It reached out its hand, but after much consideration, A.I.G. did not extend its middle finger to the United States, which it was thinking about suing over the terms of the $182 billion bailout that prevented it from going under in 2008. After a board meeting Wednesday that capped off what DealBook described as “more than a year of suspense over what A.I.G. would do,” the company decided it wanted nothing to do with the suit, filed by former C.E.O. Maurice Greenberg on behalf of its shareholders, which sought to recover some of the $22 billion in profit A.I.G. paid the government under the terms of the bailout. “After the meeting, which lasted all morning, the board voted unanimously to steer clear of the case. It also decided to ask Mr. Greenberg to forgo legal claims in the company’s name.”
Why in the world did A.I.G. even consider so seriously an action that some members of Congress said would make it “the poster company for corporate ingratitude and chutzpah?” The Wall Street Journal explains: In declining to support the litigation, AIG faces two main risks: missing out on any upside if the suit succeeds, and litigation over its decision. By conducting what directors saw as a robust review process, AIG was attempting to insulate itself from any challenges.”
Greenberg’s position is that the terms of the bailout were unfair and that “the government is not empowered to trample shareholder and property rights even in the midst of a financial emergency. Representatives from the Treasury Department and Federal Reserve Bank of New York explained at Wednesday’s meeting where they made their case against A.I.G. joining the suit, per DealBook. “The government argued that Mr. Greenberg’s claims were frivolous, as the company’s only alternative was bankruptcy — a far worse outcome for shareholders.” Anyway, avoiding a reputation as the company that bit the hand that nursed it back to life has got to be worth at least $22 billion in public relations.