Newspaper article International New York Times

As A.I.G. Trial Ends, Disputes Unresolved

Newspaper article International New York Times

As A.I.G. Trial Ends, Disputes Unresolved

Article excerpt

The lawyers on both sides debated the extent of the Federal Reserve's authority.

The unusual trial of Maurice R. Greenberg's $40 billion lawsuit against the government ended in much the same way it started, with both sides presenting starkly different narratives about the 2008 taxpayer bailout of the American International Group.

"Not surprisingly, just about everything is still in dispute in this case," Judge Thomas Wheeler wryly commented from the bench as he adjourned Wednesday afternoon, prompting chuckles among those in attendance.

David Boies, the lawyer for Mr. Greenberg, the former A.I.G. chief executive, sought to frame the case as less about A.I.G., or the $182 billion bailout itself, and more about the limits of executive power and whether the federal government had overstepped its bounds. The company's shareholders, he argued, were shortchanged when the Federal Reserve imposed harsh terms -- like a 14 percent interest rate and a 79.9 percent equity stake -- that it did not have authority from Congress to apply.

Kenneth M. Dintzer, who represented the Justice Department, argued just as strongly that not only did the Fed have the authority but that A.I.G's shareholders never lost any money, which should preclude them from crying foul. The plaintiffs' shares, he told the judge, "would not have had any value if not for the government's actions" and instead would have been wiped out in bankruptcy.

Even the valuation of A.I.G.'s shares remained in dispute. Mr. Dintzer cited stock charts that showed the stock price plummeting before the taxpayer bailout, then surging once the Fed's emergency loan was announced. Mr. Boies said the stock was depressed after the collapse of Lehman Brothers and called for considering a previous, higher price as the baseline.

In the end, Mr. Greenberg's lawsuit, brought on behalf of A.I.G. shareholders but without the company's cooperation -- its board testified for the government -- ended largely in a stalemate that will now be broken by Judge Wheeler of the United States Court of Federal Claims here. …

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