Fed Says Court Ruling Shows AIG Rescue Helped Millions

The Federal Reserve on Monday welcomed a federal judge's decision that the former head of American International Group was not entitled to damages as a result of the U.S. central bank's rescue of the giant insurance company in the fall of 2008. The judge, Thomas C. Wheeler of the U.S. Court of Federal Claims, ruled that the government exceeded its authority in its 2008 rescue of AIG but didn't award any money to former CEO Hank Greenberg and other shareholders. "The court's decision... recognizes that AIG's shareholders are not entitled to compensation for that decision, and that the Fed's extension of credit to AIG prevented losses to millions of policyholders, small businesses, and American workers who would have been harmed by AIG's collapse during the financial crisis," the U.S. central bank said in a statement. "The Fed added it "strongly believes that its actions in the AIG rescue during the height of the financial crisis in 2008 were legal, proper and effective."