Thursday, July 23, 2009
AIG's Preposterous Suit
"Maurice R. 'Hank' Greenberg won a resounding, though not absolute, victory over American International Group. Inc. [AIG] when a jury said his current firm didn't have to hand over $4.3 billion to the giant insurer he once led. ... The trial was basically a dispute over tens of millions of shares in AIG held by Starr but used for decades when Mr. Greenberg was AIG's chief executive to fund a long-term compensation plan for AIG employees. Mr. Greenberg left AIG in 2005 while it was under investigation for its accounting. When he left, the program ended and Starr later sold off some of the shares; AIG maintains it should control the shares. The verdict is a big setback for the insurer, which has been hungry for funds to repay a federal bailout in September that rescued the storied firm from the brink of bankruptcy", my emphasis, Liam Pleven and Chad Bray (P&B) at the WSJ, 8 July 2009, link: http://online.wsj.com/article/SB124699443213407227.html.
This case was preposterous. If AIG wants money, let its sue its counterparties, like Goldman Sachs. Disagreeing with P&B, the AIG bailout "rescued" the counterparties.