American International Group (AIG), a diverse business with accounts all over the world, flirted with financial meltdown during the financial crisis of 2008 causing the US government to come to the rescue. AIG received the largest bailout according to the Connecticut Post.
Information released recently indicates that AIG has been placed in a perilous position by its former CEO. The former CEO is suing the US government on behalf of shareholders alleging that the bailout negatively impacted shareholder rights. Under the law and rules of corporate governance, AIG has to take an affirmative act in connection with the lawsuit. It has three options. AIG can attempt to take over the suit on behalf of shareholders, it can attempt to dissuade its former CEO from pursuing the lawsuit or it can opt to allow the former CEO to pursue the case. Each option has important ramifications for the company and its shareholders.
One such ramification is none other than the ire of the American public and Congressmen. In fact, a couple of Congressmen have already written a letter to AIG berating the company for even considering the possibility of suing the government and recommending AIG not pursue such action. Some called the idea “outrageous” and “unbelievable” according to reporting by The Hill newspaper.
As a Maryland Bankruptcy lawyer I am familiar with AIG and other related businesses due to their participation in the mortgage industry. In simple terms, AIG provides a type of insurance for what are known a mortgage backed securities sold by mortgage banks. Mortgage backed securities are pools of individual mortgages put together by banks and sold to outside investors.
Many of the clients I have helped as a Baltimore bankruptcy lawyer had a loan that was sold several times by the original lender. These sales often compounded the problems associated with obtaining a loan modification or other workouts including chapter 13 bankruptcies.
This case and other lawsuits about the mortgage crisis may begin to answer questions about the financial meltdown that have gone unanswered for far too long. Unfortunately, there has not being enough criminal actions brought by governmental entities whether it is at the State or Federal level.
AIG is expected to make its decision shortly and it could ignite further conversation. Stay tuned.
This is a general overview and is not meant as a comprehensive discussion. For this reason and others, it is always a good idea to speak with a knowledgeable Maryland bankruptcy lawyer to get answers specific to your situation.
Joseph K. Githuku
Maryland Bankruptcy Lawyer
Baltimore Bankruptcy Lawyer
Disclaimer: This article is provided for informational purposes only and should not be construed in any way as legal advice. This article does not create an attorney-client relationship.