Should AIG Pursue Lawsuit Against the Government That Saved It?

They say the surest way to lose a friend is to lend him money. And so it goes with the latest twist of fate that could see American International Group (AIG) suing the very same government that saved it five years ago with a $182 billion rescue package. As shocking as it seems (AIG May Sue Its Savior), there's a legitimate legal claim lurking beneath the surface.

As my co-host Jeff Macke and I discuss in the attached video, the $25 billion suit being filed against the government was launched in 2011 by former AIG CEO Hank Greenberg, the 87-year-old billionaire who ran the global insurance conglomerate for 40 years and still owns a large stake in the company. While Greenberg's grievances are many and well known, he's essentially challenging the scope and cost of the government's ad-hoc bailout in the midst of the financial crisis and wants AIG to join in and get its shareholders their due.

That's where the new CEO and board come in. They must decide whether to look greedy and bite the hand that fed them or to look stupid (or unconcerned) about its fiduciary responsibility to shareholders and, thus, risk being sued in return. It seems obvious to us that AIG has no choice but to allow the courts to decide whether there is merit to Greenberg's case. The trick will be in how they handle it and explain it to the public.

As it stands, the company is already running a "Thank You, America" ad campaign that touts the fact that AIG ''paid back every dollar" plus $22 billion in interest and has gotten back to the more laudable business of rebuilding the country after disasters. I am certain the creative minds on Madison Avenue could craft an equally compelling message to succinctly explain the complexity of this seemingly unseemly behavior. Failing that, Macke suggests AIG might want to take a note from the movie My Cousin Vinny and put forth a completely unqualified defense.

Ultimately, the suit will proceed and could even succeed, which is not necessarily a bad thing given the speed at which things were handled and the almost arbitrary manner in which certain assets were seized and sold — or the price at which contracts were settled. Either way, a look inside the process would be revealing, albeit clearly hard to stomach.

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