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AIG Thanks America

AIG Thanks America

After paying back the $182 billion bailout it received in 2008, AIG recently launched an ad campaign with the tag line "Thank You America". And that is made all too ironic by the fact that behind the scenes, the firm was contemplating suing the US government.

Needless to say, suing the government would have undercut its 'thank you'. And that the idea was even being entertained made the firm appear 'tone deaf'.

The suit was originally filed back in 2011 by the firm's former CEO Maurice "Hank" Greenburg on behalf of fellow shareholders. His complaint is that the terms of the government's bailout - that it took a 92% stake in the company, and charged a high interest rate (over 14%) - cheated shareholders out of money and violated the 5th Amendment by using private property for "public use, without just compensation". So he is suing the government for $25 billion, and he wanted AIG to join him in the suit.

Of course, the government bailout was the only thing standing between the firm and bankruptcy, and the only thing standing between shareholders and losing their investment. And ultimately, in the face of the financial crisis when it had nowhere else to turn, AIG accepted the government's terms.

The firm didn't take Greenburg's bait. The board met last Wednesday and decided, unanimously, not to join the lawsuit. And to be fair, the board technically had a legal obligation to shareholders to consider the suit. But, also to be fair, delaying their decision as they did only prolonged the process, and cost the government more in legal fees.

It was a good thing that AIG chose not to bite the hand that fed it. Too bad it took a while to decide.