

AIG considers suing government for bailing it out - cgs1019
http://www.washingtonpost.com/blogs/wonkblog/wp/2013/01/08/aig-considers-suing-government-for-bailing-it-out-world-implodes-in-on-itself/

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kevinconroy
I think that this headline a bit misleading. AIG is legally required to
consider it because their former CEO is a huge shareholder and is demanding
that they consider it. Since it has potential shareholder benefit they have to
hear him out.

NPR's Marketplace covered this story tonight and provide a bit of context:

"[Henry Hu, a law professor at the University of Texas and a former SEC
regulator] says AIG’s board has an obligation to consider the lawsuit because
of shareholder interests, “but they should also consider the costs of this in
terms of their relationship with the regulators.”

Don’t forget, AIG is the company that just started running ads saying -- no
joke -- “Thank you America.”

A spokesman for the New York Fed said the allegations have no merit because
bankruptcy was AIG’s only alternative. That would have wiped out shareholders
entirely.

[Phil Angelides, who chaired the Financial Crisis Inquiry Commission] thinks
the board shouldn’t consider this lawsuit for more than a minute.

...

AIG issued a written statement today saying it will follow the law and
consider the suit. In earlier email to Marketplace, an AIG spokesman declined
to comment. Though he did say Thank You."

Source: [http://www.marketplace.org/topics/business/aig-thanks-
bailou...](http://www.marketplace.org/topics/business/aig-thanks-bailout-see-
you-court)

~~~
jbooth
If a large shareholder insisted they build a moon base, would they be required
to consider that, too?

This is approximately as reasonable.

~~~
untog
_If a large shareholder insisted that build a moon base, would they be
required to consider that, too?_

If they owned 51% of shares? Well, er...

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rossjudson
Nobody made AIG accept the bailout. They could have walked away.

It's fortunate that even with the short attention spans of today, the word
"AIG" is now synonymous with "fuck up".

They should have waited another year or two.

~~~
prostoalex
I think the problem is that there's very little overlap people that accepted
the bailout and people who are running the company today.

We like to think of corporate entities as these monolithic self-governing
decision-making entities, but most likely it's some top executive's knee-jerk
reaction to not meeting the 2012 goals that his bonus depended on.

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DigitalSea
This was on the homepage less than 24 hours ago but from the New York Times:
<http://news.ycombinator.com/item?id=5024900> — from what I can see they're
basically saying the same thing. The whole situation is messed up, if they
proceed I'm sure it'll rattle a few birdcages in Washington.

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mtgx
It's a shame the government didn't break up these financial giants when they
had the chance. Now they are powerful again and don't care what the government
thinks, and they'll continue to lobby against new regulation, and repeat the
same mistakes. Then the American citizens will have to bail them out again.
And they know this.

~~~
jacoblyles
What role do industry representatives have in writing a huge bill like Dodd-
Frank, and the implementation of it after it passes? It was my assumption that
industry has a big role in crafting the laws that regulate them.

~~~
tedunangst
This is unlikely to change as long as one side is willfully determined to
remain ignorant of finance. If you want to write effective regulation, you'll
need to understand the industry. Until then, the insiders will continue to run
the show.

~~~
sageikosa
To balance that out, I would state that neither the regulator, nor the
_regulatee_ , really understands finance enough to make arbitrarily accurate
predictions of consequences to their actions. They are betting that they
understand how the whole market, the rest of the market, or the regulators
(regulatees only need consider this) will act in response to information they
may or may not possess based on analysis they may or may not be able to
justify.

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boushley
Doesn't the government own 92% of the company? How can the company make any
decision they don't approve of? Did they buy 92% and have no voting power?

~~~
aioprisan
The government now own no shares in AIG, it was paid back in full and with
interest. In fact, the US made $18 billion profit from AIG:
[http://abcnews.go.com/Business/government-
makes-177-billion-...](http://abcnews.go.com/Business/government-
makes-177-billion-profit-aig-bailout/story?id=17074275#.UOzbeInjnaI)

~~~
unreal37
The accusation is that the government used AIG to bail out the rest of Wall
Street, forcing AIG to settle trades with big name Wall Street companies for a
loss. And on top of that, the gov't charged 14% interest on the money it lent.

Yes, they could have "not accepted" that deal. But there are two sides to
this.

~~~
rjtavares
Trades that AIG took at fair terms. Sorry, but if an insurer insures
something, it better damn well pay what it promised.

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0003
I thought there was such a thing as sovereign immunity. How does this
reconcile?

~~~
maxerickson
Wikipedia has some info:

[http://en.wikipedia.org/wiki/Sovereign_immunity_in_the_Unite...](http://en.wikipedia.org/wiki/Sovereign_immunity_in_the_United_States)

Maybe a lawyer will stroll by and give you a real answer.

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outside1234
i hope there is a special ring of hell for these guys.

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niels_olson
Patient survives, sues doctor. Happens all the time.

~~~
JosephRedfern
America, fuck yeah!

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tehwalrus
These guys need to hire a normal person to sit in their CEO office and say
"What the actual __*?!" to stuff like this, because they clearly do not
understand how normal people see the world.

SECOND REACTION: hmm, so they're only 'considering' it because they have to.
Fair enough I guess, crazy shareholders must be a nightmare.

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csense
I hope AIG sues the government, and the scandal and political firestorm that
results means that similar bailouts become politically impossible for the next
50 years.

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recoiledsnake
Reminds me of the costly executive conference retreat they took after the
bailout:

Less than a week after the federal government committed $85 billion to bail
out AIG, executives of the giant AIG insurance company headed for a week-long
retreat at a luxury resort and spa, the St. Regis Resort in Monarch Beach,
California, Congressional investigators revealed today.

"Rooms at this resort can cost over $1,000 a night," Congressman Henry Waxman
(D-CA) said this morning as his committee continued its investigation of Wall
Street and its CEOs.

AIG documents obtained by Waxman's investigators show the company paid more
than $440,000 for the retreat, including nearly $200,000 for rooms, $150,000
for meals and $23,000 in spa charges

[http://abcnews.go.com/Blotter/story?id=5973452&page=1#.U...](http://abcnews.go.com/Blotter/story?id=5973452&page=1#.UOzYUDV2qM4)

~~~
DavidAdams
As the other commenter said, it would actually be pretty dumb to cancel a
conference that's already bought and paid for, unless it's for pure CYA PR
reasons. I used to work in the meetings and events industry and I can
confidently say that the organizers of the AIG conference at the St Regis
probably never imagined that it would turn into a PR debacle, because that
kind of event is absolutely ordinary. They would not have considered it
extravagant at all.

Consider this: you're having a conference for multimillionaire corporate
executives and top performers. People who usually work in different locations
are coming in to meet together and perhaps bring their spouses for some
hobnobbing, strategy talks, and teambuilding exercises. Where do you think
they're going to stay? The Motel 6? When you're paying someone a high six
figure salary plus bonuses, is it really a scandal to pay $300 for a hotel
room?

And by the way, if the rooms "can cost $1000 per night" and you rent out two
hundred rooms for your event, if you ended up paying more than $300 per room,
you should fire your meeting planner.

~~~
RealGeek
Top Performers? These are the executives who didn't just grounded their
company, but the whole financial system into a hole.

