Thank you, America: We won't sue you for bailing us out.
That's the decision made by insurance giant AIG's board Wednesday after getting slammed by critics for considering whether to join a lawsuit claiming the government bailout of the company treated shareholders unfairly.
The American International Group Inc. was in a rather difficult position. It was forced to choose whether to participate in the $25 billion suit filed by the company's former CEO Maurice "Hank" Greenberg. The suit takes issue with the terms of the $182 billion bailout received by company at the height of the country's recent financial crisis. It claims the government charged too high of an interest rate. AIG has since paid all the money back and the government made a profit of $22.7 billion, the Washington Post reports.
To make things even more awkward for AIG on the public relations front, the company had just started running television ads saying, "Thank you, America," to show its appreciation to taxpayers for helping it survive.
@MongoAPillager If they didn't before, they should have "angry mob attack policies" after reading what people had to say about the proposed lawsuit. There's a lot of heat on the internet but I thought the reaction to this was exceptionally (and justifiably) furious. I thought some people were going to go right through their screens so they could arrive in the CEO's office with plans to strangle him with his own silk tie.
@Zazziness personal economics is not my strong point,but are not the 401k's and other retirement plans heavily invested in these type of companies?are not some of these guys looking out for their investor's which is the average Joe or Jill as well as themselves?
@MongoAPillager IMHO, they are looking out for the executive staff's bonus money. AIG charges higher interest rates on high risk loans. That's standard practice. They have a lot of gall being indignant about their own policies being applies to themselves.
@Zazziness Well,it appears AIG and others did agree to the terms of the loan or they wouldn,t have received them,would the government loan fall under the auspices of an high risk loan,was the government provided any collateral on said loans?
AIG laundered over $11 billion of TARP money for German mega-bank Deutsche Bank AG.
This bank was founded in 1870, and it funded the Gestapo, Auschwitz and IG Farben (makers of zyklon gas) during WWII. In the 2000s this bank was involved in thousands of fraudulent mortgage derivatives and foreclosures against Americans. It also is being investigated for funding Iranian nuclear weapons programs.
It helps a very little, because it shows that the board is at least a little rational. Mr. Greenberg, not so much.
It does serve to illustrate why 'unfettered capitalism' is a dangerous idea. Capitalism has no morality, so the equivalent of morality has to be supplied by regulation.
As to big financial institutions, if they are so big that their failure means the kind of recession we just had, then there needs to be in place soon a plan for their orderly liquidation should they ever find themselves in that position again.
If it was tax payer money that was used to bail you out and it was unfair to your investors then maybe you should have turned it down and filed for bankruptcy then maybe your investors would have been happier. This just sounds more like greed on everyones behalf at AIG.
When you desperately need money, you gotta pay the price. Super high interest comes with payday loans, title loans, and my favorite, Western Sky, they even say in their commercial, "Yes its expensive"! Hello!!
For some strange reason it's OK in America for banks to give welfare people credit cards at 23% interest but it's not OK to charge mega corporations half that when they come crying to the govt to be bailed out? Must be the new math.
@texas_cutie75 I read a while back that those companies like Capital One and others who offer credit cards to the poor charge rates designed so once the poor can't pay something like a 300-500.00 limit off every month the interest will ensure those people can never get out from under those cards. NEVER.
@texas_cutie75 I had my identity stolen back in 1997. Get this. They got two cards with 25K limits on each. I didn't know that the cards were stolen. They rang up over 30,000.00 in charges in a matter of days. The card company never questioned a single charge despite the fact there was no balance and all of a sudden someone when on a spree. Long story short they got the two who did it, they went to jail for a couple of years and the credit card company (not capital) agreed to take off the fraudulent charges. They then sent me a notice I owed for late fees of not making a payment. HUH? How do you have a late fee on a zero balance? I went around and around with them and they kept tacking on more late fees and for about a year my credit was ruined. Never underestimate the power of banks to destroy your life wrongly.