A.I.G. decides not to sue U.S. government for saving it, after all
After revealing earlier this week that A.I.G. might sue the U.S. government for saving it—and taking $22 billion in profit on the deal when the Treasury sold the last of its shares last month—the New York Times now reports A.I.G. voted not to sue on Wednesday.
Former A.I.G. chief Maurice R. Greenberg initiated the suit as a shareholder. Greenberg had hoped the current board would join in. A.I.G.’s board heard arguments at its corporate headquarters this morning from Mr. Greenberg’s team as well as Justice Department lawyers arguing that the lawsuit was frivolous and unfounded. After hearing out both sides they sided with the Justice Department and decided A.I.G. won’t sue after all.
Which was probably smart, considering one Manhattan judge already threw the case out on the grounds that A.I.G voluntarily entered into the bailout agreement with the government and took $182 billion in taxpayer money knowing full well what the terms of repayment would be.
Even more amazing, A.I.G. was considering suing the U.S. at a time when the company has been running an ad campaign thanking taxpayers for bailing them out and preventing bankruptcy during the crisis.
Of the decision, A.I.G chairman Robert S. Miller said, “America invested in 62,000 AIG employees, and we kept our promise to rebuild this great company, repay every dollar America invested in us, and deliver a profit to those who put their trust in us. We continue to thank America for its support.”
Of course, deciding not to sue the U.S. government for saving it is probably more than just PR—it’s good business. Since the crisis the risky financial instruments that got everyone into trouble in the first place like mortgage back securities and credit default swaps have made a big rebound. After a bust comes a bubble—it’s almost a law of physics. And while the next bubble may take a while to inflate, companies like A.I.G. probably don’t want to soil their relationship with the U.S. government—they may need them again before long.