Monday, November 21, 2011
Did the U.S. Government's bailout of AIG constitute an illegal taking under the 5th Amendment? That is the argument that former AIG CEO "Hank" Greenberg (through Starr International Co., which he controls) is making in two lawsuits filed today.
The complaint in Starr International Co. v. U.S. (Download StarrvsUS11212011), filed in the U.S. Court of Federal Claims, alleges that, rather than provide AIG with liquidity support offered to comparable firms, the Government took steps in September 2008 that resulted in its taking control away from AIG shareholders and taking 80% of shareholder equity, without shareholder approval and without just compensation.
Starr International also filed a complaint (Download StarrvsNYFed11212011) in federal district court in Manhattan against the New York Federal Reserve, alleging that as AIG's controlling shareholder and controlling lender, it breached duties owed to AIG and Starr International.