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(CNBC)   AIG: "Thanks for bailing us out, America. BTW, we're gonna sue the sh*t out of you for bailing us out"   (cnbc.com ) divider line
    More: Ironic, fiduciary duties, University of San Diego, just compensation, accounting scandals, AIG  
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3840 clicks; posted to Business » on 08 Jan 2013 at 7:16 AM (3 years ago)   |   Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



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2013-01-08 12:51:25 AM  
FTFA: "The A.I.G. board of directors takes its fiduciary duties and business judgment responsibilities seriously," said a spokesman, Jon Diat.

Yeah, so much so that your farking company needed the bailout.

fark all of the board of directors, you and the old fart who started the suit. Sideways.
 
2013-01-08 01:32:15 AM  
Good luck with that...
 
2013-01-08 05:05:13 AM  

Aulus: FTFA: "The A.I.G. board of directors takes its fiduciary duties and business judgment responsibilities seriously," said a spokesman, Jon Diat.

Yeah, so much so that your farking company needed the bailout.


Exactly.

"Its board members, most of whom joined after the bailout"

Oh.
 
2013-01-08 06:27:44 AM  
Ffs.
 
2013-01-08 07:17:05 AM  
They should watch for drones from now on.
 
2013-01-08 07:21:26 AM  
Dissolve the company. Confiscate their assets and the assets of the CEO's. Burn the building, piss on the ashes.

farking worthless parasites.
 
2013-01-08 07:25:22 AM  
We're all suckas.
 
2013-01-08 07:26:32 AM  
Interesting.

If they join, they lose what little respect they got by paying off the loans early and add fuel to those who would like to nationalize the financial sector.

If they abstain, they get sued for breach of fiduciary duty.

The problems of thieves.
 
2013-01-08 07:28:30 AM  
Okay, I read it as this: They are not suing claiming they did not need to be bailed out, but they claim the bailout could have been 'handled better' thus increasing the profits for the share holders of the company.
So they are going to sue for the imaginary value of the profits they think should have happened as a result of the bailout.

This might be farking brilliant. If they sue and win, and the government has to pay out billions then it will change the way all government bailouts in the future are going to happen. When a company drives itself into the ground, the government will probably consider the options and simply decide there is too much risk the government will loose too much money, thus decline to bail out the company. It might be the first step in getting rid of the 'socialize the risk - privatize the profits' mentality that is taking over.

All that said, I hope a federal judge takes this case, throws it out of court and fines AIG for being so stupid and greedy.
 
2013-01-08 07:30:04 AM  
try working for them they are just horrible.
 
2013-01-08 07:52:19 AM  
That is one jury I would love to be on.

"Your Honor, we find for plaintiff and order the plaintiff to pay the defendant one trillion dollars."
 
2013-01-08 08:04:59 AM  
AIG: Thanks, Now give us some more money!
 
2013-01-08 08:08:25 AM  
If they paid off the loans sooner than expected, it doesn't mean we handled them too roughly. It means we didn't squeeze the bastards hard enough.
 
2013-01-08 08:08:46 AM  

Psylence: Confiscate their assets


That's what they did to shareholders. You can't ignore the rights of preferred stock holders because it's expedient. Common stock does not have a claim on assets. Preferred stock does. Forced conversion of preferred to common stock and taking a 92% stake is confiscating assets sure sounds like confiscating assets.
 
2013-01-08 08:09:40 AM  
Need coffee and proofreading now.
 
2013-01-08 08:10:52 AM  
Joke is on us. Not sure why the government got into bed with these vultures...
 
2013-01-08 08:23:37 AM  
The case has already been dismissed because it is terrible.

This crap happens all the time when a company goes belly up. The owners lose everything, whoever is willing to put up money becomes the new owners. The old owners scream that "if they had done this and this I wouldn't have lost my money", always forgetting the new owners owe nothing to the old ones.
 
2013-01-08 08:37:42 AM  

Bruce Campbell: Psylence: Confiscate their assets

That's what they did to shareholders. You can't ignore the rights of preferred stock holders because it's expedient. Common stock does not have a claim on assets. Preferred stock does. Forced conversion of preferred to common stock and taking a 92% stake is confiscating assets sure sounds like confiscating assets.


If the company needed the bailout to stay afloat, then it's safe to say the fair market value of those assets was roughly $0. They can rest assured they were fairly compensated for their confiscated assets - and since they still have common stock, they even came out ahead.
 
2013-01-08 08:58:24 AM  

flamingboar: They should watch for drones from now on.


Can drones be equipped with guillotines?
 
2013-01-08 08:59:23 AM  

eKonk: Bruce Campbell: Psylence: Confiscate their assets

That's what they did to shareholders. You can't ignore the rights of preferred stock holders because it's expedient. Common stock does not have a claim on assets. Preferred stock does. Forced conversion of preferred to common stock and taking a 92% stake is confiscating assets sure sounds like confiscating assets.

If the company needed the bailout to stay afloat, then it's safe to say the fair market value of those assets was roughly $0. They can rest assured they were fairly compensated for their confiscated assets - and since they still have common stock, they even came out ahead.


Not necessarily. It could simply mean that the value of their liabilities exceeded the value of their assets. Being bankrupt is not the same as being worthless.

That said, if we had just let AIG go under, we wouldn't be having this problem.

/We might be having other problems.
//But we wouldn't be having this one.
 
2013-01-08 09:03:24 AM  

badLogic: That is one jury I would love to be on.

"Your Honor, we find for plaintiff and order the plaintiff to pay the defendant one trillion dollars."


/hold pinkie to side of mouth
 
2013-01-08 09:07:07 AM  
So maybe the U.S. should turn around and sue AIG and this shiatstick for the damage they did to the global economy.

One trillion dollars doesn't sound so Austin Powers-ish in that scenario.
 
2013-01-08 09:07:57 AM  

badLogic: That is one jury I would love to be on.

"Your Honor, we find for plaintiff and order the plaintiff to pay the defendant one trillion dollars."


You'd have to put your pinky to the corner of your mouth when you say that, though.
 
2013-01-08 09:08:52 AM  
$^!&^#*!^&$!(!@#^!??!?!?

That's what I get for changing my post to something more "clever."
 
2013-01-08 09:09:45 AM  
Another thing to consider, without the bailout AIG would've gone under. How much shareholder value is there in a company going Chapter 7?
 
2013-01-08 09:18:52 AM  

jaggspb: badLogic: That is one jury I would love to be on.

"Your Honor, we find for plaintiff and order the plaintiff to pay the defendant one trillion dollars."

/hold pinkie to side of mouth


Payable in the form of one platinum coin.
 
2013-01-08 09:19:29 AM  
Where is the shareholder lawsuit against the former BoD and management for destroying shareholder value?

Seems to me that given the choice between going belly up, and being raped by the US Government but retaining some dignity, the rape is the lesser of two evils.
 
2013-01-08 09:19:58 AM  
I could see some people at AIG wanting some kind of revenge for having to operate under the restrictions that the gov't placed on them. I don't know the man personally, but I have to wonder if CEO Benmosche is someone like that. He almost didn't take the job unless he could get some special compensation.
 
2013-01-08 09:24:14 AM  

Bruce Campbell: Psylence: Confiscate their assets

That's what they did to shareholders. You can't ignore the rights of preferred stock holders because it's expedient. Common stock does not have a claim on assets. Preferred stock does. Forced conversion of preferred to common stock and taking a 92% stake is confiscating assets sure sounds like confiscating assets.


Yes, but when the choice is that or getting in line for Chap 11 proceedings, even the dumbest shareholder (I should think) would prefer a company that will be around longer than the courts' interest in it.
 
2013-01-08 09:43:45 AM  

BizarreMan: Seems to me that given the choice between going belly up, and being raped by the US Government but retaining some dignity, the rape is the lesser of two evils.


Yeah, because if rape is inevitable one should just relax and enjoy it. AmIright?
 
2013-01-08 09:58:06 AM  
LOLOL. If subprime borrowers were wronged by the lenders who lent them money (which many farkers nonsensically believe), then I suppose its possible that AIG was wronged by the entity that lent them money. Interest rate of 14% is in fact higher than most subprime borrowers got. Ironic indeed.

Practically, i'd guarantee that the board and management (the significant majority of whom came on after the crisis) are desperately trying to figure a way to NOT join this suit without getting sued themselves. They know full well that the govt bailout was the best deal available, and recognize how scummy it would be to sue the government, but they have to heed to their fiduciary duty to shareholders.

The former CEO of AIG (forced out in an accounting scandal im 2005) who initiated this suit is a scumbag of the highest order. An absolute weasel.
 
2013-01-08 10:03:00 AM  

xtragrind: Joke is on us. Not sure why the government got into bed with these vultures...


In Too Big To Fail, Aaron Ross Sorkin has some interesting insight on the behind the scenes management of the company and how things got to where they did. Overall his take seems to be a case of the right hand not knowing what the left was doing (and not really knowing what right was doing either if you read the subtext).

To answer your question in basic terms though, AIG was the principle insurer against bad mortgages. If AIG had gone under, it would have meant that nearly every bank that held mortgages were no longer insured against the enormous and often completely unidentifiable losses everyone was looking at. All of these banks would have had to quickly obtain cash reserves as collateral in a market where no one was dealing or face declaring bankruptcy.

In the simplest of terms, if AIG had failed then the rest of the dominoes would fall like a house of cards, checkmate!
 
2013-01-08 10:07:06 AM  

hungryhungryhorus: xtragrind: Joke is on us. Not sure why the government got into bed with these vultures...

In Too Big To Fail, Aaron Ross Sorkin has some interesting insight on the behind the scenes management of the company and how things got to where they did. Overall his take seems to be a case of the right hand not knowing what the left was doing (and not really knowing what right was doing either if you read the subtext).

To answer your question in basic terms though, AIG was the principle insurer against bad mortgages. If AIG had gone under, it would have meant that nearly every bank that held mortgages were no longer insured against the enormous and often completely unidentifiable losses everyone was looking at. All of these banks would have had to quickly obtain cash reserves as collateral in a market where no one was dealing or face declaring bankruptcy.

In the simplest of terms, if AIG had failed then the rest of the dominoes would fall like a house of cards, checkmate!


Correct. The powers that be were completely shocked at how significant the impact was from the default of Lehman. They learned their lesson quickly enough to not let the next, even larger, domino fall.
 
2013-01-08 10:10:01 AM  

Slives: Okay, I read it as this: They are not suing claiming they did not need to be bailed out, but they claim the bailout could have been 'handled better' thus increasing the profits for the share holders of the company.
So they are going to sue for the imaginary value of the profits they think should have happened as a result of the bailout.

This might be farking brilliant. If they sue and win, and the government has to pay out billions then it will change the way all government bailouts in the future are going to happen. When a company drives itself into the ground, the government will probably consider the options and simply decide there is too much risk the government will loose too much money, thus decline to bail out the company. It might be the first step in getting rid of the 'socialize the risk - privatize the profits' mentality that is taking over.

All that said, I hope a federal judge takes this case, throws it out of court and fines AIG for being so stupid and greedy.


It would be like suing the Red Cross because while they saved your life with that blood transfusion after you got injured they failed to give you a new liver you ended up needing after trying to drink to forget all you lost in the disaster, plus they failed to provide you that emergency penile reduction surgery you need to stop scaring off your lady friends.
 
2013-01-08 10:14:12 AM  

Bruce Campbell: Psylence: Confiscate their assets

That's what they did to shareholders. You can't ignore the rights of preferred stock holders because it's expedient. Common stock does not have a claim on assets. Preferred stock does. Forced conversion of preferred to common stock and taking a 92% stake is confiscating assets sure sounds like confiscating assets.


The government didn't force them to take the bailout.
 
2013-01-08 10:16:51 AM  

Bruce Campbell: Psylence: Confiscate their assets

That's what they did to shareholders. You can't ignore the rights of preferred stock holders because it's expedient. Common stock does not have a claim on assets. Preferred stock does. Forced conversion of preferred to common stock and taking a 92% stake is confiscating assets sure sounds like confiscating assets.



forced conversion? hahahahaha

AIG Preferred class A shares didn't go anywhere.

The government received convertible preferred stock warrants when they gave AIG the initial credit line. the holders of AIG's stock were given a block of warrants to compensate for the dilution.

AIG should be suing the old board of directors, not the government.
 
2013-01-08 10:18:28 AM  
common stock doesn't have a claim on assets? wtf are you smoking?
 
2013-01-08 10:25:33 AM  

Bruce Campbell: Psylence: Confiscate their assets

That's what they did to shareholders. You can't ignore the rights of preferred stock holders because it's expedient. Common stock does not have a claim on assets. Preferred stock does. Forced conversion of preferred to common stock and taking a 92% stake is confiscating assets sure sounds like confiscating assets.


Which is okay so long as there is "just compensation".  Given that all the perferred stock was about to be as valuable as wallpaper and nothing else, the fact that they got more than a penny on the dollar says they were OVER-compensated.
 
2013-01-08 10:35:34 AM  
In an alternate dimension, the dimension of derp, President Romney is letting them win the case while making sure they give some dividends to his son, Fapp.
 
2013-01-08 10:41:22 AM  

dumbobruni: Bruce Campbell: Psylence: Confiscate their assets

That's what they did to shareholders. You can't ignore the rights of preferred stock holders because it's expedient. Common stock does not have a claim on assets. Preferred stock does. Forced conversion of preferred to common stock and taking a 92% stake is confiscating assets sure sounds like confiscating assets.


forced conversion? hahahahaha

AIG Preferred class A shares didn't go anywhere.

The government received convertible preferred stock warrants when they gave AIG the initial credit line. the holders of AIG's stock were given a block of warrants to compensate for the dilution.

AIG should be suing the old board of directors, not the government.


No kidding.  They took the deal.  This is going to be fun to watch.
 
2013-01-08 11:44:25 AM  
April 17, 2009
Less than a week after the federal government had to bail out American International Group Inc., the company sent executives on a $440,000 retreat to a posh California resort, lawmakers investigating the company's meltdown said Tuesday.

The tab included $23,380 worth of spa treatments for AIG employees at the coastal St. Regis resort south of Los Angeles even as the company tapped into an $85 billion loan from the government it needed to stave off bankruptcy.
 
2013-01-08 11:48:28 AM  

Dr Dreidel: Yes, but when the choice is that or getting in line for Chap 11 proceedings, even the dumbest shareholder (I should think) would prefer a company that will be around longer than the courts' interest in it.


They were illiquid, and organizations come out of illiquidity all the time through reorganization. In this case less than 4 years and at credit card rates of interest. The Fed didn't want to deal with the market fragility. The bailout was done out of fear.

dumbobruni: AIG Preferred class A shares didn't go anywhere.

The government received convertible preferred stock warrants when they gave AIG the initial credit line. the holders of AIG's stock were given a block of warrants to compensate for the dilution.


Yes they did go somewhere. To the bottom of the stack, initially. Once Series E and F were issued, they lost senior status Link. Preferred Series A was a mandatory conversion preferred stock that converted in 2011. Also the warrants were for common stock. It's currently trading at 0.00, so I'm gonna by a billion shares right now. Link
 
2013-01-08 11:53:21 AM  

badLogic: That is one jury I would love to be on.

"Your Honor, we find for plaintiff and order the plaintiff to pay the defendant one trillion dollars."


The plaintiff is AIG (or at least that shareholder); the defendant is the US government.
 
2013-01-08 12:01:51 PM  

Mike Chewbacca: badLogic: That is one jury I would love to be on.

"Your Honor, we find for plaintiff and order the plaintiff to pay the defendant one trillion dollars."

The plaintiff is AIG (or at least that shareholder); the defendant is the US government.


thatsthejoke.jpg
 
2013-01-08 12:05:04 PM  

red5ish: Less than a week after the federal government had to bail out American International Group Inc., the company sent executives on a $440,000 retreat to a posh California resort, lawmakers investigating the company's meltdown said Tuesday.

The tab included $23,380 worth of spa treatments for AIG employees at the coastal St. Regis resort south of Los Angeles even as the company tapped into an $85 billion loan from the government it needed to stave off bankruptcy.


This is incorrect. It was a sales incentive program for independent agents for selling a specific level of life insurance premium to get the reward. Independent agents are not not beholden to AIG, they just sell its products as well as the product of its competitors. These are typically attended as well by a few company marketing representatives, and occasionally an executive or two; in this case none. It's a business expense to keep the independent agents selling its products. Breaching an incentive program with people who have no obligation to you is a great way to lose market share.

Link
 
2013-01-08 12:12:29 PM  

Bruce Campbell: red5ish: Less than a week after the federal government had to bail out American International Group Inc., the company sent executives on a $440,000 retreat to a posh California resort, lawmakers investigating the company's meltdown said Tuesday.

The tab included $23,380 worth of spa treatments for AIG employees at the coastal St. Regis resort south of Los Angeles even as the company tapped into an $85 billion loan from the government it needed to stave off bankruptcy.

This is incorrect. It was a sales incentive program for independent agents for selling a specific level of life insurance premium to get the reward. Independent agents are not not beholden to AIG, they just sell its products as well as the product of its competitors. These are typically attended as well by a few company marketing representatives, and occasionally an executive or two; in this case none. It's a business expense to keep the independent agents selling its products. Breaching an incentive program with people who have no obligation to you is a great way to lose market share.

Link


Yeah, but just saying "executives" inspires more outrage, see?

Acknowledging that it was an incentive program to improve sales and therefore profits of the company then owned by the taxpayer doesn't justify impotent proletariat indignation, and is therefore un-Farkworthy.
 
2013-01-08 01:14:03 PM  

Bruce Campbell: This is incorrect. It was a sales incen


Facts, in this case, are unimportant. The result of this "news story" was the decimation of the hospitality industry all across the United States as corporations paid cancellation fees for bookings then stopped holding conferences, retreats, etc.
Even companies that were not bailed out or in financial difficulties stopped spending any money at resorts because it was such horrible PR. Big corporations had their Christmas parties in their cafeterias and lunch rooms rather than spend a dime in public. Cities whose main industry is the hospitality industry were slammed and experienced some of the highest layoffs and unemployment rates in the nation.
 
2013-01-08 01:27:06 PM  

dumbobruni: common stock doesn't have a claim on assets? wtf are you smoking?


In a liquidation scenario? I didn't know I needed to point out the practicality of a common stock claim within that context. Allow me to rephrase it so it sounds like there is still something of value to its claim on assets. It gets to pick what's left of the nonexistent carcass after liquidation. So it's got that going for it. Which is nice.
 
2013-01-08 01:37:54 PM  
I think "Bailout" for AIG and GM is something of an understatement. It's closer to say that the U.S. government bought the companies outright.

Seems like a reasonable lawsuit. I do think if the government makes a profit off of those two companies (beyond reasonable interest) that it should be distributed to the shareholders who would otherwise get nothing.
 
2013-01-08 02:21:28 PM  

The Jami Turman Fan Club: I do think if the government makes a profit off of those two companies (beyond reasonable interest) that it should be distributed to the shareholders who would otherwise get nothing.


Why?
 
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