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Rescued by a Bailout, A.I.G. May Sue Its Savior

dealbook.nytimes.com

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Re: Rescued by a Bailout, A.I.G. May Sue Its Savior

#41

Post by hristov »

sudonim wrote: post #10

From the article: "It contends that the onerous nature of the rescue — the taking of what became a 92 percent stake in the company, the deal’s high interest rates and the funneling of billions to the insurer’s Wall Street clients — deprived shareholders of tens of billions of dollars and violated the Fifth Amendment, which prohibits the taking of private property for “public use, without just compensation.” From a di…

There is no legitimacy to that claim. They did not have to take the deal. The government did not owe them anything.

Maybe there was something about the bailout being really a Goldman bailout, and if someone can prove actual corruption there, maybe there could be grounds for the Government to sue Goldman.

But there is no reason here the Government would owe AIG anything out of this.

Re: Rescued by a Bailout, A.I.G. May Sue Its Savior

#42

Post by anigbrowl »

So going by the number being sought (I haven't bothered to read the complaint), the government should only have taken an 85% stake instead of a 92% stake? This seems like an instance of chronic denial by Greenberg and his remaining admirers - anything to put the blame on someone else.

Re: Rescued by a Bailout, A.I.G. May Sue Its Savior

#43

Post by anigbrowl »

smsm42 wrote: post #24

It's kind of funny that the government apparently (if AIG claims are true) did the same to them as what politicians long criticized the bankers for doing as "predatory lending". I.e. if you consider that using one's bad situation to trick him into a loan which terms are unduly onerous is despicable thing to do for a bank - shouldn't be the same thing despicable for the government? On the other hand, if it's OK for th…

Yes, the board of directors of AIG are exactly like financially illiterate people trying to get a mortgage to buy their own home.

Re: Rescued by a Bailout, A.I.G. May Sue Its Savior

#44

Post by viscanti »

fleitz wrote: post #21
adrr wrote: post #15

Earlier quoted context omitted.

If AIG would have went bankrupt, shareholders would have got nothing. After all the liabilities paid out(to the wall street clients who had credit default swap contracts), there would have been nothing left. US put 170 billion into a company worth $2 billion(market cap at the time) for 92% stake. There is no legitimacy to the claim.

That's not true, the shareholders would only have gotten nothing if the creditors insisted on immediate payment / and/or liquidation. Given the fiscal situation I'm sure they would have seen the error of their ways. AIG being liquidated would have been possibly the worst thing for AIG's creditors and the best outcome possible for the people of the United States. The government used the assets of AIG for it's own purp…

I guess I don't follow how the government used AIG's assets for it's own purposes. AIG owed money to other people (specifically Goldman), and when they got the bailout money were instructed to do what real businesses do (pay their debts). Receiving a bailout sounds like reasonable grounds for not defaulting on obligations. AIG had 2 options, the first was to take the bailout money and pay back their debts, and the second was to go into bankruptcy. There wasn't a third option where they got to decide not to pay back what they owed, and instead just kept all the bailout money for themselves.

Re: Rescued by a Bailout, A.I.G. May Sue Its Savior

#45

Post by anigbrowl »

btilly wrote: post #20
lostlogin wrote: post #4

With government contract work here in New Zealand I have noticed a willingness to call in the lawyers very early. If the contract were with a private enterprise there is no way a contract would get renewed, however the government is happy to deal with people even after after they have been sued recently. This may not we a world wide phenomenon.

I have seen it noted that common law countries in general tend to resort to lawyers early and often. Indeed when comparing major construction in different countries, having a common law legal system is a risk factor for having much higher costs.

You've probably read it already, but I really enjoyed Robert Kagan's book Adversarial Legalism on this subject. http://www.bsos.umd.edu/gvpt/lpbr/subpages/reviews/kaganal.h...

Re: Rescued by a Bailout, A.I.G. May Sue Its Savior

#46

Post by varjag »

Alterlife wrote: post #5
sharkweek wrote: post #3

This really makes my blood boil, but I'm trying to remain impartial while reading. The highlight of the article: > Judge Paul A. Engelmayer wrote that while Starr’s complaint “paints a portrait of government treachery worthy of an Oliver Stone movie,” the company “voluntarily accepted the hard terms offered by the one and only rescuer that stood between it and imminent bankruptcy.” Sure, the terms might have seemed "…

AIG is trying to get money out of the situation. That's what companies do, and apparently this is what companies are supposed to do.

Normally companies make money by providing a product or service. Granted, that's something AIG wasn't very good with lately, but I'm not sure suing the government for money is a sustainable business model.

Re: Rescued by a Bailout, A.I.G. May Sue Its Savior

#47

Post by retube »

newman314 wrote: post #33

Just posted a related article from Rolling Stone. http://news.ycombinator.com/item?id=5025234 It's both mindblowing and disgusting the extent which banks have manipulated things to the point where they have their cake and eat it too.

Rolling Stone has a huge anti-bank bias. The material they present is usually misleading, out of context and often plain wrong or mis-informed. This is absolutely not a credible source on the financial crisis. Indeed Matt Taibbi is basically just a troll.

Re: Rescued by a Bailout, A.I.G. May Sue Its Savior

#48

Post by [deleted] »

OGinparadise wrote: post #26
fleitz wrote: post #21

Earlier quoted context omitted.

That's not true, the shareholders would only have gotten nothing if the creditors insisted on immediate payment / and/or liquidation. Given the fiscal situation I'm sure they would have seen the error of their ways. AIG being liquidated would have been possibly the worst thing for AIG's creditors and the best outcome possible for the people of the United States. The government used the assets of AIG for it's own purp…

" That's not true, the shareholders would only have gotten nothing if the creditors insisted on immediate payment / and/or liquidation. " Do you really think that the banks (already in the brink of bankruptcy) would have ponied up tens of billions so AIG would continue to operate? I don't think you know how much of the world's finance AIG controlled via their insurance. http://en.wikipedia.org/wiki/American_Internati…

[deleted]

Re: Rescued by a Bailout, A.I.G. May Sue Its Savior

#49

Post by DeepDuh »

Alterlife wrote: post #5
sharkweek wrote: post #3

This really makes my blood boil, but I'm trying to remain impartial while reading. The highlight of the article: > Judge Paul A. Engelmayer wrote that while Starr’s complaint “paints a portrait of government treachery worthy of an Oliver Stone movie,” the company “voluntarily accepted the hard terms offered by the one and only rescuer that stood between it and imminent bankruptcy.” Sure, the terms might have seemed "…

AIG is trying to get money out of the situation. That's what companies do, and apparently this is what companies are supposed to do.

The main problem seems to be that litigation in court is lucrative in the American system. It's not just righting something wrong, to cover ones damages, it's about making money you couldn't make otherwise. And that's when suing becomes a business model.

It's amazing to me how the USA is still so innovative despite that legal insecurity.

Re: Rescued by a Bailout, A.I.G. May Sue Its Savior

#50

Post by vidarh »

fleitz wrote: post #21
adrr wrote: post #15

Earlier quoted context omitted.

If AIG would have went bankrupt, shareholders would have got nothing. After all the liabilities paid out(to the wall street clients who had credit default swap contracts), there would have been nothing left. US put 170 billion into a company worth $2 billion(market cap at the time) for 92% stake. There is no legitimacy to the claim.

That's not true, the shareholders would only have gotten nothing if the creditors insisted on immediate payment / and/or liquidation. Given the fiscal situation I'm sure they would have seen the error of their ways. AIG being liquidated would have been possibly the worst thing for AIG's creditors and the best outcome possible for the people of the United States. The government used the assets of AIG for it's own purp…

If AIG was in a situation where their creditors might have been willing to structure a deal, then it is on AIG that they did not pursue that option.
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