Bailed Out Billionaire Hank Greenberg Suing The Government For More, Has Chance To Win

The financial crisis of 2008 had decimated the economy and the government had to spend millions of dollars to bail out mortgage giants like Fannie Mae, Freddie Mac and AIG. Even as Wall Street's risky behaviour triggered this menace, the executives apparently continued to get their fat bonuses and salaries. But they want more.

Maurice Hank Greenberg, former CEO of AIG insurance, is suing the government for taking away 80 percent of his stock as a condition for the bailout. His lawsuit was greeted with disbelief and many in the government called him an ingrate. It was supposed to look like a unwinnable battle. But not this time, as judges at the US Federal Claims Court have looked into the merits of case, the balance seems to have tilted in favour of AIG, reports CNBC.

Hank Greenberg had ruled AIG as a feudal despot and made his profits by clever understanding of the loopholes in corporate law. He supported risky business models and eschewed internal controls and regulatory compliances, reports Washington Post. Greenberg's Starr International is suing the government for charging an interest rate of 14 percent, which, according to him, bordered on extortion. Greenberg's lawyers have also pointed out that the other firms got lenient terms for the bailout.

According to the New York Post, David Boies, lawyer for Greenberg, said, “They (Federal Reserve) were punitive to AIG because someone had to be a political scapegoat. Out of 75 years, there were hundreds and hundreds of 13(3) loans, and they never required equity except in the case of AIG.” The most important argument is that the government tried to demonise AIG and arm-twisted it to part with the common stock. Greenberg is demanding US$40 million ($51 million) from the government as damages and is seeking the return of the stock.

But it has to be noted that AIG had approached the Federal Reserve for a loan after they were rebuffed by private lenders. The terms of the loan include the reserve would lend the money at 14 percent interest rate and ownership of 80 percent of the stock. These terms were offered to the private lenders by AIG's investment bankers without success.

As the case continues, it has to be noted that Boies is a high profile lawyer who has had maximum success in winning anti trust cases. His high profile cases includes the anti-trust case against Microsoft, disputes with SEC and many others. But many in the media like Jon Stewart have made fun of Greenberg and compared his lawsuit to childish tantrums.

Watch John Stewart's take on Greenberg's suit on YouTube

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