Thursday, April 23, 2015

Judge seems skeptical of government's AIG bailout terms

Judge seems skeptical of government's AIG bailout terms



7:28 p.m. EDT April 22, 2015

WASHINGTON — A federal judge on Wednesday appeared openly skeptical toward the government's claim that it had the authority to take a majority stake in American International Group (AIG) in exchange for a bailout at the height of the 2008 financial crisis.

Judge Thomas Wheeler repeatedly challenged a government lawyer's argument that the Federal Reserve's decision to take an 80% interest in the insurance giant was not an illegal taking of property and was justified because it rescued the firm from bankruptcy.
"All of the company's people who had been running the operation….were gone and the government is running the show, completely," Wheeler told Justice Department lawyer Kenneth Dintzer. "How can it be there wasn't some sort of illegal (taking) for that to happen?"
His remarks came in the closing arguments of former AIG CEO Maurice Greenberg's lawsuit accusing the government of illegally taking controlling ownership of AIG without "just compensation."
Judge Thomas Wheeler, quite possibly a REAL American!
Whatever injuries they allege, the benefits exceeded that," Dintzer said of the government's equity stake."Absent the equity element, there is no deal at all and the company goes bankrupt."
But Wheeler responded, "One view of the case is the government took the stock, didn't pay anything for it and then pocketed revenue from the sales. I mean, come on." The government earned about $16 billion in profits when it sold the AIG shares and another $7 billion or so in interest.