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January 8, 2013

Washington’s jaw drops at possibility of AIG lawsuit

Remember when AIG took a $182 billion bailout only to turn around and hand out seven-figure bonuses to the same guys who tanked their company?

Grab the pitchforks — it gets better.

Now the insurance organization might join a lawsuit against the U.S. government over the terms of the bailout — saying the deal that saved the company cheated shareholders.

Treasury Secretary Timothy Geithner — who faced calls for his firing over the AIG bailout — and Federal Reserve Chairman Ben Bernanke are furious, according to one Democratic lawyer. Other officials inside the agencies were angered by the news, too, sources in the department told POLITICO.”


Dennis Kelleher, chief executive of the financial reform group Better Markets, called the notion of AIG suing taxpayers over the terms its own bailout absurd, but he believes there may be an unintended and beneficial impact of pulling back the curtain on where the bailout money went, including to AIG’s Wall Street counterparties. The idea that the AIG rescue was a “backdoor bailout” for Wall Street has long been a rallying cry for progressive groups.

“The idea of AIG, which got this sweetheart bailout deal with no strings attached, forcing Treasury and the Fed to parade into a board meeting and explain the terms of that deal is incredible,” Kelleher said. “But a lawsuit that actually explains exactly what went on with this mess might be a great public service.””


Read Ben White and Anna Palmer’s full Politico Pro article here (subscription required)

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