American International Group Inc. said it has a duty to weigh joining a suit by former Chief Executive Officer Maurice “Hank” Greenberg that claims the insurer’s 2008 U.S. bailout was unconstitutional.
“The board of directors has fiduciary and legal obligations to the company and its shareholders to consider the demand served on us,” CEO Robert Benmosche said yesterday in a statement.
The board is scheduled to meet today to hear arguments from representatives of Greenberg and the U.S. Lawmakers including Senators Elizabeth Warren and Robert Menendez and Representative Peter Welch said New York-based AIG shouldn’t join the suit.
“Taxpayers are still furious that they rescued a company whose own conduct brought it down,” Welch said in a letter to AIG Chairman Steve Miller. “Don’t rub salt in the wounds with yet another reckless decision.”
Greenberg’s investment firm Starr International Co., an AIG shareholder, filed the suit in 2011. Starr claims the rescue cheated investors by diluting their stakes.
AIG accepted a rescue that swelled in value to $182.3 billion after it couldn’t raise money in equity and bond markets to pay clients who bought protection against losses on mortgage- related securities.
Greenberg is pursuing some of his claims in AIG’s name, and the insurer has three options to respond, according to yesterday’s statement. It can take over those claims and litigate them itself, allow Greenberg to prosecute them on its behalf, or prevent him from prosecuting the claims.
Challenge Likely
Greenberg is likely to challenge a decision blocking him from proceeding, AIG said in the statement, which came after the New York Times reported on the case.
“It is the AIG board’s obligation and intention to consider seriously Starr’s demand and respond to it in a manner that the board believes is in the best interest of the company,” AIG said.