Tags: Greenberg | hedge | funds | suits

WaPost: AIG's Greenberg, Hedge Funds May Prevail in Suits Against Government

By    |   Tuesday, 09 June 2015 12:00 PM

The government's bailout of financial institutions during and after the 2008-09 financial crisis may turn into the gift that keeps on giving.

"Just imagine how it outrageous it would be if some Wall Street sharpies went to court to argue that they didn’t benefit enough from the bailouts and that taxpayers should pay them tens of billions of dollars more," writes Washington Post columnist Steven Pearlstein.

"In fact, they did. And, according to legal observers, they just might prevail."

Pearlstein cites two cases in which Wall Street figures argue that the government seized their property without paying for it.

AIG's legendary ex-CEO Maurice “Hank” Greenberg is the plaintiff in one suit. He's asking for $23 billion from the government for himself and other AIG shareholders.

The other case involves three hedge funds that purchased Fannie Mae and Freddie Mac shares for pennies after the government bailed the companies out. The funds are Perry Capital, Fairholme Fund and Pershing Square Capital.

Meanwhile, only six years after the end of the worst financial crisis since the 1930s some experts are worried another one may be on its way.

Some are "warning that the global community has failed to learn the lessons of the Greek debt crisis — or even of Argentina’s default in 2001, the consequences of which are still being contested furiously in courts on both sides of the Atlantic," writes The (U.K.) Guardian's Heather Stewart.

Some of the concern stems from the soaring dollar, plunging oil prices and the Federal Reserve's preparation to raise interest rates.

The dollar has reached multi-year highs against a range of currencies in recent weeks, oil prices have hit six-year lows, and many economists expect a Fed rate move in September.

"We’re going to have another financial crisis," Ann Pettifor, director of Policy Research in Macroeconomics, told The Guardian.

"Brazil’s already in great trouble with the strength of the dollar; I dread to think what’s happening in South Africa; then there’s Malaysia. We’re back to where we were, and that for me is really frightening."

Borrowing by developing countries soared 40 percent to $17.3 billion in 2013, according to World Bank data.

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The government's bailout of financial institutions during and after the 2008-09 financial crisis may turn into the gift that keeps on giving.
Greenberg, hedge, funds, suits
Tuesday, 09 June 2015 12:00 PM
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