U.S. Appeals Ruling in Greenberg’s Case Against AIG Bailout
A judge in the Court of Federal Claims in Washington, D.C. found that the U.S. Federal Reserve exceeded its authority in the insurer’s bailout, and the government had been expected to appeal in order to preserve a robust shield against legal challenges to their responses in future financial crises.
Greenberg had sought up to $50 billion in damages, but was not awarded a penny after Judge Thomas Wheeler also found that without the government’s intervention, AIG would have filed for bankruptcy.
The government is appealing to the Court of Appeals for the Federal Circuit. Starr International Co., which was AIG’s largest shareholder at the time of the bailout, has also appealed. It argued for damages and a reversal on other claims dismissed by Wheeler.
Greenberg, 90, was ousted from AIG in 2005 after almost four decades at the helm. Through his firm, Starr International Co., Greenberg sued the U.S. government in 2011. He argued federal officials acted illegally in the initial $85 billion loan package to the stricken company.
The New York-based insurance giant was rescued by the U.S. government in September 2008 to stave off bankruptcy after the company ran up billions of dollars in losses stemming from insurance it wrote on shoddy mortgage securities.
The case is Starr International Co. v. U.S, U.S. Court of Appeals for the Federal Circuit, No. 15-510
(Reporting by Lindsay Dunsmuir; Editing by Grant McCool)
- Berkshire’s Jain on Cyber: ‘The Mindset Should Be You’re Not Making Money’
- People Moves: Everest Names US Regional Execs to North America Insurance Leadership
- Update: Fannie Mae Guidelines Raise Concerns, Could Bar ACV Coverage for Homes
- Insurer Chubb Readies $350M Payout Tied to Baltimore Bridge Collapse