Former US Treasury Secretary Defends AIG Bailout

Former U.S. Treasury Secretary Timothy Geithner on Tuesday defended the government’s rescue of American International Group Inc (AIG.N) in September 2008, saying it was necessary to prevent the country from plunging into a second Great Depression.

Geithner’s comments came in testimony in the trial of a lawsuit brought by Hank Greenberg, a major AIG shareholder until the bailout and the company’s chief executive until 2005. He contends the terms of the government $85 billion loan to AIG cheated its shareholders.

While few legal experts expect Greenberg’s lawsuit to be successful, it has served to reopen a fraught chapter in American economic history and the outcome could shape how regulators respond to future crises.

 
Greenberg’s lawyer, star litigator David Boies, spent much of Tuesday morning introducing emails Geithner wrote and received that discussed AIG’s deteriorating condition when he served as president of the New York Federal Reserve in the chaotic days around the initial bailout offer.

via Reuters

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