Tuesday, November 22, 2011

Former AIG CEO Sues Claiming Taxpayers Need To Pony Up $25 Billion More

Former AIG CEO Sues Claiming Taxpayers Need To Pony Up $25 Billion More

By Ian Millhiser on Nov 22, 2011 at 12:00 pm

For many years, insurance behemoth AIG was so poorly managed that the American taxpayer eventually had to invest nearly $70 billion in the incompetently run company to prevent its collapse from taking the entire U.S. economy along with it (much of this money has since been repaid). Former AIG CEO Maurice Greenberg, however, thinks that the American people haven’t done enough to protect his massive fortune, so his company filed a lawsuit demanding even more taxpayer money:

Starr International, the company run by the former head of insurance giant American International Group (AIG), has filed a $25 billion lawsuit against the federal government, arguing that the takeover of the insurance company at the height of the financial crisis was unconstitutional.

When the government took an 80 percent interest in AIG during the financial crisis, it did so without “due process or just compensation,” in violation of the Fifth Amendment of the Constitution, according to the suit filed Monday in the U.S. Court of Federal Claims.

The unbridled arrogance of this lawsuit is astonishing. While the wealthy insurance baron is correct that the Constitution does not allow private property to be taken “without just compensation” — a requirement that generally requires the government to pay a property owner the fair market value for their property — his legal complaint can be rebutted with just one chart:

[...] [see original article for chart showing AIG's stock prices]

That’s the near total collapse of AIG’s stock price immediately after investors learned that the insurance giant was little more than a smoking pile of toxic assets. So, at the time when the federal government took a supermajority interest in AIG, the fair market value for this interest was only slightly north of zero. Rather than receiving zero dollars for AIG’s mix of toxic sludge, however, AIG received tens of billions of dollars from the American people.

Now, however, its former CEO wants even more.


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