From Bailouts to Bogs -- Shaking the Takings Money Tree
13 Pages Posted: 9 Jul 2015
Date Written: July 8, 2015
Recently, shareholders of the insurance giant AIG, which received billions of dollars in bailout funds from the federal government at the height of the 2008 financial crisis, filed suit against the United States government for $40 billion. One might think that this claim would be absurd on its face. Commentators – legal and otherwise – appeared to have been caught off guard as to how this could be a plausible legal case. If the government simply offers you a deal, which you can take or leave, how can you sue – later – if you don’t like its terms? This might sound astounding, but it is not. To understand the theory of the AIG litigation, one must go to its deeper, festering root in American takings law. In a series of “exactions” cases, the United States Supreme Court has held that when government offers something (which it has no obligation to offer), in exchange for value of some sort, courts must ensure that this is “fair” – even though the offeree is under no obligation to take it. In short, we should not be surprised by AIG. It is simply Nollan/Dolan’s progeny.
Keywords: Takings, Property, Financial Crisis 2008, government, Supreme Court
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