A U.S. judge has decided that Ben Bernanke, chairman of the Federal Reserve, should testify in the suit filed against the government in connection with the 2008 bailout of American International Group Inc (NYSE:AIG). The judge cited “extraordinary circumstances” in deciding that the Fed chairman should testify in the case, according to CNBC.
The court needs Bernanke’s testimony
The lawsuit was filed by Maurice Hank Greenberg, the former chief of American International Group Inc (NYSE:AIG). His company Starr International Co. did have a 12 percent stake in the insurer. U.S. prosecutors were attempting to prevent Ben Bernanke from testifying in the case.
Khrom Capital was up 32.5% gross and 24.5% net for the first quarter, outperforming the Russell 2000's 21.2% gain and the S&P 500's 6.2% increase. The fund has an annualized return of 21.6% gross and 16.5% net since inception. The total gross return since inception is 1,194%. Q1 2021 hedge fund letters, conferences and more Read More
The suit revolves around the government’s claim of 79.9 percent of AIG, which it took in September 2008 as part of the bailout package, and the 2009 one-for-20 reverse stock split, which occurred the following June. Shareholders who recently sued the government over the Fannie Mae and Freddie Mac takeover were said to have gotten the idea from Greenberg’s lawsuit.
CNBC quotes Judge Thomas Wheeler as writing, “Indeed, the court cannot fathom having to decide this multi-billion dollar claim without the testimony of such a key government decision maker.”
Greenberg makes his case
Greenburg attempted to force AIG into joining his lawsuit earlier this year, although the company rejected his attempts. He is suing the government for tens of billions of dollars because of losses he said he incurred because of the insurer’s bailout.
Judge Wheeler decided that Ben Bernanke’s “personal involvement in the decision0-making process to bail out AIG” provided extraordinary circumstances which will require the Fed chairman’s testimony. He said it is unlikely the plaintiff in the case will be able to get the same evidence or testimony from any other sources.
Ben Bernanke’s deposition is tentatively scheduled for Aug. 16, although that could change. Judge Wheeler indicated that the court would be flexible regarding the Fed chairman’s schedule in terms of deciding when he should be deposed. Wheeler also said he would be at the deposition himself.