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Greenberg Sues United States Over for $25 Billion over AIG Rescue

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AIGMaurice R. Hank Greenberg, the former Chief Executive officer of American international Group Inc. (NYSE:AIG) sued the United States government for $25 billion, alleging the takeover of AIG in 2008 as an unconstitutional move.

Greenberg’s lawyers on behalf of AIG shareholders and Starr International Co. sued the United States and New York’s Federal Reserve Bank, on Monday. The lawsuits filed accuse the New York Fed and Treasury Department of incorrectly acquiring the insurer and using it as a medium to guide billions of dollars to AIG’s partners in trading, including large European and American lenders.

An unusual move is accused by the lawsuit, to push the government to pay the shareholders, who have observed stock prices of AIG, which fell 98 percent since mid 2007. The lawsuits allege that by acquiring about 80 percent stake in AIG in Sept 2008. It was the time when the government had decided to lend the insurer about $85 billion, the government took valuable property from AIG’s shareholders and Starr violating the Fifth Amendment. According to the Fifth Amendment, without just compensation, private property cannot be taken for public use.


Damages of at least $25 million are being looked for by Starr and other Shareholders of AIG. In the lawsuit American International Group is been listed as a nominal defendant, which also seeks damages for the business. A spokesman for the organization refused to comment.

The lawsuit filed against U.S government said that the government, even in the midst of a financial emergency, is not authorized to crush property and shareholder rights. The Treasury Department, which holds majority of AIG’s stakes, said it is examining the case and anticipates defending its actions strongly.

Tim Massad, assistant secretary for financial stability at Treasury, said the actions were legal, necessary and constitutional. He added, it is vital to remember how the government provided AIG with assistance and stopped it from collapsing, in order to prevent the global financial system from melting down.

The treasury currently owns about 77 percent of American International group after selling some shares in May to investors. It is attempting to recoup more over $41 billion by selling remaining shares over the time. In order to repay the major sums of the bailout AIG has sold assets. The treasury at $29 per share sold the first batch of shares. AIG’s share on Monday fell 87 cents, or $percent to $21.

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edliston
Post Written By: Ed Liston

Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.


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Ed Liston

Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing.

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