Is there such a thing as excess in capitalism? I thought about that last
week when insurance giant AIG -- the one on life support in 2008 until
bailed out by taxpayers -- toyed with the idea of joining some of its
shareholders in a lawsuit against the federal government.
This was the same week that AIG ran ads thanking Americans for coming to its rescue. After a long meeting with shareholders and the fed, AIG declined to join the suit, giving hope that a good deed is still a good deed even in the world of predatory capitalism.
The suit was filed by Maurice Greenberg, former CEO of AIG who is now a
major investor with his new company, Starr International. The suit was
tossed out of a New York court but was allowed to proceed in a D.C.
Greenberg argued that the government charged too high of an interest rate at 14 percent, but the company freely entered into the bailout terms and could’ve chosen bankruptcy that would have left shareholders with nothing.
I’m sure the same people bellyaching over the 14 percent would have no
qualms with payday loan companies charging 300 percent interest on their
poor clientele. In fact, many of those same complainers probably invest
in payday loans businesses.
Starr also cited the Fifth Amendment in its suit, the one that says the government cannot take private property for public use without just compensation. This is asinine. AIG was not taken by the government for public use. The company agreed to a loan to stay afloat. George W. Bush’s secretary of the Treasury, Hank Paulson, decided that AIG was too big to fail. It’s clear now that all of these companies on the brink in 2008 should’ve tanked to begin the economy anew, but that’s another story.