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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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza