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View Diary: Sen. Elizabeth Warren gives thumbs down to AIG's possible suing of taxpayers for bailing it out (125 comments)

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  •  Don't you have to get permission to sue the (5+ / 0-)

    government?

    •  Sovereign immunity (6+ / 0-)

      I'm not sure what theory they're proceeding on, though.  Their lawyers must have some basis for arguing that the federal government has waived its sovereign immunity with respect to these claims.

      "Ça c'est une chanson que j'aurais vraiment aimé ne pas avoir écrite." -- Barbara

      by FogCityJohn on Tue Jan 08, 2013 at 01:13:20 PM PST

      [ Parent ]

      •  Could it possibly be bill of attainder? -nt (0+ / 0-)
      •  All they need is a calculation that the (3+ / 0-)

        Government will seek to settle rather than fight. And given we've just seen the drug- and terrorist-money launderers get an easy-to-absorb fine, (same with fraud fraud fraud fraud and then fraud) ...

        they've got a good chance of getting some billions.


        The Internet is just the tail of the Corporate Media dog.

        by Jim P on Tue Jan 08, 2013 at 01:58:36 PM PST

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        •  Noted. Can we PLEASE fire Eric Holder now? (5+ / 0-)

          "When in doubt, do the brave thing." - Jan Smuts

          by bunnygirl60 on Tue Jan 08, 2013 at 02:29:40 PM PST

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        •  The gov't hands are not clean here (4+ / 0-)

          Wasn't AIG about to deny payout or at least give a 40% haircut on some swaps due to misrepresentation of the underlying deals, the value, the risk, and the collusion with the ratings agencies?  The fed moves in and orders AIG to payout 100 cents on the dolllar.
          The gov't will not want discovery and trial on this deal, although it would be enlightening for the rest of us.

          These capitalists generally act harmoniously and in concert to fleece the people, and now that they have got into a quarrel with themselves, we are called upon to appropriate the people's money to settle the quarrel. Abraham Lincoln

          by Nailbanger on Tue Jan 08, 2013 at 02:33:16 PM PST

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          •  One criticism of the AIG bailout was that it was (7+ / 0-)

            really a bail-out of Goldman-Sachs & other Wall St biggies who were on the other side of all the CDSwaps AIG had sold.  Although I think some bailout of AIG made sense given its size, it could've been structured so that GS et al. bore some of the cost since they were the ones who had made the bad bets by having AIG as a counterparty in a type of deal that they knew AIG really wasn't expert at.   Both GS et al. & AIG were being insanely reckless with these CDSWs, but only the AIG shareholders to some degree and the US taxpayer ended up with the losses.  

            Government of the what, for the what, and by the what?  

            P.S.  I've read a ton of books on the crash, but, if you haven't read it yet, "The Big Short" still wins by many lengths the race for best combination of entertainment & informativeness.  

      •  We've waived immunity for contract and tort (1+ / 0-)
        Recommended by:
        judyms9

        claims, and other assorted stuff, per statute.

        •  Yeah, but which statute? (0+ / 0-)

          The FTCA, as Loge suggests?  Or some other?  For the FTCA to work, I think you'd have to plead a cause of action that would be recognized under state law, but I'm certainly no expert on that.

          In any event, you have to find an explicit waiver, and I'm not sure what that would be.

          "Ça c'est une chanson que j'aurais vraiment aimé ne pas avoir écrite." -- Barbara

          by FogCityJohn on Tue Jan 08, 2013 at 05:50:25 PM PST

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      •  It's easy: Even though the company was bailed out (4+ / 0-)

        preventing a total collapse in which investors would have lost their entire stake, they feel that they are owed additional money from the tax payers based on money they think the might have gotten had the government bailed out AIG differently, the moon had turned blue, and all left-handed, red-headed baseball players had hit home runs on the same day. So there's THAT incontrovertible proof that Obama owes them whatever they demand.

        Case closed!

      •  FTCA? (0+ / 0-)

        Maybe sue Geithner personally under Bivens?

        Actually, if the defendant is the NY Fed, the suit is prosbly easier, jurisdictionally.

        Difficult, difficult, lemon difficult.

        by Loge on Tue Jan 08, 2013 at 03:09:36 PM PST

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        •  Is the Fed not covered by sovereign immunity? (0+ / 0-)

          I hadn't heard of that.

          "Ça c'est une chanson que j'aurais vraiment aimé ne pas avoir écrite." -- Barbara

          by FogCityJohn on Tue Jan 08, 2013 at 05:48:44 PM PST

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          •  found the answer: (1+ / 0-)
            Recommended by:
            FogCityJohn

            28 U.S.C. 1491:  there's jurisdiction in the court of federal claims, which is where the suit was brought.  Starr International Co. v. U.S., 1:11-cv-00779, U.S. Court of Federal Claims.  

            There was earlier litigation against the federal reserve bank of new york in district court by Greenberg.  He cited 12 U.S.C. § 341, which does seem to be determinative.  The FRBNY didn't assert immunity, but rather preemption of the common law claims, on the basis of being an instrumentality of the federal government.  My intuition was that since the FRBNY engages in open-market operations, it would have to be able to sue and be sued, but only in federal court.

            Difficult, difficult, lemon difficult.

            by Loge on Tue Jan 08, 2013 at 06:19:56 PM PST

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            •  That's the Tucker Act. (0+ / 0-)

              Thanks.

              So this must be a contract claim seeking nothing other than monetary damages from the U.S. government.  Those are the only kinds of suits the Court of Federal Claims can hear.

              "Ça c'est une chanson que j'aurais vraiment aimé ne pas avoir écrite." -- Barbara

              by FogCityJohn on Tue Jan 08, 2013 at 09:56:26 PM PST

              [ Parent ]

    •  Yes and no: (8+ / 0-)

      The shareholders sued the Fed on the ground that it had "taken over" the company and failed to do a good job for the shareholders:

      http://www.newyorklawjournal.com/...

      A federal judge in Manhattan has dismissed a $25 billion lawsuit filed by Starr International, an insurance company run by former American International Group CEO Maurice "Hank" Greenberg, against the Federal Reserve Bank of New York over its 2008 bailout of AIG.

      Southern District Judge Paul Engelmayer (See Profile) yesterday rejected Starr's arguments that the bailout was an illegal takeover of multinational insurance company AIG and a "backdoor bailout" for other financial firms that did business with it.

      Engelmayer further ruled that Delaware law could not apply to the Federal Reserve Bank because the bank is a federal instrumentality "entrusted with responsibility for maintaining the stability of the financial system" with "specific powers to be deployed when the economy is in difficulty."

      Starr's suit also alleged the bailout violated the takings, due process and equal protection clauses of the U.S. Constitution, though it abandoned those claims in the New York lawsuit and is pursuing them in a separate suit in the Court of Federal Claims in Washington, D.C. That suit, which is in the discovery stage, also seeks $25 billion.

      So what's left is, an action on behalf of the corporation in the Court of Claims on the ground of a "taking".   However, shareholders normally can't sue on behalf of the corporation: that's the management's job, and if the board of directors decides the suit is not in the corporate interest, it ends there.
       

      One piece of free advice to the GOP: Drop the culture wars, explicitly.

      by Inland on Tue Jan 08, 2013 at 01:25:09 PM PST

      [ Parent ]

      •  Sorta. (1+ / 0-)
        Recommended by:
        Creosote

        There's a strong presumption that decisions by directors that are unaffected by conflict of interest are non-actionable by shareholders (this is the "business judgment rule").

        But it's a presumption, not a conclusion, and as such can be overcome: a truly terrible decision that prejudices the interests of the shareholders can result in liability for the directors, even if they "decide the suit is not in the corporate interest."

      •  I was thinking about a shareholders derivative (0+ / 0-)

        action, and I think it's fair to say that unless the board decides the suit is in the corporation's best interest and takes it over, it won't go any further.   The shareholder/plaintiffs demand some sixteen million pages of documents from the USG: that's expensive stuff.

        One piece of free advice to the GOP: Drop the culture wars, explicitly.

        by Inland on Tue Jan 08, 2013 at 02:24:46 PM PST

        [ Parent ]

      •  Well, (2+ / 0-)
        Recommended by:
        judyms9, Laconic Lib

        shouldn't the shareholders loss be measured against what they would have had had the government done nothing?  That is, shareholders would have lost pretty much all their holdings, and now they are in a far better position than otherwise.

        This is assuming that the "taking" claim is not bullshit, which it totally is.  That one's not making it past the dismissal stage.  

        Maybe there ought to be a shareholder suit against Greenberg -- who really caused this mess.  That's got a lot more merit.  [I've no idea if it could ultimately win, of course, but he's far more responsible for the shareholder's losses, if any, than the government.)

      •  All we can be certain of (1+ / 0-)
        Recommended by:
        Creosote

        is that, had a capitalist CEO come in and run the company into the ground, no one would be getting sued just because he bailed after six months with a multi-million dollar golden parachute and more millions in solid gold stock options. Cause, Freedumbz!

        This is just lawyers thinking they can roll the government to steal a few million dollars from the taxpayers. Again.

        And why should we imagine they are wrong? It's certainly worked before.

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