Member Since: 11/27/2010
Posts: 9,806
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Judge illegal for federal government to bail out A.I.G.
Here
Quote:
Judge Wheeler wrote in his 75-page opinion that the Fed’s action “constituted an illegal exaction under the Fifth Amendment.”
“The Board of Governors and the Federal Reserve Banks possessed the authority in a time of crisis to make emergency loans to distressed entities such as A.I.G., but they did not have the legal right to become the owner of A.I.G.,” he wrote in his decision. “There is no law permitting the Federal Reserve to take over a company and run its business in the commercial world as consideration for a loan.”
The judge’s ruling also criticized the government for “unduly harsh treatment” of A.I.G. compared with other financial institutions that were bailed out during the financial crisis.
However, when it came to assessing damages, Judge Wheeler ruled that he “must examine what would have happened to A.I.G. if the government had not intervened.”
“The inescapable conclusion is that A.I.G. would have filed for bankruptcy,” he wrote. “In that event, the value of the shareholders common stock would have been zero.”
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