Paulson Takes the Stand in AIG Trial

WASHINGTON - The first of a series of witnesses who were the leading government figures during the financial crisis appeared on Monday in the trial of a lawsuit that challenges the government's rescue of the insurance giant American International Group.

Henry M. Paulson Jr., who was Treasury secretary when A.I.G. was bailed out with what became a $192 billion lifeline, testified for little more than an hour on Monday morning under questioning from David Boies, the lawyer representing Maurice R. Greenberg, formerly chief executive of A.I.G.

Mr. Greenberg, a major A.I.G. shareholder through his company Starr International, sued the government in 2011, contending that the rescue imposed illegally onerous terms. On behalf of A.I.G. shareholders, Mr. Greenberg is seeking more than $40 billion in compensation.

Mr. Paulson acknowledged that he believed the terms of A.I.G.'s bailout in September 2008 were 'punitive' and 'harsher' compared with the assistance that other financial institutions received at the time. He also said he believed the A.I.G. assistance constituted a nationalization of the company.

'When the government owns more than 50 percent, it's a nationalization,' Mr. Paulson said. The rescue gave the government what became a 92 percent stake.

Despite the tough terms, Mr. Paulson said he 'supported the terms of the loan,' and favored the government's action to save A.I.G. Without it, he said, the company would have faced a bankruptcy that would have been 'catastrophic' for the economy.

When questioned by Mr. Boies about whether he believed an A.I.G. collapse would have wreaked havoc on the American people, Mr. Paulson responded, 'I sure did, yes.'

Mr. Paulson was also asked about the potential for the Chinese to rescue A.I.G. during the critical period in September. He said he did not believe the Chinese would ever have made a deal that did not involve United States government assurances or backstops, which Mr. Paulson was unwilling to provide at the time.

'I was 100 percent certain the Chinese weren't going to come in,' he said.

Maurice R. Greenberg, the former chief of A.I.G., has now raised several million dollars from three Wall Street investors to help cover the cost of the case.

Lokasi:

Share :