The Ed Show | January 08, 2013
>>> and in the big finish tonight, we have a truly shocking story of corporate greed . let's go back to late 2008 . the insurance giant aig was on the verge of financial collapse because of its role in the financial crisis . if they went down, the ripple effect would have had devastating consequences on the economy. so the federal government stepped in and offered aig a $182 billion loan, bailout. they accepted the offer. now four years later, aig is considering joining a lawsuit to sue the federal government because they didn't like the terms they agreed to? the $25 billion lawsuit claims the federal government has deprived shareholders of tens of billions of dollars and violated the fifth amendment. it says the government took too large a share in aig and charged excessive interest rates. basically, they think they paid the federal government too much money, and now they want it back. the man who filed the lawsuit is former aig ceo hank greenberg , who resigned in 2005 during a scandal. he is still a major shareholder in aig . he started the lawsuit with his own group of investors and is now pursuing aig to join in. aig is meeting with greenberg tomorrow to decide if they will join in on the suit. it would be ridiculous for them to join in considering that they are doing just fine. because since 2008 , the government loan, aig has posted a profit of over $26 billion. and on top of the money, aig has been touting its great relationship with the government. with this advertising blitz, they're actually thanking the american people for saving them.
>> aig , we said we were going to turn it around, and we did.
>> leading insurance company based right here in america .
>> we have repaid every dollar america lent to us.
>> everything, plus a profit of more than 22 billion.
>> for the mesh people.
>> thank you, america .
>> aig played a major role in taking our country into the great recession. the taxpayers saved aig . the ripple effect would have been unbelievable. and now for aig to think about suing the federal government is beyond disgraceful. for more, let's turn to my friend bill cohen . he is the columnist for bloomberg view and author of "money and power." okay. let's play a word game . you match what i say, appalling, outrageous.
>> the year is only eight days old, but this is the largest corporate pr blunder of the year so far, without question. for aig to take all of this money when it was on the verge of bankruptcy, a board was in place and did it willingly, knowing exactly what they were doing, knowing that their choice was to have bankruptcy or take the loan, they took the loan. they paid it back. they paid it back with $22 billion of profit. and for now to them, to seriously consider joining this lawsuit is absolutely, to use your word, outrageous.
>> well, the federal government went in. the lawmakers went in and said you got the take this deal, because if you go down, the ripple effect in the economy, we may not be able to recover. i mean, that was the conversation.
>> isn't this unamerican?
>> well, it's some corporate lawyer 's dream fantasy along with hank greenberg 's fantasy that perhaps he'll make money out of this. but it really has no basis in law or fact.
>> why is greenberg doing this? just a grudge?
>> well, he lost a tremendous amount of money when aig got diluted down by the government's ownership, okay. he still got hundreds of millions of dollars in his pocket. but he lost probably several billion and he is pissed out about it if i may use that word there is no basis of this board considering even for a second joining this lawsuit.
>> senator liz warren of massachusetts today said aig continues to profit from a stealth bailout in the form of tax loopholes. what is your reaction to that?
>> i think elizabeth warren is absolutely right about that. i mean, aig has benefitted from income tax repayments that it's been able to get from the government as a result of the bailout, avoiding future taxes. again, the choice for shareholders when they made this loan, when they accepted this loan, was either bankruptcy and getting wiped out, or live to fight another day. and that's exactly what they have done.
>> so greenberg will go to this board meeting tomorrow and ask the board members to get on board with this lawsuit. the question is who is going to have the courage to throw him out of the room?
>> if i were a board member there, ed, i would not even allow him to show up, let alone throw him out of the room. it's outrageous that they're even considering hearing what he has to say. and they're also hearing from the treasury department . i can't believe the treasury department is going the waste its time and go into this boardroom tomorrow. i cannot believe this board is even considering joining this lawsuit.
>> is this one man's vengeance, greenberg ?
>> that's what this is. this is hank greenberg trying to get restitution for all that was done wrong to him beginning in may of 2005 when he had to resign from the company.
>> and what if aig had gone under? what if he we had not done this?
>> the one thing hank paulson was absolutely right about is the ripple effects of this would have been tremendous. people don't understand this particularly well, but aig had insured the mortgage wrist in the world. when i did that, it collected billions of dollars in premiums. it paid hundreds of millions to salaries and bonuses to the people that work there. but the effect of aig going down would have been disastrous. it was the right thing to bail them out. and it's the right thing for aig to say thank you very much.
>> will cohan, good to have you with us tonight. that's "the ed show." i'm ed