Super-Lawyer Boies Calls AIG Bailout $25B Ripoff. U.S.: ‘Lifeboats Uncomfortable?’

by Andrew Zajac,  Bloomberg

David Boies spent much of the past month interrogating the architects of the 2008 Wall Street bailout, making the case that the U.S. cheated American International Group Inc. (AIG) shareholders of at least $25 billion partly for the benefit of an elite club of banks.

This week, the government is set for its turn to respond to claims by Boies and his client, former AIG Chairman Maurice “Hank” Greenberg, describing the lawsuit as the ultimate case of biting the hand that feeds you.

Boies represents Greenberg’s Starr International Co. in a trial challenging the government’s demand for AIG equity in consideration for an initial $85 billion loan. He has framed the rescue as a series of deals rigged by regulators in favor of Goldman Sachs Group Inc. (GS) and other investment banks at the insurer’s expense.

Those called to the witness stand included former Federal Reserve Chairman Ben Bernanke, Goldman Sachs chief turned U.S. Treasury Secretary Henry Paulson and Timothy Geithner, then head of the Federal Reserve Bank of New York and later Paulson’s successor at the Treasury Department. All three testified about why AIG was treated more harshly than banks shored up by government money. Read the entire story.

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