The insurance giant, which received $182 billion in bailout money, was legally obliged to consider the suit brought about by its former CEO.
The AIG logo is displayed at headquarter offices in Manhattan's financial district. American International Group Inc. decided today against suing the federal government over the $182 billion bailout that saved the insurance giant from collapse.
American International Group Inc. was put in the awkward position of having to consider joining a lawsuit brought against Uncle Sam by its former CEO, Maurice “Hank” Greenberg.
The suit claims that the terms of the taxpayer-funded bailout were too onerous. The government received a huge stake in AIG when it bailed the company out at the height of the 2008 financial crisis.
AIG has since paid all the money back and notes that the government made a profit of $22.7 billion. The timing could hardly have been worse for AIG.
The company is in the midst of a “Thank You, America” ad campaign to show its gratitude for being rescued from the brink of collapse.
The prospect of the insurer joining the lawsuit had already triggered outrage.
A congressman from Vermont issued a statement telling AIG: “Don’t even think about it.” Comedian Andy Borowitz likened the insurer to somebody suing a fireman for ripping a designer jacket after rescuing them from a burning building.
AIG, which was legally obligated to consider joining the lawsuit, demurred.
The company said it would not join Greenberg’s lawsuit and wouldn’t permit Greenberg to pursue his claims in AIG’s name.
“The majority of directors decided that the reputational damage was greater than the possibility on a long-shot lawsuit,” said John Coffee, a professor at Columbia Law School who specializes in corporate and securities law.
AIG’s CEO Bob Benmosche told CNBC in a televised interview that the company would be better off in the long run without the “headwinds” of the lawsuit and should look forward, rather than focusing on the past.
“It’s not acceptable socially for AIG to take the money and go back and sue the government,” Benmosche said in the CNBC interview. “A deal is a deal.”