Maybe AIG Got the Bailout It Had Coming

So here we are, nearly five years after the financial crisis, listening to a cranky, old, former billionaire yammer about how his bailout wasn't as good as some of the other bailouts.

At a time when the nation is freaking out over $85 billion in sequester cuts, Hank Greenberg, the 87-year-old ex-CEO of American International Group (NYSE:AIG), wants more than $55 billion because the government didn't bailout his company enough.

On Monday, his current company, Starr International Co. Inc., filed an amended complaint in U.S. Court of Federal Claims. It alleges that the government took over the insurance giant so it could provide "backdoor bailouts" to Goldman Sachs (NYSE:GS), Bank of America (NYSE:BAC), J.P. Morgan Chase (NYSE:JPM) and many others, including plenty of banks that aren't even based in the U.S.

AIG got into trouble because it sold credit default swaps, guaranteeing all the shoddy mortgage securities that these banks had collected before the big bust. By taking over AIG, the government made certain these swaps were paid, often in full, shoring up a teetering financial system.

The total cost of AIG's bailout hit $182 billion--the largest in history--and the U.S. Treasury at one point owned 92% of the company.

The Treasury has since sold all of its stake at a profit. And Mr. Greenberg remains one of AIG's largest shareholders, thanks to the government's extraordinary intervention, which of course spared him from losing all of his equity in what would have been a bankruptcy.

Mr. Greenberg's lawsuit complains that bailout terms for AIG were far harsher than those offered to other companies.

Shareholders parted with most of their equity and the company paid steep interest rates. Other troubled companies, by contrast, were allowed to borrow from the Federal Reserve through its discount window. Even foreign banks received this largesse, including Dexia SA of Belgium and Arab Banking Corp., owned by the Libyan Central Bank, the lawsuit says.

Many of Greenberg's claims ring true. AIG did get a tough deal. But then it's also possible that AIG got these less-attractive terms because it had behaved more recklessly than other players. Fed Chair Ben Bernanke, who is normally quite reserved, practically blew out his spleen when discussing AIG in a March 2009 interview with 60 Minutes.

"Of all of the things we've done...the single one that makes me the angriest, that gives me the most angst, is the intervention with AIG," he said. "Here was a company that made all kinds of unconscionable bets. Then, when those bets went wrong, we had a situation where the failure of that company would have brought down the financial system.

"I slammed the phone more than a few times on discussing AIG," Mr. Bernanke continued. "It's absolutely unfair that taxpayer dollars are going to prop up a company...that was operating out of the sight of regulators."

Perhaps the best thing that ever happened to Mr. Greenberg was getting thrown out of AIG in 2005 amid an accounting scandal. AIG had to restate its financials for the previous five years, acknowledging "improper or inappropriate" transactions. So Mr. Greenberg wasn't at the helm a few years later when the whole ship ran aground.

Now he spends his time writing books, giving media interviews and filing lawsuits claiming that AIG's collapse was somebody else's fault.

AIG, itself, has refused to join in Mr. Greenberg's class-action lawsuit, fearing the public's predicable contempt. AIG officials have also said they think the action has little chance of success. A similar lawsuit Mr. Greenberg filed against the New York Fed was dismissed, but Mr. Greenberg is appealing that decision.

It's difficult to get past the bite-the-hand-that-feeds of absurdity someone of suing the government for bailing out their own company. It's also tough to picture an 87-year-old man with this much testosterone. Why doesn't he just kick back and collect Social Security?

What Mr. Greenberg seems most upset about is the way the government had AIG and shareholders like him against the wall.

"All I want in life is an unfair advantage," was once his personal motto, according to books and published reports written about him over the years.

He had it for a while. But there comes a day when it's someone else's turn.