Stephen Foley: AIG makes a return to the legal fray
Saturday 30 April 2011
US Outlook: US taxpayers may yet get a little bit of the revenge they seek on Goldman Sachs, Bank of America and the other financial institutions that had to be bailed out when their brand of casino capitalism went haywire in 2008.
AIG, which is still 90 per cent owned by the US government, is drawing up lawsuits against these banks and others who created about $40bn in disastrous mortgage securities which AIG insured against losses.
With so much fraud in the mortgage system, and too few checks by the financial institutions that packaged them up for sale around the world, AIG thinks it has a good case that it was misled about what it was being asked to insure.
Pretty much everybody involved in the mortgage market in the run-up to the bust is now suing pretty much everybody else. AIG gave up many of its rights to launch lawsuits when it was bailed out inSeptember 2008, but it is good to see it has found a path back on to the field. Taxpayers will be cheering from the sidelines.
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