CORRUPTION IN THE COUNTRY: Former AIG CEO Tries to Sue the Government for the Bailout it Received

A couple days ago, Hank Greenberg, the former CEO of AIG who resigned in 2011, announced his plans to try to convince the company’s board to sue the government.  It’s not that AIG didn’t desperately need the bailout to survive – that has never been in dispute. What Greenberg is complaining about is that the terms of the bailout weren’t generous enough and didn’t protect the rights of the company’s shareholders. Greenberg cites high interest rates and too much government ownership as his chief concerns, but what it all comes down to is money.

In this country, since the 1980s, “shareholder value” is king.  This is the reason given by the banks for almost every nefarious, shady, short-sighted, cannibalistic deal they make – and they make many thousands of such deals to reap many trillions. Investment bankers are the highest paid sector of the economy – and they truly produce nothing, reap huge transaction fees, and rig the market against the average investor.

But the term “shareholder value” itself is misleading. What Wall Street means by this is short-term stock price. Ironically, pumping up the short-term stock price almost always leads to the stock plummeting later, once the IBs have made their money and gotten out. So “shareholder value” in which the shareholder, who has no responsibility in the company, becomes the ultimate dictator of its fate, and predictor of its demise.

Today, Obama named Jacob Lew the new Secretary of the Treasury.  I looked at Lew’s background, and it’s not clear to me how he’ll handle the problem of the big Wall Street banks.  So far, they have gotten off with little more than a slap on the wrist in terms of penalty fees – and the criminals themselves have been asked to do a prescribed number of hours of community service.

At least it doesn’t look like the AIG suit is getting much traction.  Several people, including Elizabeth Warren, have shamed Greenberg for even thinking about it.  But the point to me is that “shareholder rights” are such a sacred cow in our financial institutions, that Greenberg felt he was on solid ground to bring a suit. It’s like a thief suing you for slipping and falling in your house while he robs you. When did shareholder rights trump the US Bill of Rights?

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