Maurice “Hank” Greenberg’s Starr International Co. and the U.S. filed a second set of post-trial papers in a lawsuit over the terms of the government’s bailout of American International Group Inc., setting the stage for next month’s closing arguments.
Starr’s lawyer, David Boies, in a brief filed Monday, repeated arguments from last fall’s trial that AIG stockholders were cheated by onerous terms of a government loan carrying an interest rate of 14 percent and a demand for 80 percent of the stock. Starr sued the U.S. in 2011 in U.S Court of Federal Claims in Washington.
The government sought to “punish” the insurer through the conditions of the 2008 bailout, Boies wrote.
In the U.S. filing, Justice Department lawyers wrote that the Federal Reserve acted within its authority when it sought equity in AIG as a condition for an $85 billion rescue loan.
“AIG acted voluntarily and without duress” in accepting the equity demand, according to U.S. filings this week. The government “did not act wrongfully or coercively” when the Federal Reserve Bank of New York offered AIG the loan on a take- it-or-leave-it basis.
If New York-based AIG rejected the loan, it “would have faced no adverse action from the government whatsoever, and would have been free to pursue bankruptcy,” Justice Department lawyers said in the filing.
Closing arguments in the non-jury trial before Judge Thomas Wheeler are scheduled for April 22.
The case is Starr International v. U.S., 11-cv-00779, U.S. Court of Federal Claims (Washington).
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