AFTER WRECKING the U.S. economy, the numbskull who helped cause it, former AIG CEO Maurice “Hank” Greenberg, is trying to get A.I.G. to join his lawsuit against the New York Fed and the federal government, which was reported in a widely read story in the New York Times on Monday.
The reaction in Washington and on Wall Street was swift, meaning that the company is unlikely to join their former boss in what is sure to be a spectacle, because the bad publicity would be epic.
Senator Elizabeth Warren wasted no time in giving Greenberg a piece of her mind, releasing a statement on Monday.
“Beginning in 2008, the federal government poured billions of dollars into AIG to save it from bankruptcy. AIG’s reckless bets nearly crashed our entire economy. Taxpayers across this country saved AIG from ruin, and it would be outrageous for this company to turn around and sue the federal government because they think the deal wasn’t generous enough. Even today, the government provides an ongoing, stealth bailout, propping up AIG with special tax breaks–tax breaks that Congress should stop. AIG should thank American taxpayers for their help, not bite the hand that fed them for helping them out in a crisis.“
When a company accepts a taxpayer bailout to stay in business, it ought to follow the same tax laws followed by companies that aren’t bailed out. In its ongoing efforts to reform corporate tax law, Congress should close this egregious loophole and prevent AIG from continuing to receive a stealth bailout every time it files its taxes.”
Nobody else could have saved A.I.G. but the U.S. taxpayers, something the Daily Beast also noted. Yet the greedy Greenberg is now alleging that the interest rates were punitive.
A.I.G. paid the taxpayers back, including a $23 billion profit.
This is more about Hank Greenberg’s sizable ego and retribution for what happened to A.I.G.
The lawsuit claims that the government and Fed’s bailout functioned as a “backdoor bailout” of AIG’s Wall Street trading partners who were paid at 100 cents on the dollar for their derivatives bets that AIG was not able to cover without government aid. More than $90 billion of the government’s bailout was used to pay off banks that were counterparties with AIG, including $12.9 billion to Goldman Sachs and $8.5 billion to Barclays. An upcoming memoir by Greenberg, cowritten with George Washington University professor Lawrence Cunningham, argues that “the Government seized AIG, using it to funnel staggering amounts of bailout money to Goldman Sachs and other ‘too big to fail’ banks.” [Daily Beast]