(Bloomberg) -- For Hank Greenberg, vindication is not enough.
Despite a victory over the federal government Monday in a six-year fight over the bailout of American International Group Inc., his Starr International Co. announced Tuesday that it will appeal the verdict because it wasn’t awarded any money as part of the judgment. The company said it disagreed with the court’s conclusion that there’s no remedy for the government’s illegal conduct.
The terms of an $85 billion rescue loan given to the company in the midst of the 2008 financial crisis were illegal, a federal judge in Washington ruled Monday, siding with Starr in a lawsuit on behalf of AIGshareholders. But investors would have been worse off if the government did nothing, the judge found, and awarded not a penny, though Starr sought as much as $40 billion.
Starr said in a statement Tuesday it will appeal those findings, arguing the government shouldn’t be allowed to “keep billions of dollars of citizens’ money in its pocket.”
The Justice Department has not said whether it will appeal the decision as well.
“They weren’t suing for a moral victory,” Dennis Kelleher, head of the financial advocacy group Better Markets, said Monday of Starr and Greenberg. “They were suing for cold hard cash.”
Jon Diat, a spokesman for New York-based AIG, declined to comment on Starr’s statement.
2011 Suit
Starr sued the U.S. in November 2011, claiming the government broke the law by insisting on 80 percent of AIG stock and imposing a 12 percent interest rate on the loan. Wheeler agreed, saying that while the Fed had authority to make an emergency loan to AIG, it didn’t have the authority to take shares in exchange for it.
The government countered the demands were justified since the loan was high-risk. As evidence, government lawyers cited similar terms in a private rescue that fell through over doubts about AIG’s ability to repay.
Despite the lack of a damages award, U.S. Court of Claims Judge Thomas Wheeler’s ruling Monday was seen as a dramatic rebuke of the government’s rescue plan that could limit future actions in a crisis.
The case is Starr International Co. v. U.S., 11-cv-00779, U.S. Court of Federal Claims (Washington).
--With assistance from Betty Liu and Sonali Basak in New York.
Copyright 2018 Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
Want to continue reading?
Become a Free PropertyCasualty360 Digital Reader
Your access to unlimited PropertyCasualty360 content isn’t changing.
Once you are an ALM digital member, you’ll receive:
- Breaking insurance news and analysis, on-site and via our newsletters and custom alerts
- Weekly Insurance Speak podcast featuring exclusive interviews with industry leaders
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical converage of the employee benefits and financial advisory markets on our other ALM sites, BenefitsPRO and ThinkAdvisor
Already have an account? Sign In Now
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
