Monday, June 15, 2015

AIG STARR VS USA: USA LOSES but NO damages.

In the United States Court of Federal Claims

 No. 11-779C (Filed: June 15, 2015)

AIG STARR VS USA

http://www.scribd.com/doc/268746137/Starr-vs-U-S-Re-AIG-Bailout

Here is why no damages:
Starr was ok with the dilution that allowed the US to profit in 2009!
“Indeed, Starr voted its shares in favor of the reverse stock split resolution.”
With regard to Starr’s reverse stock split claim, the evidence supports a conclusion that the primary motivation for the split was to ensure AIG was not delisted from the New York Stock Exchange (“NYSE”). In June 2009, AIG was in jeopardy of having its stock delisted because the stock value was teetering at or below $1.00 per share. The NYSE will not list stocks that are valued at less than $1.00 per share.

Indeed, Starr voted its shares in favor of the reverse stock split resolution.

Although it might be logical to conclude that the twenty-for-one decrease in the number of issued shares, with no change in the authorized shares, was designed to allow the Government’s preferred stock to be exchanged for common stock, there is no evidence that this was the case. The Court concludes that the motivation for the reverse stock split was to assure the continued listing of AIG stock on the NYSE. Accordingly, Starr’s reverse stock split claim is denied.
Turning to the issue of damages, there are a few relevant data points that should be noted. First, the Government profited from the shares of stock that it illegally took from AIG and then sold on the open market. One could assert that the revenue from these unauthorized transactions, approximately $22.7 billion, should be returned to the rightful owners, the AIG shareholders. Starr’s claim, however, is not based upon any disgorgement of illegally obtained revenue. Instead, Starr’s claim for shareholder loss is premised upon AIG’s stock price on September 24, 2008, which is the first stock trading day when the public learned all of the material terms of the FRBNY/AIG Credit Agreement. The September 24, 2008 closing price of $3.31 per share also is a conservative choice because it represents the lowest AIG stock price during the period September 22-24, 2008. Yet, this stock price irrefutably is influenced by the $85 billion cash infusion made possible by the Government’s credit facility. To award damages on this basis would be to force the Government to pay on a propped-up stock price that it helped create with an $85 billion loan. See United States v. Cors, 337 U.S. 325, 334 (1949) (“[V]alue which the government itself created” is a value it “in fairness should not be required to pay.”). In the end, the Achilles’ heel of Starr’s case is that, if not for the Government’s intervention, AIG would have filed for bankruptcy. In a bankruptcy proceeding, AIG’s shareholders would most likely have lost 100 percent of their stock value. DX 2615 (chart showing that equity claimants typically have recovered zero in large U.S. bankruptcies).

here is why warrants are not good in fannie mae and are not usable.
no 1, shareholders wont vote for it since all money is paid back and fannie was already delisted.
no 2, the power of treasury to take equity is beyond its power granted by HERA. Treasury can not go past its lawful power granted by congress.
However, Section 13(3) did not authorize the Federal Reserve Bank to acquire a borrower’s equity as consideration for the loan. Although the Bank may exercise “all powers specifically granted by the provisions of this chapter and such incidental powers as shall be necessary to carry on the business of banking within the limitations prescribed by this chapter,” 12 U.S.C. § 341, this language does not authorize the taking of equity. The Court will not read into this incidental powers clause a right that would be inconsistent with other limitations in the statute. Long ago, the Supreme Court held that a federal entity’s incidental powers cannot be greater than the powers otherwise delegated to it by Congress. See Fed. Res. Bank of Richmond v. Malloy, 264 U.S. 160, 167 (1924) (“[A]uthority to do a specific thing carries with it by implication the power to do whatever is necessary to effectuate the thing authorized – not to do another and separate thing, since that would be, not to carry the authority granted into effect, but to add an authority beyond the terms of the grant.”); see also First Nat’l Bank in St. Louis v. Missouri, 263 U.S. 640, 659 (1924) (“Certainly, an incidental power can avail neither to create powers which, expressly or by reasonable implication, are withheld nor to enlarge powers given; but only to carry into effect those which are granted.”); Suwannee S.S. Co. v. United States, 150 Ct. Cl. 331, 336, 279 F.2d 874, 876 (1960) (“No statute should be read as subjecting citizens to the uncontrolled caprice of officials.”).

If the action to take equity was Illegal
If the action to take equity was Illegal, which the judge agrees with, then the gains to the government by the equity is a loss to the shareholders.
Since the action was illegal, any gains by such action would have to be returned to AIG as the government could not have a gain from the illegal activity. The loss was real to shareholders since the Capital and dilution should never of happened to buy out the governments shares, and the Capital would be a direct taking from the shareholders by method of dilution, Not from split 20 to 1, but from issuing more shares to buy off govt illegal shares after AIG was again solvent.
Hmm. This will be appealed. You cant be Illegally found guilty of TAKING and receive a profit from that Taking and not be responsible for Paying it Back.
Would a thief be found guilty of stealing your car, then since your insurance gave you money for car, Not have to pay for the car he took? No crime kinda crime? No way!!

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