How to be Offensive: AIG Shareholders Sue Feds
Talk about biting the hand that bails you out of bankruptcy. AIG shareholders have brought suit against the federal government because the bailout deal had a “punitive” interest rate of more than 14 percent and diluted the holdings of existing shareholders due to the government’s large stake in the company. In short, they are suing because they didn't like the terms of the deal that saved the insurer from bankruptcy. Never mind that these shareholders might not even exist today, much less have a dime, if the federal government hadn't come to the rescue.
The suit is just another example of how AIG is completely out of touch with reality. The company’s CEO has lamented that neither the Treasury not the Fed has said, “thank you” for paying the money back. It’s as if AIG doesn’t remember that it was one of the main reasons the economy tanked and that the company would have folded without the $135 billion federal bailout.
The AIG shareholder’s attitude is endemic of the much larger issue of corporate victimhood. Goldman Sachs, another bailout recipient, insists that it is getting bad publicity for something that wasn’t their fault. Like AIG, the claim is markedly false and there is substantial evidence of wrongdoing. It’s the same story with JP Morgan Chase. These institutions that received billions of taxpayers’ dollars to bail them out, from a situation that they caused nonetheless, still believe they have done nothing wrong.
What makes this attitude even more offensive is that the people that really suffered from the institutional bad behavior are receiving a fraction of federal attention that AIG and others did. A fund to help struggling homeowners has distributed only 3 percent of its total. In fact, most of the housing assistance programs have under-delivered, including a loan modification program that has reached less than a third of its targeted population. Congress did nothing to pass any job creation programs. And little was done for the millions of Americans who saw their retirement savings gutted or wiped out entirely.
The AIG suit also shows the fundamental problem with our corporate structure where shareholder profit rules above all else. Shareholders filing suit for not making enough profit off of being bailed out shows just how distorted the profit supremacy is. If shareholders sue for not making enough money from being bailed out, then there is zero space for implementing practices that would be better for the broader good but could incur a cost, like environmental protections or better wages.
Until we break the profit supremacy, corporations are legally bound to act like the AIG shareholders-- no matter how insane or offensive that behavior may be.
