AIG opts out of suit against US

The Treasury Wednesday said the lawsuit was ‘‘without merit’’ and welcomed AIG’s decision not to support it.
Brendan McDermid/Reuters
The Treasury Wednesday said the lawsuit was ‘‘without merit’’ and welcomed AIG’s decision not to support it.

NEW YORK — Afraid of looking like a world-class ingrate, AIG on Wednesday decided against suing the federal government over the $182 billion bailout that saved the giant insurance company from collapse.

American International Group was put in the awkward position of having to consider joining a lawsuit brought against Uncle Sam by its former chief executive, Maurice ‘‘Hank’’ Greenberg.

The suit claims that the terms of the taxpayer-funded bailout were too onerous. The government received a huge stake in AIG when it bailed the company out at the height of the 2008 financial crisis. AIG has since paid all the money back and notes that the government made a profit of $22.7 billion.


The timing could hardly have been worse for AIG. The company is in the midst of a ‘‘Thank You, America’’ ad campaign to show its gratitude for being rescued from the brink of collapse.

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The prospect of the insurer joining the lawsuit had already triggered outrage. A congressman from Vermont issued a statement telling AIG: ‘‘Don’t even think about it.’’ Comedian Andy Borowitz likened the insurer to somebody suing a fireman for ripping a designer jacket after rescuing them from a burning building.

AIG, which was legally obligated to consider joining the lawsuit, demurred. The company said it would not join Greenberg’s lawsuit and would not permit Greenberg to pursue his claims in AIG’s name.

AIG’s chief executive Bob Benmosche told CNBC in a televised interview that the company would be better off in the long run without the ‘‘headwinds’’ of the lawsuit and should look forward, rather than focusing on the past.

‘‘It’s not acceptable socially for AIG to take the money and go back and sue the government,’’ Benmosche said in the CNBC interview. ‘‘A deal is a deal.’’


The insurer nearly imploded after making huge bets on mortgage investments that later went wrong. Regulators were concerned that if it were allowed to fail it would send shock waves through the financial system, which was already reeling as Lehman Brothers collapsed.

The company became a symbol for excessive risk on Wall Street and a touchstone of public anger.

Since the financial meltdown, AIG has undergone a restructuring that has halved the size of the company, with the twin aims of focusing on its core insurance operations and repaying the government’s bailout cash.