U.S. Federal Reserve Chairman Ben Bernanke should be required to testify in Maurice “Hank” Greenberg’s lawsuit over the bailout of American International Group Inc., Greenberg’s lawyers said.
Bernanke made key decisions about the government takeover of the insurer during the financial crisis, according to a filing by Greenberg’s Starr International Co. today in the U.S. Court of Federal Claims in Washington.
Starr sued the U.S. for $25 billion in 2011. Greenberg called the assumption of 80 percent of AIG’s stock by the Federal Reserve Bank of New York in September 2008 a taking of property in violation of shareholders’ constitutional rights to due process and equal protection of the law.
Starr, Greenberg’s closely held investment firm and an AIG shareholder, urged Judge Thomas Wheeler to deny a government request to quash a deposition subpoena of Bernanke.
“No other witness can serve as a substitute for Mr. Bernanke’s testimony,” according the filing. By Bernanke’s own admission, “the decision to take over AIG was his.”
Bernanke was served with a notice of deposition on June 21 by Starr. The company proposed questioning him on Aug. 16. In today’s filing it amended its request to “a date and time of convenience to Mr. Bernanke and the court.”
Allison Price, a U.S. Justice Department spokeswoman, declined to comment on Starr’s filing.
Whatever Bernanke has to say is available from other sources, including Board of Governors meeting minutes and the depositions of lower-ranking officials, Brian Mizoguchi, a lawyer for the Justice Department, wrote in a July 8 request to Wheeler to block a deposition.
“No extraordinary or exceptional circumstances exist that justify the extraordinary step of compelling the involuntary deposition” of a sitting Fed chairman, Mizoguchi wrote.
The AIG board declined Jan. 9 to join the Starr suit, saying that it was unlikely to succeed and risked harming the company’s reputation after the bailout.
A related case brought by Starr against the New York Fed was dismissed in November by a judge in New York.
Greenberg, 88, stepped down as AIG’s chairman and chief executive officer in 2005 during an investigation linked to an accounting scandal.
The Washington case is Starr International Co. v. U.S., 11- cv-00779, U.S. Court of Federal Claims (Washington).
Editors: Andrew Dunn, Stephen Farr