A former AIG executive whose company was bailed out by taxpayers is now suing the federal government.
When middle-class taxpayers grouse about the “welfare state” in the United States, they are looking down the economic ladder at the poor.
Perhaps they should glance up from time to time.
Up there, among Wall Street’s rich and powerful, they might notice a few takers like Maurice “Hank” Greenberg.
Greenberg is the former CEO of American International Group Inc., a company that exists today only because American taxpayers granted a $182 million bailout.
Greenberg is showing his gratitude by suing the federal government, which helped save his company’s hide. He claims the repayment terms were too cumbersome.
AIG officials considered, but decided against, joining Greenberg’s incredulous suit. Their decision may have been made easier by the fact that AIG is in the midst of an advertising campaign whose theme is to thank the American people for the bailout.
AIG was among the Wall Street companies that were considered too big to fail. But the insurer all but collapsed by making huge and risky bets on mortgage investments that later went terribly wrong. Regulators feared that if AIG were allowed to fail, it would inflict unacceptable damage on the financial system.
In the end, the generous loan extended to AIG turned out to be a good investment for both the company and the federal government. AIG has repaid all the money and the government made a $22.7 billion profit.
Greenberg argues, however, that AIG’s bailout terms were much tougher than those given to other financial firms. The New York Times examined the terms of the deal and suggests it was fair to shareholders.
Because the company was in such dire straits, the Treasury Department chose to loosen terms, which helped save AIG billions of dollars.
Much of middle-class America is still reeling from economic damage caused by loose regulations, lax enforcement and the reckless greed of Wall Street. Meanwhile, many of those same financial firms were all too eager to receive Uncle Sam’s welfare.
Perhaps David Horsey, of the Los Angeles Times, puts it best when he writes that “big-time bankers, speculators, derivatives traders and others in the financial industry ... operate in an alternative economic world that has little to do with making things or providing quality services and everything to do with devising esoteric, barely legal and frequently unethical methods of amassing fortunes for themselves.”