The Globe and Mail reports in its Monday edition that while American International
Group has fully repaid taxpayers for the bailout it received six years
ago, a $40-billion (U.S.) question mark still hangs over the company. A Wall Street Journal item inside The Globe says AIG indemnified the Federal
Reserve Bank of New York for any payouts from litigation tied
to the emergency loans. That detail looms larger by the day. Later this month, an investment and charitable firm
run by former AIG boss Hank Greenberg goes to court seeking more than $40-billion (U.S.) for losses that he says his firm and
other shareholders suffered in the bailout. The firm, Starr International
Co., alleges the government took the shareholders' property in violation
of the U.S. Constitution. If Mr. Greenberg wins, AIG
could conceivably be on the hook for the damages. The Starr v. United States trial begins Sept. 29 and will run for six weeks.
To be sure, analysts and legal experts say any payment is likely
years down the road. The losing side is expected to appeal to the U.S. Supreme Court.
If the government is found to have acted unlawfully, AIG would likely argue that the indemnification provision should not be enforced.
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