Fannie Mae-No Politics (FNMA)

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Greenberg’s AIG Suit Provides Not-So-Fast Moment: comment if you see parallels to fnf.
By C. Thompson November 03, 2014
Boies Schiller & Flexner Chairman David Boies

David Boies, the attorney for former AIG Chairman Maurice “Hank” Greenberg’s Starr International Co. in the trial challenging the government’s demand for AIG equity in consideration for an initial $85 billion loan, has framed the rescue as a series of cozy deals rigged by regulators in favor of Goldman Sachs Group Inc. and other investment banks at the insurer’s expense. Photographer: Andrew Harrer/Bloomberg

The pretrial wisdom had pegged this so-called AIG trial up to an old man, Maurice “Hank” Greenberg, attempting to exact revenge for the face he lost when the company he built over almost 40 years had to be seized, some might say nationalized, by the federal government to keep it from wreaking some of the worst possible havoc of the 2008 financial crisis.

It was a long shot, they said, probably having more do with Greenberg’s desire to drag Tim Geithner, Henry Paulson and Ben Bernanke through the mud than anything. It would be next to impossible to show harm, considering how the company survived and in fact thrived.

“I think they’re going to lose,” Marcel Kahan, a New York University law professor who specializes in corporate finance and governance, said about Boies and Greenberg on the eve of the trial. “I think they realize they’re going to lose. But you never know what’s going to happen.”
Story: The Bailout Reunion Trial

Got that right.

With the trial entering its sixth week today, suddenly it seems people are seeing it differently. Andrew Zajac and Christie Smythe take stock of the proceedings so far and find the arrow has moved. They note the adroit litigating by David Boies, the celebrated attorney representing Greenberg and the plaintiffs, as well as favorable rulings from the judge in this bench trial, Thomas Wheeler.

Wheeler appeared to be leaning even before the trial, based on reporting that he had criticized the U.S. for trying to keep AIG out of the case as well as “the low evaluation of Starr’s potential success on the merits” of the case that AIG’s lawyers represented to the board.
Video: AIG’s Miller: Board Declined to Join Greenberg Suit

Reading today’s story, we wonder whether Wheeler ever was prepared to give the U.S. government a fair hearing. News to us in the story is how much else the judge had written or said before the trial ever began -- years ago.

Zajac and Christie report Wheeler wrote in 2012 that he agreed with Starr’s argument that the only consideration for a loan under the Fed’s emergency powers can be an interest rate set by the board of governors -- not a demand for equity. He also wrote that he didn’t buy the government’s argument that the Federal Reserve Act conferred broad enough powers to take that equity, and that the Treasury Department’s holding of the stake in a trust didn’t mitigate any of this.

So, chalk it up to our ignorance, which is always on full display, when we wonder whether and how there was supposed to be any impartiality in this and whether, as suggested by today’s story, this judge saw a vacuum in the federal powers at use for the first time since the Great Depression and decided he abhorred it.

http://www.businessweek.com/news/2014-11-03/greenberg-s-aig-suit-provides-not-so-fast-moment-opening-line