Pay AIG Billions More? HELL NO!
I think I speak for about 319 million Americans, give or take a handful, when I say, “HELL NO!” to AIG’s former chief executive, Maurice “Hank” Greenberg. Greenberg was at the helm of the world’s largest insurance company when it made the fateful decision to begin selling large quantities of credit default swaps in order to boost its profits. These toxic loans, known to be bad investments by Wall Street managers, nearly crashed the world economy when the bubble burst in 2008. But for massive bailouts and stimulus, we would all be standing in bread lines right now. Even though the economy was saved, more or less, the executives made off like bandits, with bonuses to buy a mansion and nary a day in jail.
So, it may seem both darkly comical and enraging enough to burst the capillaries in your eyeballs that Greenberg is now taking a second shot at a lawsuit against the US government. The government bailed out AIG for $182 billion which was repayed in 2012. Greenberg now wants the government to pay between $25 billion and $40 billion to shareholders. He contends that, because the government took over 80% of AIG’s shares, the shareholders lost value on their shares. The government argued that Greenberg and his stupendously avaricious friends were not harmed in any way because, absent the bailouts, their shares would have been worth zero. The case was previously thrown out of federal district courts in New York and Washington D.C. with a mighty harrumph.
But Greenberg is trying again, and he has found a more receptive audience in the U.S. Court of Claims, a few steps from the White House, where George W. Bush-appointed federal judge Thomas C. Wheeler is reportedly taking Greenberg’s claims seriously.
It’s significant that Greenberg was forced out of AIG by US regulators even before the crash, according to the Washington Post, for:
…sham transactions that allowed AIG and its corporate customers to manipulate reported earnings, avoid taxes, evade regulatory requirements and hide risks and liabilities from shareholders.
But he remained the company’s largest shareholder, with 20% of shares. He argues that when the US government took over controlling shares of AIG, it was tantamount to the government stealing his property.
This is not a case where the government built a highway through someone’s house and devalued the property before reimbursing them. Hank Greenberg is a criminal who was forced out of his position for corporate crime. When the tab came due, the American people had to foot the bill because his crime, and that of other Wall Street executives, was so massive, that it threatened the US economy, the world economy, the very concept of capitalism itself. Hank Greenberg threatened civilization with his greed. He was not substantively punished for this. Now he wants to be paid lots and lots of money, again, by the American people, via the American government.
The issue here is not whether an extremely rich criminal was cheated out of some of his riches because the government, in its rush to save the modern world from Hank Greenberg, could have handled Greenberg’s historic mess a little better. The issue is whether the US government is constituted, as our Founders wrote, by “We The People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity,” or the US government is constituted by the corporations to ensure the personal profit and enrichment of corporate criminals like Maurice “Hank” Greenberg. Right now, it’s not clear which one it is.
If Judge Wheeler rules for Greenberg, it would be an outrageous and historic insult to the American people and the United States government. Such a ruling would lend enormous credence to last year’s Princeton study that proposed the US is an oligarchy, not a functioning democracy. It would be a “let them eat cake” ruling. The kind of insult on top of injury that could shift the tectonic plates of simmering, mass outrage and cause unpredictable historical ripples. The type of hubris that the impoverished French dragged kicking and screaming to the guillotine two centuries ago.
In the same 2008 crash, as alarms were ringing in financial sectors around the world, one country saved not only its economy, but also its democracy and its capitalism. The US bailed out the banks and let the people pay, effectively subverting democracy, and subverting capitalism by socializing loss and privatizing profit. Iceland, meanwhile, kept its banks on the hook, as in classic capitalism. It ensured the public welfare, as in a functioning democracy. Iceland let the banks go bankrupt, arrested and jailed financial criminals, expanded its social safety net, and bailed out its people who were at risk. Many economists agreed that this was the wisest possible course of action, and lamented that the US and Europe had not followed Iceland’s lead. Iceland’s response was the definition of both functioning democracy and functioning capitalism.
America’s response belies disease in its democracy and its capitalism. Greenberg now wastes the Justice system’s time arguing that America wasn’t enough of an oligarchy. He thinks the US government should make it painfully clear that the debt of the American people to the criminals on Wall Street is endless.
If the US was anything like democratic capitalist Iceland, Greenberg wouldn’t even be able to file this lawsuit. No one should ever hear another peep out of Greenberg for the rest of his life. Greenberg should be in prison. If Judge Wheeler rules in Greenberg’s favor, then he should be impeached and investigated by the IRS. The US government should give Greenberg not one penny.
Greenberg is already a very lucky man. He’s lucky to be rich. He’s lucky to have his freedom. At 90 years old, he is lucky to have his health. He should leave it at that, and listen to what I believe virtually the entire American population would say to his request for billions more dollars from us:
Feature image via YouTube.
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Marc Belisle is the Reverb Press World Affairs Editor. He is a writer, activist and teacher. He has a Master’s degree in International Conflict Analysis from the Brussels School of International Studies. READ MORE BY MARC.