Hank Greenberg Challenges Constitutionality of AIG Takeover

(Jonathan H. Adler)

Former AIG CEO Hank Greenberg is suing the federal government challenging the constitutionality of the AIG takeover.  From the WSJ:

Mr. Greenberg's lawyers on Monday sued the U.S. and the Federal Reserve Bank of New York on behalf of Starr International Co. and other AIG shareholders. The lawsuits accused the Treasury Department and New York Fed of wrongly taking control of the insurer and using it as a vehicle to funnel tens of billions of dollars to AIG's trading partners, which included large U.S. and European banks.

The suits allege that by taking a nearly 80% stake in AIG in September 2008 when it agreed to lend the insurer up to $85 billion, the government took valuable property from Starr and other AIG shareholders in violation of the Fifth Amendment, which says private property can't be taken for "public use, without just compensation."

Starr is seeking damages for itself and other shareholders of at least $25 billion. AIG is listed as a nominal defendant in the suits, which also seek damages for the company. A spokesman for the company declined to comment.

More coverage from the NYT and Reuters.