January 13th, 2013

Hank Greenberg, AIG and Misplaced Outrage

I know that there are a lot of people who are ever-so-mightily upset that Hank Greenberg of AIG had the temerity to sue the federal government regarding a Takings Clause issue that arose from the government’s bailout of AIG, but as Stephen Bainbridge points out, there most certainly does exist an important legal principle at stake in this case, and that principle deserves to be settled by allowing Greenberg to have his day in court.

It is worth noting that Professor Bainbridge is all over this issue. He explains here why AIG’s board had to join Greenberg’s suit; note that former Harvard law professor—and current Massachusetts senator—Elizabeth Warren either does not understand, or pretends not to understand the reasons why AIG’s board had to join the suit, and here, he offers a further explanation as to why the suit against the government may have merit. Whether one agrees or not, there should be a consensus around the fact that political grandstanding regarding the issue should not replace sober legal analysis.

Unfortunately, however, there are a great many people more interested in fomenting outrage regarding the Greenberg/AIG suit than there are in spelling out the legal issues in dispassionate fashion. Interestingly enough, those waving the bloody shirt regarding this story like to call themselves part of the “reality-based community.”


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