The AIG lawsuit (Cont’d.)

The coverage of the Starr International v. United States trial has sort of dried up with the testimony of Ben Bernanke, but the trial goes on, although not reported.

However, today’s New York Times pitches in with an op-ed by Steven Ratner, Megarich Plaintiffs, Legally Adrift, Oct 19, 2014, takes off after the plaintiffs, as undeserving, ungrateful “megarich.” http://www.nytimes.com/2014/10/20/opinion/megarich-plaintiffs-legally-adrift.html?mabReward=RI%3A11&action=click&pgtype=Homepage&region=CColumn&module=Recommendation&src=rechp&WT.nav=RecEngine

In his op-ed, Ratner makes the familiar argument, that the plaintiffs are ungrateful for Uncle Sam’s bailout of AIG, and have some chutzpa to be making a claim against the generous Uncle who rescued their company. In spite of its title, this op-ed doesn’t say much — anything? — about the legalities of this controversy. Like, for example, it fails to mention the fact that Uncle Sam seized some 80% of AIG’s voting stock, and then, using its power as the biggest shareholder forced AIG into some disadvantageous deals, such as waiving its claims against its insureds for misrepresenting the quality of the bonds they snookered AIG into insuring. At least, that’s their argument.

Ratner doesn’t see it that way, and argues that AIG directors consented to this deal. Their response is that they were coerced to do so.

But keep in mind that this is an opinion piece. The facts, in the form of evidence, are still being presented at trial in the U.S. Court of Federal Claims. Stay tuned.

Follow up. Check out today’s Letter to the Editor, NY Times, 10/24/14, at p. A24, by William M. Isaac (former chairman of the FDIC) who criticizes Ratner’s op-ed for mixing up two disparate items: (a) the AIG bailout mess, and (b) the feds’ handling of Fannie and Freddie problems. Short and to the point.

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