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(Reuters) — The United States filed an appeal on Wednesday against a U.S. judge’s ruling in June that sided with former American International Group Inc. CEO Maurice Greenberg on a legal claim over the company’s 2008 bailout.
A judge in the Court of Federal Claims in Washington, found that the U.S. Federal Reserve exceeded its authority in the insurer’s bailout, and the government had been expected to appeal in order to preserve a robust shield against legal challenges to their responses in future financial crises.
Mr. Greenberg had sought up to $50 billion in damages, but was not awarded a penny after Judge Thomas Wheeler also found that without the government’s intervention, AIG would have filed for bankruptcy.
The government is appealing to the Court of Appeals for the Federal Circuit. Starr International Co., which was AIG’s largest shareholder at the time of the bailout, has also appealed. It argued for damages and a reversal on other claims dismissed by Judge Wheeler.
Mr. Greenberg, 90, was ousted from AIG in 2005 after almost four decades at the helm. Through his firm, Starr International Co., Mr. Greenberg sued the U.S. government in 2011. He argued federal officials acted illegally in the initial $85 billion loan package to the stricken company.
The New York-based insurance giant was rescued by the U.S. government in September 2008 to stave off bankruptcy after the company ran up billions of dollars in losses stemming from insurance it wrote on shoddy mortgage securities.
Starr International Co. Inc. said last Tuesday that it will appeal a federal judge's decision that although the Federal Reserve acted illegally in requiring American International Group Inc. to transfer about 80% of its equity to the government for 2008 financial assistance, the government is not required to monetarily compensate shareholders including former AIG leader Maurice R. Greenberg.