Greenberg says U.S. owes him $25B for AIG rescue
COMMENTARY Maurice "Hank" Greenberg, the former CEO of American International Group, is suing the U.S. government for $25 billion because it had the nerve to bail out AIG.
Some people just don't know when to shut up.
Greenberg asserts that the government took valuable property from him when, in return for providing tens of billions of dollars in aid, it took ownership of 80 percent of AIG. The lawsuit (which should have come with its own laugh track) claims the Feds violated the Fifth Amendment, which says private property can't be taken for "public use, without just compensation."
Now those of you still suffering from Traumatic Financial Shock Disorder may not remember exactly why the citizens of the United States came to own the company Greenberg founded. To recap: AIG had issued billions of dollars in insurance on bonds made out of subprime mortgages (also known by the technical term: crap). When it turned out that crap wasn't in fact worth crap, a lot of folks called up AIG and asked for their money. Surprisingly, AIG didn't have that money because AIG never ever ever thought that there was any risk in all that crap.
In September 2007, Joe Cassano -- head of AIG's financial products division -- said during an earnings call, "It is hard for us, without being flippant, to even see a scenario ... that would see us losing one dollar in any of these transactions." A year later, the U.S. government took over AIG in an $85 billion bailout.
Now to be fair to Greenberg, I should note that by 2007 he was no longer employed by AIG as chairman. He was then just a major shareholder. He had "resigned" in 2005 when, as Bethany McClean and Joe Nocera recount in their great book All The Devils Are Here, "accountants from PWC told the [AIG] board that it would no longer vouch for the firm's books if Greenberg stayed on as CEO."
Oooops.
That very same Hank Greenberg is now suing the government because of the alleged value his AIG stock allegedly lost when the government took over the company. On September 15, 2008, when the bailout was announced, AIG opened at $119 and closed at $79. Shares currently trade around $23.
While this seems like a steep decline, it is as nothing as to the decline in the year prior to the bailout. In September of 2007 AIG stock was going for $1,099. So when you and I took possession of this turkey, it had lost 90 percent of its value. Had our government not done this the firm would have gone bankrupt. The only reason the stock has any value today is because of what the government did. This is a fact.
Hank Greenberg drove AIG right up to the edge of the cliff. Even though he'd been pushed out of the driver's seat when it went over, it was still operating under his momentum.
He should be ashamed to show his face in public.
