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No bailout damages for ex-AIG boss, court rules | No bailout damages for ex-AIG boss, court rules |
(about 4 hours later) | |
A court has ruled that former AIG boss Hank Greenberg should get no damages in his case against the US government over the insurer's 2008 bailout. | A court has ruled that former AIG boss Hank Greenberg should get no damages in his case against the US government over the insurer's 2008 bailout. |
However, it did concede that the government overstepped its authority with "overly harsh" conditions imposed on an $85b loan to prevent AIG from collapse. | However, it did concede that the government overstepped its authority with "overly harsh" conditions imposed on an $85b loan to prevent AIG from collapse. |
The government took an 80% stake in the company and 14% interest on the loan. | The government took an 80% stake in the company and 14% interest on the loan. |
In total, AIG received nearly $185bn in aid during the financial crisis. | In total, AIG received nearly $185bn in aid during the financial crisis. |
Mr Greenberg, through his company Starr International, had sought $50bn in damages on behalf of the company and its shareholders. | Mr Greenberg, through his company Starr International, had sought $50bn in damages on behalf of the company and its shareholders. |
Starr was the largest shareholder in AIG at the time of the bailout, with a 12% stake. | Starr was the largest shareholder in AIG at the time of the bailout, with a 12% stake. |
'Appropriately tough' | |
But Judge Thomas Wheeler awarded no damages because the alternative to the loan would have been bankruptcy. | But Judge Thomas Wheeler awarded no damages because the alternative to the loan would have been bankruptcy. |
"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," he said in the ruling. | "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," he said in the ruling. |
''In a bankruptcy proceeding, AIG's shareholders would most likely have lost 100% of their stock value." | ''In a bankruptcy proceeding, AIG's shareholders would most likely have lost 100% of their stock value." |
The US central bank, which worked with the US government on the bailout, said it strongly believed its actions "were legal, proper and effective". | |
"The Federal Reserve's extension of credit to AIG prevented losses to millions of policyholders, small businesses, and American workers who would have been harmed by AIG's collapse," it said. | |
The Fed added that the terms of the deal "were appropriately tough to protect taxpayers from the risks the rescue loan presented". |
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