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A.I.G. Won't Join Lawsuit Against Government

Posted January 10th, 2013 @ 9:28am

There'll be no OMG! moment from insurance giant A.I.G.

After hearing from American International Group former chief executive Maurice R. Greenberg Wednesday, the company's board decided against joining a $25 billion lawsuit against the federal government that is being spearheaded by Greenberg on behalf of shareholders.

His contention is that while taxpayers did indeed bail out A.I.G. during the near U.S. financial collapse of 2008 to the tune of $125 billion -- a handout that has since been paid back -- the government acted like a "loan shark" by charging an interest rate of 14.5 percent, which Greenberg alleges cost shareholders tens of billions of dollars.

However, A.I.G.'s board, perhaps sensing a huge backlash from both Washington and the public if it joined the suit, declined to do so.

Ironically, A.I.G. is in the midst of an advertising campaign, thanking taxpayers for their help during the company's darkest days, which virtually all economists blamed on the insurer's excessive risk taking. A.I.G. also earned a black eye when it continued paying mammoth bonuses to executives even as the company was close to tanking.

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