John Kiernan

Have you ever wanted to hold a mock trial of Hank Greenberg’s lawsuit over the AIG bailout from the comfort of your own home? If so, you’re in luck, because yesterday AIG filed with a federal court the complete AIG Mock Trial Deluxe Kit. It’s all here:

  • A written protocol for conducting the mock trial
  • Briefs, reply briefs, and sur-reply briefs from Hank Greenberg’s investment vehicle Starr International, the Treasury, and the New York Fed
  • A polite letter from the Department of Justice declining the invitation to attend1
  • PowerPoint presentations of both sides2
  • A transcript of highly respected lawyers arguing both sides

The mock trial was, of course, conducted by AIG’s board a few weeks ago as part of the board’s consideration of whether to join Greenberg’s lawsuit against the government claiming that AIG’s bailout was an unconstitutional taking of shareholder property. The board, unsurprisingly, went with no, and yesterday it filed the full mock trial kit with the court hearing Greenberg’s claims.

The transcript is a very good read; I will mostly pick out a few amusing points but that shouldn’t detract from the facts that (1) there is a legitimate serious interesting issue here, beyond the “ooh look at the ingrates” surface, and (2) both sides did a good job of arguing it. David Boies, Greenberg’s lawyer, has the harder case – that the government unconstitutionally took 80% of AIG’s equity by entering into a voluntary credit agreement approved by AIG’s board that included a grant of equity – but he does a good job with it, resting his argument largely on Section 13(3) of the Federal Reserve Act (which permits the Fed to lend to non-banks but which does not on its face allow the Fed to, for instance, punitively demand lots of equity in excess of what it needs to compensate it for that lending) and on public statements by government officials to the effect of “AIG’s bailout was harsh because we wanted to make an example of them.” Read more »