Directors at American International Group Inc., the recipient of one of the biggest government bailout packages during the financial crisis, are considering whether to join a lawsuit that accuses the U.S. government of too-onerous terms in the 2008-2009 rescue package.
The directors will hear arguments on Wednesday both for and against joining the $25 billion suit, a person briefed on the matter said. The suit was filed in 2011 on behalf of Starr International Co., a once very large AIG shareholder that is led by former AIG Chief Executive Maurice "Hank" Greenberg. It is pending in a federal claims court in Washington, D.C. The U.S. government will present the arguments against joining the lawsuit, the person said.
Dow Jones' Chris Deiterich reports on AIG considering to join lawsuit against the U.S. Government over terms of the financial bailout it received, gold prices are looking to snap a 3-day loss, and earnings season kicks off.
The debate comes as AIG and government officials have been taking bows for the successful exit of the U.S. Treasury and the Federal Reserve from the $182 billion bailout package. The government recently sold the rest of its common shares.
AIG this month rolled out a new advertising campaign that thanks the U.S. taxpayers for their support and notes that the endeavor earned the government a combined positive return of more than $22 billion. An AIG spokesman said the board "takes its fiduciary duties and business judgment responsibilities seriously."
A Treasury spokesman declined to comment.
In July, a federal judge ruled that Mr. Greenberg's lawsuit, which accuses the U.S. government of engineering an unconstitutional bailout of the insurer, could proceed. The U.S. Court of Federal Claims ruling allowed most of the case brought on behalf of Starr to proceed, while dismissing some claims.
Starr sued the government in 2011, saying its taking of a roughly 80% AIG stake and extending tens of billions of dollars in credit with an onerous initial interest rate of roughly 15% deprived shareholders of their due process and equal protection rights.