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Globe/WSJ say former SEC target AIG facing damages

2014-09-15 07:07 ET - In the News

The Globe and Mail reports in its Monday edition that while American International Group has fully repaid taxpayers for the bailout it received six years ago, a $40-billion (U.S.) question mark still hangs over the company. A Wall Street Journal item inside The Globe says AIG indemnified the Federal Reserve Bank of New York for any payouts from litigation tied to the emergency loans. That detail looms larger by the day. Later this month, an investment and charitable firm run by former AIG boss Hank Greenberg goes to court seeking more than $40-billion (U.S.) for losses that he says his firm and other shareholders suffered in the bailout. The firm, Starr International Co., alleges the government took the shareholders' property in violation of the U.S. Constitution. If Mr. Greenberg wins, AIG could conceivably be on the hook for the damages. The Starr v. United States trial begins Sept. 29 and will run for six weeks. To be sure, analysts and legal experts say any payment is likely years down the road. The losing side is expected to appeal to the U.S. Supreme Court. If the government is found to have acted unlawfully, AIG would likely argue that the indemnification provision should not be enforced.

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