WASHINGTON – A federal judge has handed a partial victory to the former CEO of American International Group, who claimed the government's bailout of the insurance giant in the heat of the financial crisis was unfairly punitive.
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Judge Thomas Wheeler ruled Monday to validate the allegation made in the lawsuit by former AIG Chairman and CEO Maurice Greenberg. But the judge rejected Greenberg's demand for some $40 billion in damages from the government.
The suit alleged that the $85 billion bailout of the teetering insurance giant in September 2008 violated the Constitution's Fifth Amendment by taking control of AIG without "just compensation."
Wheeler called the government's conduct in its taking over 80 percent of AIG's stock an "illegal exaction" and criticized its "unduly harsh treatment of AIG in comparison to other institutions."