|January 9, 2013
In a story that seems almost too audacious to believe, insurance company AIG, which only just finished paying back its $182 billion taxpayer rescue, is reportedly considering joining a lawsuit against the U.S. government over the terms of that rescue, by far the most controversial and publicly derided of the Wall Street bailout era. The possible legal action comes as AIG is also running a splashy national ad campaign saying “Thank you, America,” for saving the company from total collapse. A federal judge in New York in November tossed out the lawsuit AIG is considering joining, noting that AIG had two options in 2008: Agree to terms of the bailout or go into bankruptcy. It chose the bailout. But the lawsuit continues on a separate track in federal court in Washington and in a federal appeals court.
Former AIG CEO Maurice “Hank” Greenberg initially filed the shareholder suit. There is a corporate governance argument to be made that the AIG board has a fiduciary duty to shareholders to consider joining the lawsuit, as the NYT notes in the story below. But there is an even larger PR argument to be made that doing so would be potentially more damaging to the company’s reputation and share price than failing to take part in any settlement of the Greenberg lawsuit. Greenberg is represented in the suit by prominent attorney David Boies, who famously handled Al Gore’s failed effort to continue a recount in Florida in the 2000 presidential election that eventually went to George W. Bush.