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View Diary: A.I.G. May Sue U.S. Gov’t For $25 Billion As It Airs “Thank You, America!” TV Ad (205 comments)

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  •  As an AIG shareholder (4+ / 0-)

    at the time of the bailout, I have more than a little sympathy for the underlying theory. The value of the stock plunged something like 95% practically overnight, with a 20:1 reverse stock split, and with no warning at least to retail investors. At the time I wondered about the 5th Amendment "takings" argument.

    The best counter-argument seems to be that in the absence of a bailout, AIG would have gone bankrupt (due to credit default swaps going bad) and taken out most of the rest of the financial sector with it, so the value of the stock would have plunged anyway.

    However, as far as I can tell (having watched the company for 30 years, as my ex-husband worked there until 1996) the underlying litigation here is part of the ongoing pissing contest within AIG between Greenberg (and cronies) and the current Board, in which Greenberg continues to try to destroy the company in retaliation for having forced him out. Since the current Board is not friendly to Greenberg, I consider the chance that they will join his lawsuit pretty remote.

    Greenberg may (or may not) have an action against the Board for selling out the shareholders too cheap. I can't see that he gets anywhere on a theory that the US Government had some sort of obligation to bail out AIG on terms more favorable to the shareholders than what the then-AIG Board was willing to agree to.

    •  How could you have sympathy for the theory? (2+ / 0-)
      Recommended by:
      bobswern, slothlax

      the stock plunged because of the crappy management and behavior of the board and executives at AIG.  The government didn't take anything - they saved AIG.  I'm lost on how sympathy for AIG shareholders leads to a lawsuit against the US govt.

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