As you may have heard, AIG is in the process of deciding whether to join a $25 billion shareholder lawsuit against the federal government, despite the government’s role in bailing out the company, to the tune of $182 billion. The New York Times explains that the lawsuit charges that the government rescue “deprived shareholders of tens of billions of dollars and violated the Fifth Amendment,” which prohibits the taking of private property for “public use, without just compensation.”
This comes even as AIG is running ads thanking the American people for that initial bailout. As the Times account archly notes, joining the lawsuit “would almost certainly be widely seen as an audacious display of ingratitude. The action would also threaten to inflame tensions in Washington, where the company has become a byword for excessive risk-taking on Wall Street.”
In response to the news, Senator Elizabeth Warren released a sharply worded statement that’s worth quoting in full:
“Beginning in 2008, the federal government poured billions of dollars into AIG to save it from bankruptcy. AIG’s reckless bets nearly crashed our entire economy. 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. Even today, the government provides an ongoing, stealth bailout, propping up AIG with special tax breaks — tax breaks that Congress should stop. AIG should thank American taxpayers for their help, not bite the hand that fed them for helping them out in a crisis.“
This is very interesting, and here’s why. Warren didn’t merely castigate the company for ingratitude. She put it in a crucial larger context, specifically noting that Wall Street recklessness was what caused the country’s economic meltdown in the first place. She also used this as an occasion to indict the continued tax breaks that the company continues to enjoy — calling them a “stealth bailout.”
The other day, I noted here that Warren’s victory, and her ascension to the Senate banking committee, will give her a choice perch from which to continue to press the crusade for real Wall Street oversight and accountability, continuing a battle between her and Wall Street that stretches back literally years. Her statement today about AIG — which sounds a populist tone that some Dems would refrain from — bodes well in this regard, and it’s an early suggestion that Senator Warren is going to cut a wide swath.