AIG Considers Joining Bailout Lawsuit

Headlines are dominated today by news that AIG, American International Group Inc., the insurance and financial company that received a bailout rescue from the federal government just five years ago, may join a shareholder lawsuit against the government.

A pending lawsuit filed by former AIG CEO Maurice "Hank" Greenberg’s investment firm Starr International Co. Inc. is seeking $25 billion in damages, according to the Associated Press, and is being brought on behalf of Starr International and AIG shareholders.

The lawsuit claims that the government’s bailout, including $182 billion dollars alone to AIG, left shareholders high and dry when it took an almost 80 percent share of Starr International. In other words, the lawsuit holds that the terms of the bailout were unlawful and the federal government is now responsible for compensation.

AIG has a binding obligation to consider Greenberg’s solicitation to join the lawsuit. Whether AIG joins or allows Starr International to proceed on their behalf will be examined in a meeting of directors on Wednesday but a decision will not be publicized until later this month.

Reports out of the White House are heated as many Democratic officeholders are criticizing the move, arguing that the bailout saved AIG from collapse and that to retaliate with legal action now is offensive. But most are speculating that AIG will not join Starr International legal efforts to recover damages; given the insurance company's recent ad campaigns expressing gratitude to the American people for the bailout and acknowledging their debt, it would be a shock to many if AIG were to move forward with the lawsuit.

Below is video clip from CNN.com news commentary concerning AIG's position in the lawsuit and where they stand post-bailout.

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