AIG will consider suing U.S. for bailout

Jim Puzzanghera / Los Angeles Times /

Published Jan 9, 2013 at 04:00AM

WASHINGTON — At the same time American International Group Inc. has been running high-profile ads thanking America for the bailout that saved the company, the insurance giant reportedly is considering joining a shareholder suit against the U.S. government for the rescue.

The AIG board will meet today and could decide to join a $25 billion suit led by former chief executive Maurice “Hank” Greenberg, the New York Times reported.

The suit by Greenberg’s Starr International Co. alleges that the 2008 bailout of AIG by the Treasury Department and Federal Reserve Bank of New York in which the government received an 80 percent ownership stake in the company violated the rights of shareholders. The ownership stake later climbed to 92 percent.

The suit in the U.S. Court of Federal Claims in Washington alleges that the bailout cost shareholders billions of dollars and violated the Fifth Amendment, which prohibits the taking of private property for public use “without just compensation.”

A similar suit against the New York Fed was thrown out by a New York federal judge in November. But Judge Thomas Wheeler of the Court of Federal Claims had ruled in September that Greenberg’s case against the U.S. government could go forward.

A court filing said the AIG board expected to make a decision by the end of January.

An AIG spokesman declined to comment Tuesday. A Treasury Department spokesman also would not comment.

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