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AIG potential for bring together a lawsuit

AIG potential for a lawsuit : American International Group Inc, the insurer rescued past times the U.S. regime inward 2008, drew angry condemnation from lawmakers on Tuesday afterward maxim it may bring together a lawsuit that alleges the bailout damage were unfair.

A leading congressional Democrat called criticism of the deal's damage "utterly ridiculous," too onetime New York Attorney General Eliot Spitzer - who probed AIG when he was inward piece of work - called the prospect of a conform "insulting to the public." The White House declined to comment on the potential for a lawsuit but defended the $182 billion bailout.

Meanwhile, newly elected Senator Elizabeth Warren, feared past times Wall Street equally a potential thorn inward its side on the Senate Banking Committee, called the conform beak "outrageous" too said the companionship should non "bite the mitt that fed them for helping them out inward a crisis."

The motility would endure something of a shock, given that AIG simply launched a high-profile telly advertising crusade called "Thank you, America," inward which it offers the populace its gratitude for the bailout. On Tuesday, the companionship promoted the ads on Twitter, fifty-fifty equally it came nether burn over the lawsuit.

Securities experts said AIG's board needs to consider the affair equally component subdivision of its fiduciary duty, but equally good said it was unlikely they volition genuinely join.

AIG said its board would reckon Midweek to beak over joining a lawsuit filed against the regime past times the insurer's onetime primary executive, Maurice "Hank" Greenberg.

Greenberg, whose Starr International owned 12 percentage of AIG earlier its near-collapse, has defendant the New York Fed of using the rescue to bail out Wall Street banks at the expense of shareholders, too of existence a "loan shark" past times charging exorbitant involvement of 14.5 percentage on the initial loan.

"If AIG enters this conform it would endure the equivalent of a patient suing their MD for saving their life," said Mark Williams, a onetime Federal Reserve banking concern examiner who teaches inward the finance subdivision at Boston University.

BUSINESS JUDGMENT
A federal guess inward Manhattan already dismissed i of Greenberg's suits inward November; it is existence appealed.

In his ruling dated Nov 19, Judge Paul Engelmayer said AIG had notified the courtroom it would concur a board coming together Jan ix to beak over joining i of the suits, amongst a determination expected past times the terminate of the month.

A assort conform nether different legal theories is all the same pending inward the U.S. Court of Federal Claims inward Washington.

In a mid-December hearing inward the Washington case, a lawyer for AIG told the courtroom that all sides had already made 3 written submissions to the board too that the board would pass one-half the twenty-four hours on Jan ix discussing the suit.

One goodness inward securities constabulary said he doubted AIG would ultimately raise one's hear to bring together the case.

"All the fiduciary standards that guide board demeanour would warn against joining the suit," said James Cox, a professor of corporate too securities constabulary at Duke University School of Law inward Durham, North Carolina. "I reckon goose egg to endure gained past times AIG piling on, too I reckon a lot of downside risk."

An AIG spokesman declined to comment beyond confirming that the board would reckon equally planned. The deliberations were offset reported past times the New York Times.

'CHOICE WAS BANKRUPTCY'
The New York Fed said Tuesday at that topographic point was no merit to whatever allegations that the banking concern harmed AIG.

"AIG's board of directors had an alternative selection to borrowing from the Federal Reserve too that selection was bankruptcy. Bankruptcy would convey left all AIG shareholders amongst worthless stock," a representative of the banking concern said Tuesday.

Elijah Cummings, the ranking Democrat on the House Committee on Oversight too Government Reform, acknowledged that AIG's board has a fiduciary duty to consider the lawsuit. But he equally good said the companionship had a selection inward 2008 too picked what it considered the ameliorate option.

"The thought that AIG mightiness sue the regime is an unbelievable insult to our nation's taxpayers, who cleaned upwardly the mess this work solid created," he said inward a statement.

Cummings' onetime colleague, the recently-retired Barney Frank, said he was "stunned" past times the word too added that AIG was a fully willing player inward the rescue.

"There was non the hint of a proposition of whatever coercion. They did this real voluntarily, real gratefully. And if the companionship were forthwith to become roughly too bring together this lawsuit, that would endure outrageous," Frank said inward an interview.

The U.S. Treasury declined to comment. It completed its final sale of AIG stock inward mid-December, final the bailout amongst what Treasury called a positive furnish of $22.7 billion.

AIG shares brutal 0.8 percentage to unopen at $35.65. After losing one-half its value inward 2011, the stock rose to a greater extent than than 52 percentage inward 2012, tripling the gains of the broader S&P insurance index.

GREENBERG ROLLS ON
If AIG decides to bring together Greenberg's suit, it would endure some other legal victory for the human who i time ran the world's largest insurance companionship but was ultimately forced to exit nether a cloud of scandal.

On Monday, a federal guess ruled that New York Attorney General Eric Schneiderman does non convey standing to object to a $115 i G k short town betwixt AIG shareholders too the onetime primary executive. Schneiderman wanted the bargain rejected.

The judge's ruling champaign clears the agency for approving of the deal, whose wide releases would forbid New York from pursuing its high-profile 2005 fraud example against Greenberg, according to courtroom papers.

The nation case, brought past times Spitzer, accuses Greenberg too onetime Chief Financial Officer Howard Smith of using sham transactions to mask the company's fiscal position.

The claims, which Greenberg too Smith convey fought through 3 New York attorneys general, await an appeal at the state's highest court.

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