Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Is AIG Arrogance Turning Off Investors?

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

There seems to be no end to the greed and insolence of AIG (NYSE: AIG  ) . As the rescued megainsurer neared the end of its ward-of-the-state status last fall, CEO Robert Benmosche complained to an interviewer  that the Feds never bothered to thank his company for repaying bailout funds. Then, just last week, the company's board decided against joining in a lawsuit brought by a major shareholder against the U.S. government alleging that the bailout terms were injurious to investors -- but not before the company's consideration of involvement prompted shrieks of outrage from Washington and Main Street.

Now, the company is suing Maiden Lane II , a creation of the Federal Reserve Bank of New York, in order to purchase toxic mortgage-backed securities from AIG, thus taking them off of the insurer's books. The government claims that AIG gave up its right to sue the originators of those MBSes, such as Bank of America (NYSE: BAC  ) , but AIG wants a judge to say it ain't so.

Suit targets B of A and others
AIG initiated lawsuits  against Bank of America and Goldman Sachs (NYSE: GS  ) in 2011, alleging fraud pursuant to the MBSes the insurer bought from the two banks. In the case of B of A, at least, the case claims that the FRBNY told the bank  it had purchased litigation rights right along with the securities that were folded into Maiden Lane II. If true, this puts AIG's claim in jeopardy, and the lawsuit aims to reinstate AIG's right to sue.

It might sound like a no-brainer that a bailed-out company wouldn't be able to sue over securities it no longer owns, but bailout terms allowed it to retain rights to sue over mortgage bonds it bought directly  from the originating banks. Whether the bonds in question are covered by the agreement remains to be seen, however.

One Fool's take
While AIG has every right to seek clarification on this issue, this latest action may be perceived not as trying to uphold the rights of the company's shareholders, but more of the greed and cheek that the insurer has been exhibiting lately. Keep in mind the lawsuit that caused such a rumpus last week was instigated by a former CEO whose own actions  may very well have put AIG on the path to ruin, and not by a diverse group of righteously aggrieved investors. No doubt, it was the very idea that AIG might align itself with such a suit that sparked the outrage.

Are investors getting tired of all the drama at AIG? The stock was down somewhat at last Friday's close, which may indicate some annoyance, but time will tell. In the meantime, the rest of us are waiting to see if the next lawsuit entails AIG suing itself for being an embarrassment to its stockholders.

After bringing the financial world to its knees, most investors are wary about owning a stake in AIG today. We'll fill you in on both reasons to buy and reasons to sell AIG, and what areas that AIG investors need to watch going forward. Just click here now for instant access.

Read/Post Comments (1) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 14, 2013, at 11:50 AM, TEBuddy wrote:

    What a piece of garbage article, when are you bandwagon journalist going to have enough about how greedy and evil AIG is? Point your sights on the millions of people that are collecting your free money, and not paying any of their debts. At least AIG paid their debt back, more than anyone can say about most Americans. Its just hypocritical to say the least. Stay out of business you don't understand.

Add your comment.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2194314, ~/Articles/ArticleHandler.aspx, 9/30/2016 11:17:37 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,273.43 129.98 0.72%
S&P 500 2,166.67 15.54 0.72%
NASD 5,300.26 31.10 0.59%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/30/2016 11:02 AM
AIG $58.98 Up +0.58 +0.99%
American Internati… CAPS Rating: ****
BAC $15.49 Up +0.33 +2.14%
Bank of America CAPS Rating: ****
GS $160.77 Up +1.82 +1.14%
Goldman Sachs CAPS Rating: ***