Starr International

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 »

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 »