March 2 The U.S. government has asked a
court to dismiss a lawsuit relating to its 2008 takeover of
American International Group that was filed by a company
run by former AIG Chief Executive Maurice Greenberg, court
In November, Greenberg's company, Starr International Co,
sued the U.S. government for $25 billion, calling the 2008
federal takeover of the insurer unconstitutional.
Starr sued the government in the U.S. Court of Federal
Claims in Washington, D.C., which handles lawsuits seeking money
from the government. It brought that lawsuit on behalf of itself
and other AIG shareholders.
The lawsuit marks an unusual effort to force the government
to pay shareholders, who have seen AIG's stock price tumble
since the middle of 2007, when the insurer's risky bets on
mortgage debt through credit default swaps began to falter.
Greenberg had led AIG for nearly four decades prior to his
2005 ouster. Starr once owned 12 percent of AIG.
In a filing with the U.S. Court of Federal Claims in
Washington, D.C., on Thursday, the government said although
Starr may disagree with the terms to which AIG agreed, any loss
resulting from that agreement should be borne by AIG and its
shareholders, and not the public.
"Starr demands that the court second guess AIG and rewrite
the rescue agreement by making American taxpayers pay an
additional $25 billion, based upon a market valuation of AIG
after the rescue," the government said in the filing.
The U.S. government argued that AIG had asked and agreed to
be rescued, "electing to save itself from a failure of its own
AIG, which was once the world's largest insurer by market
value, was rescued by the U.S. government from the verge of
collapse at the height of financial crisis in 2008. AIG's
bailouts eventually totaled $182.3 billion.
The $25 billion estimate reflects what Starr called the
value of the government's stake on Jan. 14, 2011, when it
swapped AIG preferred stock for 562.9 million common shares.
The cases are Starr International Co v. U.S., U.S. Court of
Federal Claims, No. 11-00779
(Reporting by Sakthi Prasad; Editing by Mark Potter)