As public fumes, AIG says will not sue U.S. over bailout
By Ben Berkowitz
(Reuters) - Facing anger from Congress and the American people, AIG Inc said on Wednesday it would not sue the U.S. government over terms of the company's multi-billion dollar bailout.
Insurer American International Group had been weighing whether to join a lawsuit filed by its former Chief Executive Hank Greenberg and his company Starr International, which owned 12 percent of AIG before its $182 billion rescue that started in 2008.
Greenberg claims the rescue was unfair to shareholders and that the Federal Reserve Bank of New York charged an excessive interest rate on its initial loan. He is seeking billions of dollars in damages.
AIG said its board had carried out its legal and fiduciary duty to consider joining Greenberg's lawsuit before making its decision. Greenberg has a case pending in the Court of Federal Claims in Washington, D.C., and is also appealing the dismissal of a lawsuit in the federal court in New York.
AIG's Chief Executive Bob Benmosche said in an interview with CNBC that ultimately the public had to trust the company.
"It is not acceptable socially for AIG to have taken this money and to think we can go back and sue the government," Benmosche said.
AIG said it would not pursue Starr's claims nor would it allow Starr to pursue them on AIG's behalf, setting the stage for a fresh legal fight between Greenberg and the company.
The idea that AIG might sue the government struck a raw nerve with the public, which took to the Internet to vent its anger at what it viewed as the company's audacity. The volume of AIG mentions on Twitter rose more than 50-fold on Tuesday, according to Topsy Analytics. Continued...