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Maurice 'Hank' Greenberg, Ex-AIG CEO, Sues U.S. Over Constitutionality Of Bailout

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MAURICE HANK GREENBERG
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Ex-American International Group CEO Hank Greenberg is striking back at the U.S. government for bailing out his former employer.

Greenberg filed a lawsuit against the U.S. in court Monday, claiming the government's $182 billion bailout of the insurance giant during the 2008 financial crisis was unconstitutional, Reuters reports.

According to the lawsuit, which seeks at least $25 billion for Greenberg's new venture Starr International Co and other shareholders, the bailout, which gave the government a nearly 80 percent stake in the company, violated the fifth amendment because it took property from shareholders without just compensation.

The government bailed out AIG in 2008, becoming its majority in owner, after its potential bankruptcy threatened to bring the financial system to collapse. The insurance giant has paid back $11.4 billion to the government as of August.

Still, the bailout made the company one of the most public faces of the financial crisis, creating a public relations disaster for the company that likely won't go away anytime soon. AIG has the worst corporate reputation of any company, according to a recent Harris Interactive poll, surpassing Goldman Sachs and BP to get the top spot. The insurance giant was also slammed for paying out hundreds of millions of dollars in bonuses in 2009 and 2010.

But AIG isn't taking all the blame. The insurance giant filed a lawsuit in April seeking "potentially billions of dollars" from firms such as Bank of America and Goldman Sachs, alleging that the insurance giant was victim to Wall Street's riskiest practices. Robert Benmosche, AIG's current CEO, told CNN in June that he believes Wall Street should be allowed to regulate itself. Benmosche also defended investment banks in the interview, saying that their practices in the lead up to the financial crisis were poor, but not criminal.

Benmosche also found himself defending AIG earlier this month, when the insurance giant reported a quarterly loss of more than $4 billion, it's worst loss in nearly two years, according to Reuters.

Much of the $182 billion in rescue money went to pay AIG's obligations to big banks.

Around the Web

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Maurice "Hank" Greenberg Insurance News from Insurance Journal

Ex-AIG CEO Suing U.S. for $25 Billion -- Daily Intel

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