Maurice ‘Hank’ Greenberg, the former head of American International Group (AIG), has filed a $25 billion lawsuit against the federal government, claiming that Washington should have bailed out AIG during the 2008 financial crisis instead of taking it over.
The Chicago Tribune reports that Greenberg and his Starr International Co. are also suing the Federal Reserve Bank of New York. In the lawsuits, Greenberg accuses the government of taking control of 80% of AIG's common stock in order to use the insurance giant to finance ‘backdoor bailouts’ to other ailing financial services companies.
‘The government is not empowered to trample shareholder and property rights, even in the midst of a financial emergency,’ Greenberg said in his lawsuit filing.
Greenberg retired as chief executive of AIG in 2005. Swiss-based Starr International claims to have been AIG's largest shareholder in September 2008, when the government seized the company.
Tim Massad, assistant secretary for financial stability, responded to the lawsuit in a statement that defended the government's actions.
‘It is important to remember that the government provided assistance to AIG – and stopped it from collapsing – in order to prevent a meltdown of the entire global financial system,’ he said.
The New York Fed issued its own statement, dismissing the charges as having ‘no merit’ and adding that AIG would have gone bankrupt without the government's intervention.