Starr International, former AIG chief Maurice “Hank” Greenberg’s company, is suing the government over the constitutionality of the U.S. rescue of AIG in September 2008:
Starr International's suit says AIG’s $182.3 billion rescue violates the Fifth Amendment, improper government use of private sector assets. The suit says the government’s receipt of a 79.9% equity stake in AIG constituted a wrongful “taking” without just compensation. It also says the government charged punitive 14% interest rates on rescue loans to the company.
Predictably, this has outraged the left's usual suspects. The freedom-loving nitwits at Daily Kos opine "that AIG head Hank Greenberg was not indicted, convicted, sentenced to life in prison on a newly refurbished Alcatraz island and then had the entrance to his cell methodically bricked over is yet another reminder of our nation's great generosity to this collection of financial terrorists." (This from the same bunch of floks that adore cop killer Mumia Abu-Jamal.)
And the twits at Rolling Stone think (if you can call it that) that "Hank Greenberg Should Be Shot into Space For Suing the Government over the AIG Bailout." In the fine print they admit that "the lawsuit filed against the government ... isn't all wrong. In fact, parts of it are quite on the mark." They just don't like Hank Greenberg.
Well, screw that. Hank Greenberg is standing up for a very important principle, as the WSJ made clear:
Every taxpayer and shareholder should be rooting for this case to go to trial. It addresses an important Constitutional question: When does the federal government have the authority to take over a private business? The question looms larger since the 2010 passage of the Dodd-Frank law, which gave the feds new powers to seize companies they believe pose risks to the financial system.
That vague concept of "systemic risk" was the justification for the AIG intervention in September 2008. In the midst of the financial crisis, the federal government seized the faltering insurance giant and poured taxpayer money into it. The government then used AIG as a vehicle to bail out other financial institutions.
But the government never received the approval of AIG's owners. The government first delayed a shareholder vote, then held one and lost it in 2009, and then ignored the results and allowed itself to vote as if the common shareholders had approved the deal.
But why let a little thing like the Takings Clause stand in the way of a liberal high-tech lynch mob?