WASHINGTON, January 9 (RIA Novosti) – The American International Group (AIG) said Wednesday that it would not join a lawsuit against the US government over the terms of Washington’s $182 billion bailout of the firm in one of the most controversial uses of taxpayer funds during the financial crisis.
A volcano of outrage and disgust from US officials and the American public erupted this week after reports that AIG’s board on Wednesday would consider joining the $25 billion lawsuit spearheaded by the company’s former chief executive, Maurice Greenberg.
But AIG’s board said in a statement Wednesday that it would not join the lawsuit filed by Greenberg’s investment firm, Starr International Company, alleging that the bailout was unfair to shareholders, depriving them of billions of dollars.
The federal government’s $182 billion bailout of AIG came in September 2008 after the firm’s financial products division collapsed under the weight of risky and highly complex investment contracts that could have set off a daisy chain of financial fireworks throughout the global economy.
In testimony before the US Congress in 2009, US Federal Reserve Bank Chief Ben Bernanke said no other move by the federal government during the financial crisis angered him like the AIG bailout, which he nonetheless said was necessary to keep the US economy from imploding.
“This was a hedge fund, basically, that was attached to a large and stable insurance company, made huge numbers of irresponsible bets,” Bernanke testified.
The prospect of AIG suing the federal government that rescued it from bankruptcy was criticized by elected officials and political commentators this week as beyond audacious.
“AIG’s reckless bets nearly crashed our entire economy,” US Sen. Elizabeth Warren, a fierce Wall Street critic, said in a statement this week. “Taxpayers across this country saved AIG from ruin, and it would be outrageous for this company to turn around and sue the federal government because they think the deal wasn't generous enough.”