my Constitutional right to call down air strikes on my enemies (who are legion). Read more »
Hank Greenberg Estimates If The Government Had Minded Its Own Damn Business Back In ’08, AIG Would’ve Been At Least $25 Billion Ahead Right NowBy Bess Levin
Remember September 2008? Remember how American International Group was doing in September 2008? Kind of not so hot? Maybe needed the government to front it some cash to the tune of $85 billion? Maybe needed even more money after that, even though they swore they just needed that one hit, just to get them by? Maybe would’ve been- how to say this?- fucked, if not thrown a bone? Well Hank Greenberg’s been thinking about September 2008, for a while now, and what he’s concluded is that as an AIG shareholder, he was screwed, big time. And, the window of opportunity for apologies being long closed, he figures the only way he can be made to feel better about the situation is for the US to cough up $25 billion. At least. Read more »
First off, let me start by putting this out there: Team Rebellion doesn’t need your money. As you can plainly see from the photo at left, if this whole hedge fund thing doesn’t work out, the principals can easily find work as a boy band. Having said that, they’re going to keep at this money biz a bit longer and would love to have you along for the ride. Here are the relevant details:
* The Rebels are like a teeny tiny RenTec, sans the Pall Malls.
* They use Artificial Intelligence to invest, being of the mind that computers = smart, man = stupid (“It’s pretty clear that human beings aren’t improving,” said Spencer Greenberg, 27 years old and the brains behind Rebellion’s AI system. “But computers and algorithms are only getting faster and more robust.”)
* You could try to do what they do at home, but you would most likely die.
“No human could do this,” said Michael Kearns, a computer-science professor at the University of Pennsylvania who has used AI to invest at firms such as Lehman Brothers Holdings Inc. “Your head would blow off.”
Maria Bartiromo: So you think Goldman is to blame for AIG?
Hank Greenberg: Oh yeah. And there’s more to come out.
Earlier: “We’re dealing with a jigsaw puzzle where all the pieces are not in the box. Bit by bit, we’re getting the pieces. The pieces are failing into place and the picture on the face of the puzzle is not a pretty picture.”
Hank has managed to grease the requisite regulatory palms to get out from under the thumb of that whole unpleasant AIG business you may have heard about. (Vicious lies!) More importantly, Snowball will not have to worry about being the ward of some stranger during any sort of incarceration for Hank. Bloomberg explains:
Maurice “Hank” Greenberg, who led American International Group Inc. for 38 years until his ouster amid state and federal accounting probes in 2005, will pay $15 million to settle U.S. claims he manipulated the insurer’s earnings.
“This settlement brings finality for Hank,” said Jacob Frenkel, a former federal prosecutor now practicing law at Shulman Rogers in Potomac, Maryland. “A settlement means no admission, no denial, and one day of news. When they fight the charges, every event in the case is another storyline.”
So in addition to avoiding painful and disruptive adoption or dog-sitting arrangements, the daunting prospect of a life of Ruth Madoff-like notoriety (and shame) seems avoidable for Snowball and owner. We are greatly relieved.
Hank Greenberg, Ex-AIG Chief, Pays $15 Million to End SEC Probe [Bloomberg]
Former AIG CEO Hank Greenberg must be feeling a lot like Colonel Jessep. AIG sued Greenberg for his role in canceling a deferred compensation plan for executives and running away with millions of AIG shares which were then sold over time for close to $4.3 billion. After a testy day on the stand yesterday, AIG’s attorney turned up the heat today looking for Greenberg to admit he ordered the code red and broke his fiduciary duty to the executives.
We were going to spend some time making fun of the fact that the cost of the fight to seize Snowflake’s not-quite-a-billion-dollar inheritance from AIG’s Hank Greenberg is fast approaching the $120 million paid to AIG employees in Bonuses and other compensation earlier this year, except that latter figure has been revised upward just a bit in the interim- from $120 million to $454 million. Of course, this latest figure has little to do with the accursed AIG Financial Products division (AIGFP) anymore, instead representing “other forms of compensation across all of its businesses” as opposed to “what was paid to executives at the company’s headquarters and high-ranking officials at various AIG units.” But, seriously, what kind of fun is it to say “Quickly approaching the sums spent by AIG on “executives at the company’s headquarters and high-ranking officials at various AIG units”?
AIG’s Bonuses Inflate To $454m [The New York Post]
He’s probably just going to enjoy a quiet evening at home with Snowflake, but that doesn’t mean you can’t help the li’l fella ring in his 84th by starting a letter writing campaign to your congressmen and local media outlets encouraging them to get the word out via megaphone that none of this AIG shit was his fault, and lobby Oprah, who’s been holding out on having him on, to let Big G clear his name.
Believe us. We moved heaven and earth to try to get some on-the-record comments from the likes of Henry Blodget, Dick Grasso and Hank Greenberg. These guys are staying quiet, perhaps afraid they’ll jinx the best thing that has ever happened to them.
A handful of Spitzer’s former adversaries declined to comment on the stunning turn of events, first reported on the New York Times website, or they did not return requests for comment.
“It would be totally inappropriate for me to comment,” former New York Stock Exchange C.E.O. Grasso told Portfolio.com. Spitzer sued in 2004 to have Grasso return the bulk of his nearly $140 million pay package.
Former American International Group chairman and C.E.O. Hank Greenberg, who was forced to resign under pressure from Spitzer, was similarly tight-lipped.
“Mr. Greenberg will not be saying anything about this,” his spokesperson said.
Former Wall Street analyst Blodget, whom Spitzer targeted for sending private emails that conflicted with his public stock analysis, did not return requests for comment.
Wall Street on Spitzer [Portfolio.com]