In court, Stern disputed the notion the U.S. sought to nationalize the insurer, telling the court, “the last thing they wanted to do was get involved with AIG," and only did so as a last resort when efforts to find private financing failed.
5.7% Return
Still, when the government lawyer said the U.S. profit amounted to just a 5.7 percent annual return on investment, Reyna tersely noted that return-on-investment wasn’t the point of the rescue.
The arguments come during a break in a trial in which Greenberg is accused by New York state of orchestrating two 2005 transactions designed to deceive shareholders. Greenberg, 91, and former AIG Chief Financial Officer Howard Smith, who is also on trial, deny wrongdoing.
AIG’s rescue came amid the biggest economic crisis since the 1930s, when the failure of Lehman Brothers Holdings Inc. froze credit markets and threatened a cascade of other financial-firm collapses.
“We came a whisker from another Great Depression,” said Rossi. “The government had to take action. We can all debate who they saved and who they didn’t.”
The case is Starr International Co. v. U.S., 15-5103, U.S. Court of Appeals for the Federal Circuit (Washington).
This article was provided by Bloomberg News.