Photo: STAN HONDA/2008 AFP

Free from its $182 billion millstone — and damn proud of it — American International Group must now decide whether to chew off the giant hand that kept it fed by joining a $25 billion shareholder lawsuit against the government. According to former CEO Maurice “Hank” Greenberg and his complaint, “The government is not empowered to trample shareholder and property rights even in the midst of a financial emergency.” Because of the bailout’s “punitive” interest rate, the suit claims the U.S. violated the Fifth Amendment, which protects private property from “public use, without just compensation.” On Wednesday, AIG’s board will meet to hear both sides and decide if it really wants to be an even bigger bad guy once again.

The New York Times’ DealBook has a rundown of the considerations:

The choice is not a simple one for the insurer. Its board members, most of whom joined after the bailout, owe a duty to shareholders to consider the lawsuit. If the board does not give careful consideration to the case, Mr. Greenberg could challenge its decision to abstain. Should Mr. Greenberg snare a major settlement without A.I.G., the company could face additional lawsuits from other shareholders. Suing the government would not only placate the 87-year-old former chief, but would put A.I.G. in line for a potential payout. Yet such a move would almost certainly be widely seen as an audacious display of ingratitude. The action would also threaten to inflame tensions in Washington, where the company has become a byword for excessive risk-taking on Wall Street.

“The fact is we now have succeeded in getting the Fed back all of their money, and we’re just close to getting the Treasury paid back,” the company’s current CEO Bob Benmosche told New York’s Jessica Pressler just before the bailout ended entirely. “And do you know, neither of them have ever said ‘Thank you’? We have done all the right things. Somebody should say, ‘By golly, those AIG people made a promise and they are living up to a promise!’ We’re left with a major part of the economy in America; they’re going to make a profit on top of everything else they’ve got.”

Now his predecessor Greenberg, who remains an investor, wants his thanks as well, in the form of billions. “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,” someone close to Greenberg told the Times. “It owes loyalty to its shareholders.”

The case, filed through his company Starr International, was dismissed by a federal judge in New York but is proceeding in Washington. The suit “paints a portrait of government treachery worthy of an Oliver Stone movie,” said the New York judge, but he ruled that AIG “voluntarily accepted the hard terms offered by the one and only rescuer that stood between it and imminent bankruptcy.”

For now, the company will only say, “The A.I.G. board of directors takes its fiduciary duties and business judgment responsibilities seriously.” But a decision on whether or not to join the suit is expected by the end of the month, and if it decides to side with Greenberg’s shareholders, the government could be more inclined to settle, DealBook notes. Already, “its delay in making a decision, some officials say, has drawn out the case, forcing the government to pay significant legal costs.”

“There is no merit to these allegations,” said a spokesman for the Federal Reserve Bank of New York. “AIG’s board of directors had an alternative choice to borrowing from the Federal Reserve, and that choice was bankruptcy.”