AIG Is Thinking About Suing the Government for Bailing It Out

[Scipio]

Words fail me.  I have an undesired, expensively-earned expertise in federal jurisdiction, and am a fruitloop anarcho-capitalist-libertarian nutjob, and I think that this is some crazy-ass bullshit of the highest order.

However, it does vindicate my general attitude towards the bailouts.

[The Minsky Moment]

The article is misleading.

This isn't about AIG bringing a lawsuit de novo against the Government.  It is about a board meeting in which a shareholder who already has brought a lawsuit against the Government is making a presentation in which he is going to ask AIG to join the lawsuit.

The shareholder is question is Ace Greenberg - who brought two lawsuits - one against the NY Fed in federal court in New york, the second against the Treasury in the Court of Federal Claims in DC.  Both cases were brought as derivative lawsuits - that is, Greenberg asserted the right to bring the case on behalf of AIG regardless of whether AIG's board consented to that or not.

The first case was dismissed, the second however survived a motion to dismiss.  That is - a federal judge ruled that if Greenberg can prove all the facts he says he can prove, then he may have a case.  Now that he got over the hurdle, he is going back to AIG and asking them to reconsider their decision not to support the case.   One reason he is doing that is that the DC judge delayed ruling on a key issue - whether Greenberg can proceed even if AIG's board doesn't support them.

An important thing to understand here is that if AIG's board were to refuse to allow Greenberg to make the presentation, then Greenberg might use that refusal to argue that AIG's board is not acting reasonably and thus he should be allowed to sue even if AIG's board opposes him. (for the legal minded the issue here is demand futility and excusal)  So one cannot draw a firm conclusion from the mere fact that the Board has agreed to let him speak.

[Ideologue]

The important thing is that if the government just kept all the shares they had and bought 8% more, Ace Greenburg would not be in a position to launch a derivative suit.  And the first step toward the new economy would have been taken.

[grumbler]

The important thing is that if the government just kept all the shares they had and bought 8% more, Ace Greenburg would not be in a position to launch a derivative suit.  And the first step toward the new economy would have been taken.

Ah, yes, MinNewEcon.  It works so well in revisionist history and fiction. 

[Admiral Yi]

Thanks Joan, very informative.

[Caliga]

The important thing is that if the government just kept all the shares they had and bought 8% more, Ace Greenburg would not be in a position to launch a derivative suit.  And the first step toward the new economy would have been taken.

You mean the first step toward universal poverty.

[Kleves]

You mean the first step toward universal poverty.

The New Economy will be based on barter of things from "the before times" when magic existed, which made possible such wonders as carriages moving without horses and lights glowing without fire.

[The Minsky Moment]

After giving Greenberg his hearing and conferring on the matter, the AIG Board declined to join the lawsuit.

Looks like they handled this the right way - too bad the ignoramuses in the press gave them grief for it.

[Martinus]

Well, I don't think this is entirely fair to paint Greenberg as "just a shareholder", as he is a former CEO as well.

[garbon]

too bad the ignoramuses in the press gave them grief for it.

I don't feel that way. I was insulted by the blatant ad campaign that AG started up that the article mentions. Like I had a choice, AIG.

[The Minsky Moment]

Well, I don't think this is entirely fair to paint Greenberg as "just a shareholder", as he is a former CEO as well.

His former officer role has no connection to the lawsuit, except for the historical fact that it facilitated his control of the investment vehicle that brought thae case.  He hasn't been CEO for years, and has long been persona non grata with subsequent management regimes.

By giving him the hearing and then saying "no" the Board effectively cut the legs off the derivative part of the lawsuit.

[CountDeMoney]

too bad the ignoramuses in the press gave them grief for it.

They deserve any and all fucking grief they get.