People walk past the American International Group building in the financial district after the government bailed out the insurance company on September 17, 2008 in New York City. The U.S.'s two-year, $85 billion loan was in exchange for an 80% stake in the insurance company.(UPI Photo/Monika Graff) | License Photo
NEW YORK, Jan. 9 (UPI) -- American International Group said it will not join a lawsuit against the U.S. government over a $182 billion rescue shareholders said was unfair to the company.
AIG board members met Wednesday in New York to hear arguments for and against joining the lawsuit, brought by former Chief Executive Officer Maurice Greenberg, a major shareholder who filed suit in 2011, contending the bailout paid off creditors in full, leaving AIG with a loan with 14 percent interest, which required selling major assets to pay off.
News that the board was considering joining the suit -- as a time when AIG is running an ad campaign with the tag-line "Thank you, America," for the bailout -- touched off protest among the public and some elected officials. AIG board members said they were obliged to hear arguments on behalf of shareholders.
"Don't do it. Don't even think about it," said a letter signed by Democratic Reps. Peter Welch of Vermont, Michael Capuano of Massachusetts and Luis Gutierrez of Illinois, as the AIG board was to hear arguments.
"AIG became the poster company for Wall Street greed, fiscal mismanagement, and executive bonuses -- the taxpayer and economy be damned," the lawmakers' letter to AIG Chairman Robert Miller said. "Now, AIG apparently seeks to become the poster company for corporate ingratitude and chutzpah.
"Taxpayers are still furious that they rescued a company whose own conduct brought it down," the letter said. "Don't rub salt in the wounds with yet another reckless decision that is on par with the reckless decisions that led to the bailout in the first place."
After a meeting that lasted through the morning, the AIG board rejected joining the lawsuit and requested that Greenberg drop the legal action taken in the company name, The New York Times reported.
The lawsuit seeks $25 billion in damages. AIG's ad campaign notes that the government made a $22 billion profit from fees and interest paid for the bailout loan.
The lawsuit argues the bailout terms violated the Fifth Amendment, which protects against abuse of government authority, records cited by the Times and other news organizations indicate.
The alleged constitutional abuse the lawsuit focuses on is depriving shareholders of private property "without just compensation."
AIG fully repaid its $182 billion bailout only weeks ago.
The board meeting included a lengthy presentation from lawyers for Greenberg, arguing in favor of joining the lawsuit. They were to be followed by representatives of the U.S. Treasury Department and the Federal Reserve Bank of New York, the bailout architects, arguing against the lawsuit, The Wall Street Journal said.
Before the meeting, Sen. Elizabeth Warren, D-Mass., said in a statement, "Taxpayers across this country saved AIG from ruin, and it would be outrageous for this company to turn around and sue the federal government because they think the deal wasn't generous enough.
"Even today, the government provides an ongoing, stealth bailout, propping up AIG with special tax breaks -- tax breaks that Congress should stop. AIG should thank American taxpayers for their help, not bite the hand that fed them for helping them out in a crisis."
AIG CEO Robert Benmosche, who succeeded 87-year-old Greenberg, said in a news release the 12-member board had a fiduciary and legal responsibility to consider the lawsuit "in a fair, appropriate and timely manner."
He had said the board was expected to make a decision in "the next several weeks," but AIG put the furor to rest quickly.
"In considering and ultimately refusing the demand before us, the board of directors properly and fully executed our fiduciary and legal obligations to AIG and its shareholders," AIG Chairman Robert Miller said in a statement.