Treasury to 'vigorously' defend actions in response to Greenberg claim
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WASHINGTON—The Treasury Department expects to “vigorously” defend its actions in the wake of the near-collapse of American International Group Inc. in 2008, it said in a response to a suit by Starr International Co. Inc. alleging that the government's actions were unconstitutional.
In the suit filed Monday in the U.S. Court of Federal Claims in Washington, Starr—which is headed by former AIG CEO Maurice R. Greenberg—alleges that by taking control of nearly 80% of AIG in 2008, the government took the property and rights of AIG's shareholders without compensation.
Beginning in 2008 “and continuing through at least January 2011, the government ignored the Constitution and singled out AIG common stock shareholders for discriminatory and unlawful treatment in clear violation of the takings, due process and equal protection clauses of the United States Constitution,” according to Starr's suit.
The suit seeks at least $25 billion in damages for shareholders and AIG itself. Later Monday, Starr also sued the Federal Reserve Bank of New York in federal court in New York, holding that the New York bank breached its fiduciary duty to AIG shareholders.
Tim Massad, assistant secretary for financial stability at the Treasury Department, issued a statement defending the government's actions.
“It is important to remember that the government provided assistance to AIG—and stopped it from collapsing—in order to prevent a meltdown of the entire global financial system,” Mr. Massad said in the statement. “Our actions were necessary, legal and constitutional. We are reviewing the lawsuit and expect to defend our actions vigorously.”
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NEW YORK—The U.S. Treasury will be a shareholder in American International Group Inc. for a “very long time,” former AIG chairman and CEO Maurice R. Greenberg said Thursday.
