Feisty 86-year-old Hank Greenberg, long-time chief executive of AIG, is suing the Treasury Department and the New York Federal Reserve Bank charging that its 80 percent takeover of AIG in 2008 was unconstitutional. The suits, brought by Starr International and other AIG shareholders, say that the takeover violated the Fifth Amendment by taking property from those shareholders and using the company to transfer federal monies provided to AIG to banks that were trading partners of the insurer. The lawsuits seek damages of at least $25 billion. The “takings clause,” widely used to defend against eminent domain appropriation, reads “nor shall private property be taken for public use, without just compensation.”
Greenberg is no stranger to legal controversies. He was the target of former NY State Attorney General Eliot Spitzer’s zeal, and it was widely bruited that Spitzer demanded Greenberg’s dismissal after 36 years at the helm of AIG or he would bring down the company. Greenberg left the company in 2005 and faced charges from Spitzer, the SEC, and the U.S. Justice Department, with the criminal charges subsequently dropped and some civil charges still unresolved.