Of course it was obviously illegal at the time... Former AIG Chief Hank Greenberg Wins Moral Victory in Bailout Trial Nearly seven years after the governments 2008 takeover of American International Group Inc., Maurice R. Hank Greenberg won an unlikely victory in his legal crusade against U.S. authorities. But the former AIG chief and thousands of shareholders who joined his action didnt win any of the $40 billion in damages they had sought. Judge Thomas C. Wheeler ruled Monday that the government violated the law when it took a controlling stake in AIG in 2008, the most dramatic stretch of the financial crisis. Still, he accepted the governments arguments that without a Federal Reserve banks $85 billion loan to AIG, the company would have filed for bankruptcy and shareholders likely would have been left with nothing. The governments unduly harsh treatment of AIG in comparison to other institutions seemingly was misguided and had no legitimate purpose, Judge Wheeler of the U.S. Court of Federal Claims wrote in his opinion. Judge Wheelers opinion could cast a shadow over the governments role in any future financial crisis, lawyers and other legal observers said. So should Hank Paulson face charges?
It clearly was illegal. They should have let it fail. Now those that were, "too big to fail", are even bigger. The logic is insane and the acts are illegal.
The judge also ruled that since had the government not intervened, then AIG would have gone out of business and ceased to exist, because of that those who brought the suit are not entitled to any damages. AIG was so leveraged with DCS's that they owed 10's of billions more than they could ever have paid off and would have taken down most of the major banks with it.
The problem was that if AIG went under, so would most of the big banks and then most of the rest of the banks since AIG and their Credit Default Swaps were supposedly the underpinning of all of the other crazy financial shenanigans that the financial markets were involved in . This would likely have put us into a depression that would have made the Great Depression look like a cake walk. Credit of any kind would have been unavailable, tens of millions more workers workers would have lost jobs (since most large and medium sized businesses use credit lines to meet payroll and operating expensis even when they are highly profitable). As Bernie Sanders says, if these corporations are too big to allow to fail, they they are too big to exist. IMHO they should be broken up in a way that does no harm to the stockholders, but reduces the potential impact of any one of them going bust on the overall economy. It would also create greater competition in the market place and help slow down or even reverse out slide into oligarchy and plutocracy. - - - Updated - - - Had the government not intervened they would have lost far more than they did. The government was wrong, yes, but it was those that ran the company that created the conditions for it's collapse and downfall in the first place. There should be no sympathy for them or recompense for their malfeasance.
I simply disagree. It is like saying the government can kick down your door and take 1/3 of your money because you were going to lose it to them anyway in April.
