The American International Group, Inc.—which would be extinct were it not for a $182-plus billion bailout, and whose profits would be far lower were it not for the continuing tax breaks it receives—is pondering whether it will join a lawsuit charging unfair treatment by the U.S. government. Say what?

Yes, the AIG board is meeting Wednesday to decide whether to go forward with the suit. What's at issue? The government, the claim goes, was too tough in its terms for the bailout, charged too much interest, diluted shareholders' stake in the firm and violated the Fifth Amendment's takings clause.

The deciders are meeting as AIG's sugary "Thank you, America" ad campaign moves through its second week. The campaign notes that the company has repaid the direct aid of $182 billion and even made $22 billion profit in the deal. Thanks, Americans, and now bend over:


Maurice R. Greenberg, A.I.G.'s former chief executive, who remains a major investor in the company, filed the lawsuit in 2011 on behalf of fellow shareholders. He has since urged A.I.G. to join the case, a move that could nudge the government into settlement talks. [...] Some government officials are already upset with the company for even seriously entertaining the lawsuit, people briefed on the matter said. The people, who spoke on the condition of anonymity, noted that without the bailout, A.I.G. shareholders would have fared far worse in bankruptcy. [...] "The government has been saying, 'We're your friend, we owned and controlled you and we let you go.' But A.I.G. doesn't owe loyalty to the government," a person close to Mr. Greenberg said. "It owes loyalty to its shareholders." [...] The Treasury Department declined to comment. A spokesman for the Federal Reserve Bank of New York, Jack Gutt, said, "There is no merit to these allegations." He noted that "A.I.G.'s board of directors had an alternative choice to borrowing from the Federal Reserve, and that choice was bankruptcy."

"Beginning in 2008, the federal government poured billions of dollars into AIG to save it from bankruptcy. AIG's reckless bets nearly crashed our entire economy. Taxpayers across this country saved AIG from ruin, and it would be outrageous for this company to turn around and sue the federal government because they think the deal wasn't generous enough. Even today, the government provides an ongoing, stealth bailout, propping up AIG with special tax breaks—tax breaks that Congress should stop. AIG should thank American taxpayers for their help, not bite the hand that fed them for helping them out in a crisis." When a company accepts a taxpayer bailout to stay in business, it ought to follow the same tax laws followed by companies that aren't bailed out. In its ongoing efforts to reform corporate tax law, Congress should close this egregious loophole and prevent AIG from continuing to receive a stealth bailout every time it files its taxes."

Absent this assistance, it is highly likely that AIG would have been broken into parts and sold to the highest private-sector bidders—and had that happened, it is highly unlikely that the company's losses would have been permitted to carry forward [for tax purposes]. By any reasonable definition, the company changed ownership: A controlling stake passed from its stockholders to the federal government. As such, AIG should have been limited in rolling over past losses. Beginning in 2008, however, the U.S. Treasury jumped in with a special ruling that the financial rescue did not constitute a change in ownership. AIG was thus permitted to preserve its pre-bailout losses on its books, and now the company is using those losses to show enormous profits and dodge the taxes it owes on the billions it is earning today. This is wrong.

Newly elected Democratic Sen. Elizabeth Warren released the following reaction:Along with three others who served with her on the Congressional Oversight Panel established by the Emergency Economic Stabilization Act of 2008, Warren wrote an op-ed for the Washington Post last March. They pointed out that AIG was bleeding billions in 2008 and only have survived because of the bailout that gave the taxpayers majority ownership of the company:Every bailout deal of alleged too-big-to-fail operations has had its up sides and down sides. At GM, tens of thousands of direct jobs and perhaps a million or more supply-chain jobs were saved at a time when the economy was already heading for the worst plunge since the 1930s. The collapse of the entire domestic auto industry was at risk and along with it the livelihoods of a huge chunk of America's manufacturing work force. But the rescued jobs came with a price, the halving of entry-level pay for workers and reduced benefits. Moreover, the government will sell its remaining 300 million GM shares this year or early next at a loss. If it's the same price as it sold 200