AIG’s Tom Russo exits after settling probes, suits as legal head

(Bloomberg) – Tom Russo, who helped American International Group Inc. negotiate the end of its U.S. bailout, is retiring from his post as general counsel.

Russo, 72, will stay with the insurer until a replacement is found, Chief Executive Officer Peter Hancock said Tuesday in a message to employees. The general counsel has been with the New York-based insurer since 2010, saying at the time that he joined “for the challenge.”

Russo was the former top attorney at Lehman Brothers Holdings Inc. until the securities firm’s bankruptcy in 2008. He led negotiations with the Treasury Department and Federal Reserve Bank of New York to help then-CEO Robert Benmosche repay the $182.3 billion rescue. The lawyer also worked on asset sales and helped AIG navigate legal clashes with shareholders, Wall Street counterparties, regulators and ex-employees.

“Although I am pleased that he is ready to write a new chapter in his exciting professional life, on a personal level I will miss my friend and adviser,” Hancock said in the memo.

Mortgages, Lacrosse

Under Russo, AIG negotiated a billion dollar deal with investors who accused the insurer of misleading them about risks related to subprime mortgages. He also won a settlement with Bank of America Corp. that helped reimburse the insurer more than $600 million for losses on home loans. And AIG resolved government probes into mortgage-insurance abuses, claims-paying lapses and ties to Cuba, a nation sanctioned by the U.S.

AIG also resolved a case filed by Duke University over claims tied to the school’s dispute with lacrosse team members falsely accused of sexually assaulting a stripper. The insurer had sold coverage to Duke.

One notable decision in his era was to avoid the courts: In 2013, Benmosche opted against joining ex-CEO Maurice “Hank” Greenberg in a lawsuit against the U.S. government regarding the bailout terms.