AIG explains why it did not join Starr lawsuit against U.S.
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American International Group Inc.'s board of directors decided not to join in a lawsuit brought by Starr International Co. Inc. against the federal government over its 2008 bailout of AIG for a variety of reasons, including “the fact that 'a deal is a deal,'” according to a document filed with the Securities and Exchange Commission.
The suit was filed by former AIG Chairman and CEO Maurice R. Greenberg, who now heads Starr. The suit alleges that the terms of the government's rescue of AIG, under which the federal government assumed a nearly 80% stake in the financial services giant, were unfair to shareholders and that the Federal Reserve Bank of New York charged an unfair high interest rate on its initial loan to AIG.
AIG's board initially indicated that it would consider joining the suit, which drew a firestorm of criticism. The board decided Jan. 9 not to join the suit, saying that it would detail its reasons in coming weeks.
According to the Thursday SEC filing, each director spoke and each gave reasons why the company should not join the lawsuit. These included the low likelihood of success, “the potential harm to AIG's goodwill and the positive image that AIG had worked so hard to restore since September 2008 (consistent with the negative reaction by the public, the media, regulators and elected officials even to the board's consideration of the demand), (and) the fact that a deal is a deal,” according to the filing.
The filing also noted that AIG President and CEO Robert Benmosche told the board that AIG “had no choice” but honor the agreement with the government that led to its rescue of AIG. The filing also said Mr. Benmosche held “that suing the United States or FRBNY was not the right thing to do, and that AIG should continue to focus on the future, not the past.”
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AIG's board decides not to join lawsuits against federal government
American International Group Inc.'s board of directors has decided against joining lawsuits filed against the federal government by Starr International Co. Inc. contesting certain aspects of the government's rescue of AIG in 2008.
