Wednesday, January 9, 2013

(Opinion) AIG Lawsuit: A Lot of Nerve




 It is safe to say that financial institutions worldwide are not the most popular institutions in the current climate and AIG’s shocking consideration of a law suit against the US government is a key case study of why. AIG were over a barrel in 2008 when left to hold one the largest bags in the history of financial speculation after insuring risky loans against default thought to be of triple A value in the US housing market  forcing the US government  to bail the insurance company out. The situation was so bad that government officials “feared its collapse would wreck the financial system”[1].

AIG received the most cash out of all the companies that were bailed out in 2008 making even considering joining a lawsuit filed by its former chief executive Maurice Greenberg reprehensible. The reaction to AIG considering joining the lawsuit has been met with both shock and anger by taxpayers and Washington with  congressmen Peter Welch (D-Vt) and Michael Capuano (D-Mass) incensed enough to send a stern letter to AIG chairman Robert Miller telling him “don’t even think about it”[2]. The letter continued in admonishing the company stating that:

“Taxpayers are still furious that they rescued a company whose own conduct brought it down. Don’t rub salt in the wounds with yet another reckless decision that is on par with the reckless decision that led to the bailout in the first place.”[3]

Robert Reich shared his view through his twitter account and posited that AIG should be sued “for stupidity”[4]. While there is no doubt that there are grounds for such a lawsuit, the greater charge that should be made against the insurance company is greed and ingratitude. The company was in dire straits when the government stepped in and rescued it from the ineptitude of its own management and insurance policy.

There was protests in the streets at the time when AIG where bailed out and the ill will garnered from this has not gone away making AIG’s pondering over the lawsuit even worse.  AIG has revealed that it has ‘three options’ but in reality it only has one, rebuff the temptation to join its former employee in suing the government that saved it from ruin and gave it enough time to return to profitability or face a future of a hostile public and government should it ever get in trouble again,   

In sum, AIG was not the most popular financial giant in the land of the home and the brave to say the least before this story and certainly won’t after it as it risks drawing the ire of both the public and the government in one stroke.



[1] Guardian.co.uk, 2013, AIG considers joining lawsuit against US  government over $182bn bailout, http://www.guardian.co.uk/business/2013/jan/09/aig-lawsuit-us-government-bailout
[2] Quoted by Fox News,2013, Lawmakers outraged after AIG announces potential suit against US over bailout, http://www.foxnews.com/politics/2013/01/09/lawmakers-outraged-after-aig-announces-it-is-weighing-joining-suit-against-us/
[3] Ibid
[4] Ibid

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