The U.S. Supreme Court rejected an appeal by Maurice “Hank” Greenberg’s Starr International Co., refusing to revive its bid to sue the federal government over the $85 billion bailout of American International Group Inc. a decade ago.
The justices, without comment, left intact a federal appeals court ruling that said Starr, one of AIG’s largest shareholders, doesn’t have the legal right to sue the government.
The 2008 bailout saved what was then the country’s biggest insurer from imminent collapse in the midst of a national housing crisis.
The lawsuit sought compensation for what Greenberg’s lawyers said were onerous bailout terms that gave the government 80% of AIG’s equity. The government later sold its stock for almost $18 billion.
“If the decision below is allowed to stand, one of the largest government seizures of private property in history will effectively escape judicial review,” the appeal said.
Starr’s lawyer, David Boies, said he was disappointed the court wouldn’t hear the case, faulting the government for “disproportionate and unfair treatment of AIG’s shareholders.”
The appeals court said Starr was trying to press claims that “belong exclusively to AIG,” which declined to participate in the case.
The Trump administration urged the Supreme Court to reject the appeal without a hearing.
“The court of appeals correctly held that the asserted claims challenging the terms of the government’s rescue of AIG belong to AIG as a whole, not to shareholders individually,” U.S. Solicitor General Noel Francisco argued.
The government said it stepped in only after private banks determined it was too risky to lend money to AIG, whose credit had been downgraded by the three major rating agencies. The terms included a 12% interest rate.
The case is Starr v. United States, 17-540.
— Read Greenberg, AIG Bury Hatchet on ThinkAdvisor.