A U.S. judge on Monday awarded no damages to American International Group Inc shareholders led by former CEO Maurice “Hank” Greenberg in their lawsuit against the U.S. government, despite finding that the U.S. Federal Reserve exceeded its authority in the insurer’s 2008 bailout.
While Judge Thomas Wheeler of the Federal Court of Claims in Washington, D.C. sided with Greenberg on a key legal claim, the decision amounts to a pyrrhic victory that could help shield regulators from legal challenges to their responses in future financial crises.
In his opinion, Wheeler said the government showed “unduly harsh treatment” of AIG compared to other institutions it bailed out, but that shareholders ultimately benefited from the rescue.
“In the end, the Achilles’ heel of Starr’s case is that, if not for the government’s intervention, AIG would have filed for bankruptcy,” wrote Wheeler, who was appointed by George W. Bush.
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