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WASHINGTON (AP) -- A federal appeals court has ruled that the former CEO of American International Group lacks the legal right to challenge the government's bailout of the insurance giant in the heat of the financial crisis.
The ruling Tuesday by the U.S. Court of Appeals for the Federal Circuit overturned a lower-court decision and handed a victory to the government.
The next stop for the case may be the Supreme Court. David Boies, the attorney for ex-AIG chief Maurice Greenberg, said they will appeal the ruling. The unusual case raised the issue of limits on the government's power in responding to financial catastrophe.
In a lawsuit filed by his company, Starr International, Greenberg had alleged that the $85 billion bailout of the teetering AIG in September 2008 violated the Constitution's Fifth Amendment by taking control of the company without "just compensation."
The previous decision by a judge in the U.S. Court of Federal Claims validated Greenberg's allegations in principle, though the judge rejected Greenberg's demand for $40 billion in damages from the government for himself and other AIG shareholders.
Writing the new opinion for a three-judge panel of the appeals court, Chief Judge Sharon Prost said any claims against the government rightfully belong to AIG, not Starr. AIG "has exercised its business judgment and declined to prosecute this lawsuit," Prost wrote. "The alleged injuries to Starr are merely incidental to injuries to AIG, and any remedy would go to AIG, not Starr."
Starr failed to show that it, rather than AIG, directly suffered harm from the taxpayer bailout, the judges said.
In a statement, Boies noted that the appeals court didn't rule on the constitutional issue itself. At the same time, he said, the court asserted "that the shareholders have no remedy and that the government is entitled to retain more than $18 billion in ill-gotten gains."
News from The Associated Press
Never bail out these jackholes again. In fact, make this a rallying cry next election cycle.
The ruling Tuesday by the U.S. Court of Appeals for the Federal Circuit overturned a lower-court decision and handed a victory to the government.
The next stop for the case may be the Supreme Court. David Boies, the attorney for ex-AIG chief Maurice Greenberg, said they will appeal the ruling. The unusual case raised the issue of limits on the government's power in responding to financial catastrophe.
In a lawsuit filed by his company, Starr International, Greenberg had alleged that the $85 billion bailout of the teetering AIG in September 2008 violated the Constitution's Fifth Amendment by taking control of the company without "just compensation."
The previous decision by a judge in the U.S. Court of Federal Claims validated Greenberg's allegations in principle, though the judge rejected Greenberg's demand for $40 billion in damages from the government for himself and other AIG shareholders.
Writing the new opinion for a three-judge panel of the appeals court, Chief Judge Sharon Prost said any claims against the government rightfully belong to AIG, not Starr. AIG "has exercised its business judgment and declined to prosecute this lawsuit," Prost wrote. "The alleged injuries to Starr are merely incidental to injuries to AIG, and any remedy would go to AIG, not Starr."
Starr failed to show that it, rather than AIG, directly suffered harm from the taxpayer bailout, the judges said.
In a statement, Boies noted that the appeals court didn't rule on the constitutional issue itself. At the same time, he said, the court asserted "that the shareholders have no remedy and that the government is entitled to retain more than $18 billion in ill-gotten gains."
News from The Associated Press
Never bail out these jackholes again. In fact, make this a rallying cry next election cycle.
