Boies, representing Greenberg and other AIG shareholders, has had a series of evidentiary rulings go his way since the trial began Sept. 29 in Washington.<\/p>\n
Beyond the money at stake, Justice Department lawyers are also fighting to prevent a verdict that the Federal Reserve acted illegally by charging a high interest rate and demanding equity as a condition for the loan. Such a ruling could limit the tools available to the government in a future economic crisis.<\/p>\n
In their defense, the three top designers of the bailout, former Treasury Secretary Henry Paulson, ex-Federal Reserve Chairman Ben Bernanke and Timothy Geithner, the former Treasury secretary who was president of the Federal Reserve Bank of New York in 2008, all testified that the U.S. rescued AIG to avert the catastrophic damage that would have occurred if the insurer went bankrupt.<\/p>\n
The heart of Starr\u2019s argument is that however noble the government\u2019s aims, it used power it didn\u2019t have to take over AIG and further harmed shareholders by failing to pay just compensation.<\/p>\n
As an example of how shareholders\u2019 due process rights were violated, Boies highlighted the more favorable treatment troubled investment banks including Goldman Sachs and Morgan Stanley.<\/p>\n
U.S. Court of Federal Claims Judge Thomas Wheeler frequently overruled government objections to Boies\u2019s questions and handed him beneficial evidence rulings.<\/p>\n
In a skirmish over the so-called Doomsday Book, the New York Fed\u2019s compendium of confidential legal opinions on its emergency powers, Wheeler said he was inclined to grant broad access to Starr.<\/p>\n
Wheeler rebuked Justice Department lawyers several times for attempting to rely on hearsay testimony, introducing exhibits in violation of trial rules about redactions, and dragging out proceedings by reading lengthy passages from documents.<\/p>\n
The case going to trial at all was a victory for Boies and Greenberg, because the judge\u2019s refusal to dismiss it was a rejection of the notion by some legal experts that the lawsuit was without merit.\u00a0 .<\/p>\n
Wheeler in July 2012 wrote that he agreed with Starr\u2019s argument that the only consideration for a loan under the Fed\u2019s emergency powers can be an interest rate set by the Board of Governors — not a demand for equity.\u00a0 In the same 2012 ruling, Wheeler wrote that he didn\u2019t buy a government assertion that authority for demanding equity came from the \u201cincidental powers\u201d section of the Federal Reserve Act, which deals with unspecified actions needed \u201cto carry on the business of banking.\u201d<\/p>\n
Boies\u2019s position that the U.S. didn\u2019t have authority to demand equity was bolstered by testimony from Bernanke, who told Boies that he didn\u2019t read the word \u2018rate\u2019 in the emergency-powers section of the Federal Reserve Act to include equity.<\/p>\n
The government countered with testimony from the general counsel for the Federal Reserve Board of Governors. Alvarez said he concluded that the board could empower a reserve bank \u201cto extend credit and in giving that authorization can set whatever limits and restrictions and rules the Federal Reserve Board believes is appropriate,\u201d including demanding equity..<\/p>\n
Geithner testified he barely looked at the Doomsday Book because much of its counsel for the Fed was formulated during the Great Depression.<\/p>\n
If guidance for the future is Wheeler\u2019s goal, it may nonetheless have little impact, said Philip Wallach, a fellow at the Brookings Institution.\u00a0 Regulators faced with a crisis will do what they think is necessary and worry about the consequences later.<\/p>\n
Lawyer David Boies has a shot at an upset win in the trial of Maurice \u201cHank\u201d Greenberg\u2019s $25 billion bailout case against the U.S. government, a turnaround from the weak odds he was given just a month ago. Boies, representing … Continue reading ![\"Bailing](\"http:\/\/www.w-t-w.org\/en\/wp-content\/uploads\/2014\/11\/Bailing-Out-300x202.jpg\")
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