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October 9, 2014

Suit asks Why U.S. Bailout of AIG Wasn’t More Generous

“The trial pitting a fallen financial titan against an array of former high government luminaries provides a through-the-looking-glass view of the financial credit crisis of 2008 — a view that only makes sense on Wall Street.
“In the U.S. Court of Federal Claims in Washington, D.C., Maurice R. Greenberg, the deposed head of the rescued American International Group Inc., is suing the government on his claim that the taxpayer bailout of the giant insurance company was insufficiently generous.
“Although his claims were rejected in federal court in New York, he is getting a full-dress trial in the nation’s capital, complete with the compelled testimony of former high government officials — Henry M. Paulson on Monday, Timothy F. Geithner on Tuesday and Ben S. Bernanke as soon as Thursday.”
“Dennis M. Kelleher, chief executive of Better Markets Inc., a Washington nonprofit that advocates stronger financial regulation, said that how other institutions were treated is beside the point and that the Greenberg’s suit is “frivolous.”

“The only choice facing AIG was bankruptcy, total failure, a complete loss for all stockholders, and close to complete losses for all of AIG’s creditors and counter-parties — or this incredibly generous bailout from U.S. taxpayers,” Kelleher said.

“What Hank Greenberg is saying is that: ‘We should have gotten a better return from our recklessness that not only cost AIG but almost caused a second Great Depression,'” he said.

“Nonetheless, the suit’s questions were pointed enough to merit a trial, at least in the view of Judge Thomas Wheeler in the federal claims court — although not in a U.S. District Court in Manhattan, where a judge dismissed a similar Greenberg suit two years ago.”

Read the full Los Angeles Times article by Dean Starkman here.
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