Neil Barofsky on the AIG bailout lawsuit.
Jan. 8 (Bloomberg) -- Neil Barofsky, former special inspector for the U.S. Treasury's Troubled Asset Relief Program and a Bloomberg Television contributing editor, talks about the likelihood that American International Group Inc. will join a shareholder suit alleging its 2008 bailout was unconstitutional. AIG's board is scheduled to meet tomorrow to review whether it should join a case brought in 2011 by former Chief Executive Officer Maurice "Hank" Greenberg.
“The AIG board has determined to refuse Starr’s demand in its entirety, and will neither pursue these claims itself nor permit Starr to pursue them in AIG’s name,” the insurer said today in a statement. The insurer’s board met today to hear arguments from Starr and the U.S. over whether the company should join the case, which claims the rescue of AIG violated shareholders’ rights. New York-based AIG received a $182.3 billion bailout to save it from collapse during the 2008 financial crisis, after it fell short of money to pay clients who bought protection against losses on securities linked to home loans.
Allowing the suit to go forward would have been “reputational suicide,” for AIG, James Cox, a law professor at Duke University, said in an interview before the announcement. “You’re essentially suing the hand that had fed you and rescued you from financial collapse, and I don’t think there’s any way to tell that story in any other way.”
The board’s vote was unanimous, AIG CEO Robert Benmosche said in a phone interview. The insurer will file a formal statement in court explaining the board’s decision in the “coming weeks,” according to the statement.
You see that jackass cleaner peeking through the window?
Someone should ask him why he was too busy making sure Goldman got paid 100 cents on the squid dollar instead of asking for a release and cross indemnity for any potential claims and liabilities.