Even though they are the most bloodthirsty, short-sighted and egotistical people to ever live, you would still think that a capitalist would say “thank you” after the government gave his corporation a $184.6 billion bailout. Wrong. Hank Greenberg, former CEO of insurance giant AIG, thought that the most appropriate thing to do would be to sue the government for an additional $40 billion.
The trial began on Sept. 29 and is ongoing. Greenberg’s case is that it was unfair for the government to purchase a 79.9 percent stake in AIG when it was teetering on the edge of bankruptcy because other financial firms got significantly sweeter deals with lower interest rates for bailout loans. This is, of course, outrageous – 20 percent of AIG is better than nothing, which is what the company would have been worth if the government had not intervened.
Although the economic crisis is rooted in the deep, structural flaws of capitalism, the immediate spark for this most recent recession came in part from AIG itself. To keep their profits growing despite the underlying stagnation of the capitalist system, bizarre financial instruments called credit default swaps were sold by financial giants. As Richard Becker’s “The Myth of Democracy and the Rule of the Banks” explains: “These were a form of insurance on this [mortgage] debt and supposedly protected investors against loss. The sellers of the mortgage-backed securities then persuaded ratings agencies to issue top credit ratings on the bonds, convincing pension funds and other conservative investors that the bonds were almost as risk-free as U.S. Treasury bonds.”
AIG under Hank Greenberg was one of the leading sellers of credit default swaps.
A few months after the bailout, in March 2009, AIG announced that it would be paying $165 million worth of bonuses to its executives. In 2010, Greenberg sold his remaining shares of AIG for $278 million.
However, it’s important to note that even though the government is the defendant in this lawsuit, Greenberg and the capitalist state are on fundamentally the same side. Testifying at the trial, Ben Bernanke, who was the head of the Federal Reserve during the bailouts, said that “our intervention would spare it the discipline of the market.”
This is basically the truth. The government injected hundreds of billions – trillions if you count all the guarantees – of taxpayer dollars into the big banks in order to save them and their despicable owners. They also had in mind the broader stability of capitalism as a whole, since big financial firms are tied to nearly all other economic activities in many, complex ways.
People just like Hank Greenberg dominate the world. Working and oppressed people desperately need this system to end; let’s keep fighting until we win.
