AIG’s board decides not to join lawsuit

The insurance company American International Group (AIG) is opting not to sign on to a lawsuit challenging the terms of its bailout after facing withering criticism from lawmakers.

The company announced Wednesday that it had decided to reject a request to join the $25 billion shareholder lawsuit “in full.”

{mosads}”In considering and ultimately refusing the demand before us, the Board of Directors properly and fully executed our fiduciary and legal obligations to AIG and its shareholders,” said Robert S. “Steve” Miller, chairman of the AIG Board of Directors. “America invested in 62,000 AIG employees, and we kept our promise to rebuild this great company, repay every dollar America invested in us, and deliver a profit to those who put their trust in us.”

The Wall Street Journal first reported that the company’s board has opted not to join the legal challenge.

The company only recently completed its exit from government support in December, having received a total of $182 billion in funds from the Treasury and the Federal Reserve Bank of New York when it was faced with collapse at the height of the financial crisis.

The mere fact that the company was considering joining the suit set off a rapid-fire and furious response from congressional Democrats Tuesday, who accused the company of showing a galling lack of gratitude.

“AIG’s reckless bets nearly crashed our entire economy,” said Sen. Elizabeth Warren (D-Mass.), who before being elected to the Senate served on a task force that monitored the bailout program. “Taxpayers across this country saved AIG from ruin, and it would be outrageous for this company to turn around and sue the federal government because they think the deal wasn’t generous enough.”

A group of House Democrats said joining the suit would make AIG “the poster company for corporate ingratitude,” and Rep. Elijah Cummings (D-Md.), the ranking member of the House Oversight Committee, said the move was “an unbelievable insult.”

AIG had confirmed Tuesday that it was considering joining the suit, filed originally by its former CEO Maurice “Hank” Greenberg, who alleged the government charged onerous interest rates on bailout funds and sought compensation for shareholders allegedly harmed by the government’s rescue.

“AIG has paid back its debt to America with a profit, and we mean it when we say thank you to the American people,” said Robert H. Benmosche, AIG’s president and chief executive officer. “At the same time, the Board of Directors has fiduciary and legal obligations to the Company and its shareholders to consider the demand served on us and respond in a fair, appropriate, and timely manner.”

The insurance giant came to serve as a symbol of much of the public anger surrounding the bailouts, especially after the company doled out millions in bonuses to employees just after receiving funds to save it from bankruptcy.

AIG had recently launched an ad campaign to thank the American people for their support.

—Updated at 3:16 p.m.