* Weighing lawsuit by former CEO over bailout
* Critics demand AIG drop fight
* Shares up in early trade
By Ben Berkowitz
Jan 9 The board of American International Group
Inc met on Wednesday to consider a lawsuit against the
U.S. government over the terms of the company's bailout, a
discussion directors defended as their responsibility but one
that critics condemned as the height of ingratitude.
AIG is weighing whether to join a lawsuit filed by its
former chief executive, Hank Greenberg, and his company Starr
International, which owned 12 percent of the insurer before its
Greenberg alleges the rescue was unfair to shareholders, and
that the Federal Reserve Bank of New York charged an excessive
interest rate on its initial loan. He has sought billions of
dollars in damages.
The idea AIG might sue the government struck a raw nerve
with the public, which took to the Internet to vent its anger at
what it views as the company's audacity. The volume of AIG
mentions on Twitter rose more than 50-fold Tuesday, according to
Former Obama administration adviser Austan Goolsbee said,
"GO SCREW YOURSELVES" in a multi-tweet tirade. Comedian Andy
Borowitz drafted a mock letter from the company to taxpayers,
asking for more bailout money to pay for the cost of the
lawsuit. Dozens of obscene comments were aimed at Chief
Executive Robert Benmosche.
And those were the gentler barbs. The New York Daily News
ran an editorial cartoon in which a lifeguard saves a drowning
man with "AIG" on his belly. When the lifeguard asks the man how
he feels, the victim says, "like suing you."
The vitriol was just like late 2008 and early 2009, just
after the bailout, when AIG employees hid ID badges and their
families were threatened amid an uproar over post-rescue
A group of congressmen led by Vermont Democrat Peter Welch
sent AIG's chairman a letter late Tuesday, advising, "Don't do
it. Don't even think about it." Other members of Congress
AIG took to Twitter to defend itself, saying it was legally
obligated to at least consider legal action. But its defense
mostly fell on deaf ears.
The board meeting began Wednesday morning and was still in
progress, a spokesman said. A decision is expected by the end of
MORE TROUBLE THAN IT'S WORTH?
Securities experts generally agreed that AIG's board was
obliged to at least consider the prospect, though they also said
a lawsuit was more trouble than it was worth.
"Given where AIG is now in its recovery and trying to become
a more aggressive firm going forward, I can't see any drain of
executive time is going to be worth that for AIG," said James
Cox, a professor of corporate and securities law at Duke
University School of Law.
The government rescued the company from the brink of
bankruptcy in September 2008 with a bailout that ultimately
topped $182 billion. After a recapitalization deal closed in
early 2011, the U.S. Treasury owned 92 percent of AIG.
Treasury sold the last of that stake in mid-December. All
totaled, the government has said it earned a return of $22.7
billion on the rescue.
AIG shares rose 0.4 percent to $35.81 in morning trading.
The stock lost half its value in 2011 but then rose more than 50
percent in 2012, as it showed consistent profitability.