Hank Greenberg Sues AIG Over a Problem He Helped Create

Mar. 6.09 | About: American International (AIG)

Former AIG CEO Hank Greenberg suing his former company for "misleading investors" as a result of a $2 billion loss from AIG stock, has to be the most ridiculous thing I've come across in some time. How in the world can a sane person think that they have standing to sue someone for a problem that they created themselves? It's the functional equivalent of someone setting a fire bomb in a building on a 4-yr timer, and then coming back after the building has burned to the ground and blaming the fire inspector for not discovering it.

I wonder how Hank was even able to file the lawsuit with a straight face.

Hank may have left the company four years ago, but by the time of his departure in March of 2005, the die had already been cast with respect to the company's future. The division most responsible for destroying the company had already been in existence for eighteen years, and had been selling "free money CDS contracts" for seven. Furthermore, 2005 marks the near peak of activity for the other division responsible for destroying AIG, the "AIG investments unit" that bought billions of dollars worth of subprime mortgage bonds for its securities lending business.

Now perhaps Hank has an argument in terms of the company's disclosures to investors, but when you're responsible for creating the problem, you don't have any standing to call yourself a victim when things don't go right. Not to mention the fact that the situation makes Hank seem rather delusional because he's more or less claiming that there was nothing wrong with the way AIG did business, and that his successor merely mismanaged things.

No matter how you look at the whole thing, it is beyond ridiculous.

You can read more on the lawsuit here.

Disclosure: at the time of publishing the author didn't own a position in any of the companies mentioned in this article; the ideas expressed are solely the opinions of the author and shouldn't be viewed as financial or investment advice.