By Angela Chen
The U.S. government on Wednesday filed to appeal a judge's
ruling that it violated the law when it took a controlling stake in
American International Group Inc. in 2008.
Judge Thomas C. Wheeler ruled in June that the government
action, during the most dramatic stretch of the financial crisis,
was unlawful. Still, he accepted the government's arguments that
without a Federal Reserve bank's $85 billion loan to AIG, the
company would have filed for bankruptcy and shareholders likely
would have been left with nothing.
"We disagree with the court's conclusion regarding the Federal
Reserve's legal authority and continue to believe that the
government acted well within legal bounds," a spokesman for the
U.S. Department of the Treasury said.
Judge Wheeler of the U.S. Court of Federal Claims wrote in his
opinion that the "government's unduly harsh treatment of AIG in
comparison to other institutions seemingly was misguided and had no
legitimate purpose, "
In addition to the government's appeal, AIG's former longtime
chief executive Maurice "Hank" Greenberg said he would appeal the
decision not to award shareholders any of the $40 billion in
damages they were seeking.
A representative for Mr. Greenberg wasn't immediately available,
and AIG declined to comment on the appeal by the U.S.
Judge Wheeler had said "zero damages" were being awarded because
he had to take into consideration that AIG's alternative to the
government's harsh deal terms was to file for bankruptcy, an
outcome that likely would have left shareholders with nothing.
Wednesday's appeal by the U.S. was filed in a one-paragraph
notice that didn't offer further details.
Write to Angela Chen at angela.chen@wsj.com