Federal Reserve Chairman Ben Bernanke does not have to testify in the multibillion-dollar lawsuit by the former chief of American International Group Inc. against the United States over the insurer’s 2008 bailout, a federal appeals court said on Wednesday.
The ruling, from the U.S. Court of Appeals for the Federal Circuit, overturned a lower court decision from July that said Bernanke should submit to a deposition by lawyers for former CEO Maurice “Hank” Greenberg.
Deposing Bernanke while he is in office could disrupt “significant” ongoing government activities, the panel said.
Greenberg’s Starr International Co., once AIG’s largest shareholder with a 12 percent stake, also did not meet the legal threshold to depose senior government officials and have access to the Fed’s deliberative process or Bernanke’s mental processes, the panel said.
“Starr’s efforts to inquire into these issues have all the appearance, and vices, of a fishing expedition rather than an effort to establish legally material facts,” it said.
Bernanke is due to step down from his role in January. The panel said Starr could seek Bernanke’s testimony after he left that position but would have to make a better case in order to obtain that testimony.
A lawyer for Starr, David Boies, said they would seek to depose Bernanke after he leaves office.
“We are confident that we can make the showing of the importance of this testimony that the court requires,” he said in a statement.
Once the world’s largest insurer by market value, AIG was bailed out on Sept. 16, 2008, as losses were sky-rocketing from risky bets on mortgage debt through credit default swaps. The government initially took a 79.9 percent stake in the New York-based insurer.
Starr sued in 2011, and the company maintains that the bailout short-changed 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.