Wise decision, AIG. Sometimes salvaging one’s reputation is more important than trying to prove a point in court.
In case you missed it, insurance giant American International Group Inc. decided last week not to sue the federal government over the $182 billion bailout it received.
You might recall that AIG in 2008 became the poster child for all that was wrong with corporate America. The insurer had been making huge bets on mortgage investments that went south.
The bailout came because regulators worried that the company’s failure would further hurt a financial system already teetering as Lehman Brothers collapsed.
The government received a nearly 80 percent stake in the company as part of the bailout.
The Treasury Department said last month that it had sold all of its remaining shares in AIG, winding up with $22.7 billion more than what it put into the company.
Now, of course, we could argue over whether the federal government should have been taking over companies in the first place.
That is, after all, the basis of the lawsuit that was filed in November 2011 by Starr International Co. Inc., the investment firm of former AIG CEO Maurice Greenberg.
It was filed on behalf of the firm and AIG shareholders, claiming that the terms of the bailout were onerous and did not properly compensate them. And it required the AIG board to consider whether it would join in the lawsuit.
Of course, the timing couldn’t have been worse.
AIG has been running an ad campaign called “Thank You America.”
One ad opens with the words “AIG, we said we were going to turn it around, and we did.”
It touts the $144 million it has paid out in claims to the victims of the tornado in Joplin, Mo., and its current efforts to help the East Coast recover from Hurricane Sandy.
“We’re leaner and focused on what we do best,” the ad continues.
A restructuring has cut the company to half its former size. The Associated Press reports that AIG spun off Asian life insurer AIA Group in 2010, raising $20 billion. That money was used to pay the bailout debt.
“We repaid every dollar that America lent us,” the ad continues. “Everything, plus a profit of more than $22 billion.”
AIG even seems to acknowledge that the company’s survival was on the line.
“When we make guarantees for people’s lifetimes, we have to act as a company that will make sure that we are here for their lifetimes,” it states.
Gratitude and a little humble pie can go a long way.
Too bad the talk of suing the American people took a little of the luster off what just might have been a public relations coup for the company.
The question now is whether the board’s decision to take a pass on that lawsuit is enough to keep the good will flowing.
• Joan Oliver is the assistant news editor for the Northwest Herald. She can be reached at 815-526-4552 or by email at email@example.com.