A senior Treasury Department official Monday called the federal takeover of American International Group Inc. “necessary, legal, and constitutional,” and said the government would vigorously defend itself against a lawsuit contesting the 2008 bailout.
“It is important to remember that the government provided assistance to AIG–and stopped it from collapsing–in order to prevent a meltdown of the entire global financial system,” Assistant Secretary for Financial Stability Tim Massad said in a statement.
Earlier Monday, Starr International Co., AIG’s largest shareholder at the time of the 2008 government rescue, filed a lawsuit that says the U.S. takeover of
AIG was unconstitutional. Former AIG CEO Maurice R. “Hank” Greenberg is head of Starr International.
The suit alleges that by getting a nearly 80% stake in AIG in exchange for providing tens of billions of dollars in aid, the government took valuable property from Starr and other AIG shareholders in violation of the Fifth Amendment, which says that private property can’t be taken for “public use, without just compensation.”
“We are reviewing the lawsuit and expect to defend our actions vigorously,” Massad said.