* Judge says Bernanke was "key government decision-maker"
* AIG suit filed by Maurice Greenberg's Starr International
* Fed declines to comment
By Jonathan Stempel
July 29 A U.S. judge ruled on Monday that
Federal Reserve Chairman Ben Bernanke should testify in the
multibillion-dollar lawsuit by the former chief of American
International Group Inc, Maurice "Hank" Greenberg,
against the United States over the insurer's 2008 bailout.
Judge Thomas Wheeler of the U.S. Court of Federal Claims
rejected the government's effort to keep Bernanke from
submitting to a deposition by Greenberg's Starr International
Co, once AIG's largest shareholder with a 12 percent stake.
Wheeler called Bernanke a "central figure" in the decision
to rescue AIG, making him a "key witness" who could provide
"highly relevant" testimony about the government's bailout of
the insurer, which eventually totaled $182.3 billion.
"Indeed, the court cannot fathom having to decide this
multi-billion-dollar claim without the testimony of such a key
government decision-maker," Wheeler wrote. "These facts
constitute 'extraordinary circumstances' for the taking of Mr.
Bernanke's deposition," which the judge said he plans to attend.
A Fed spokesman declined to comment. Alanna Rutherford, a
partner at Boies, Schiller & Flexner representing Starr, said
the company is pleased with the decision.
Once the world's largest insurer by market value, AIG was
bailed out on Sept. 16, 2008, as losses were skyrocketing from
risky bets on mortgage debt through credit default swaps. The
government initially took a 79.9 percent stake in the New
Starr sued in 2011, and maintains that the bailout
shortchanged shareholders out of tens of billions of dollars.
The company called the government's action an illegal taking
that violated the 5th Amendment of the U.S. Constitution. It is
also suing over a 1-for-20 AIG reverse stock split in June 2009.
U.S. SAID BERNANKE TESTIMONY UNNECESSARY
The government had argued that details about Bernanke's role
could be obtained elsewhere, such as meeting minutes from the
Fed's Board of Governors, and that high-ranking U.S. officials
in general should not be deposed over their official actions. It
also said a deposition would distract Bernanke from overseeing
the nation's economy and fiscal policy.
Wheeler, however, said it is "relatively routine" for top
government officials to testify in Court of Federal Claims cases
when they have personal knowledge of relevant information.
The court sits in Washington, D.C., and handles lawsuits
seeking money from the government.
According to Wheeler, officials who have testified have
included Dick Cheney, then secretary of defense; Andrew Cuomo,
then secretary of housing and urban development; and General
Colin Powell, then chairman of the Joint Chiefs of Staff.
Wheeler asked both sides to schedule a deposition. He said
the Aug. 16 date proposed by Starr is acceptable to him.
The government eliminated its last AIG stake on March 1.
Greenberg, 88, led AIG for nearly four decades before his
2005 ouster. Starr is appealing another judge's dismissal of a
related lawsuit against the Federal Reserve Bank of New York.
The case is Starr International Co v. U.S., U.S. Court of
Federal Claims, No. 11-00779.