WASHINGTON — A company run by the former CEO of American International Group Inc. is suing the government for $25 billion in damages over its taxpayer bailout of the big insurer.
Former AIG CEO Maurice “Hank” Greenberg’s current company — Starr International — filed lawsuits Monday in two federal courts against the Treasury Department and the Federal Reserve Bank of New York. The suits accuse the government of taking valuable assets from AIG’s shareholders without their consent or fair compensation, in exchange for the government’s 80 percent stake in the compa ny. The suit says the government’s actions violate parts of the Fifth Amendment.
Much of the $182 billion in rescue money that AIG got from the government went to pay the New York-based firm’s obligations to big banks.
Starr International was the largest shareholder in AIG. It is suing on behalf of AIG and the AIG shareholders and says the $25 billion or more in damages it wants represents the market value of the 563 million shares the government received, as of last Jan. 14.
“The government is not empowered to trample shareholder and property rights even in the midst of a financial emergency,” Starr International says in the suits. It contends that the government discriminated in its action against AIG, by refusing to provide loans or loan guarantees or access to the Fed’s discount borrowing window as it had to other financial institutions such as Citigrou p Inc.
The AIG shareholders didn’t agree “to the proposed taking of their property rights,” the lawsuits say. They were filed against the government in the U.S. Court of Federal Claims in Washington and against the New York Fed in U.S. District Court in Manhattan.