Bernanke does not have to testify in AIG bailout lawsuit -ruling


By Aruna Viswanatha

WASHINGTON, Oct 16 (Reuters) - Federal Reserve Chairman BenBernanke does not have to testify in the multibillion-dollarlawsuit by the former chief of American International Group Inc against the United States over the insurer's 2008bailout, a federal appeals court said on Wednesday.

The ruling, from the U.S. Court of Appeals for the FederalCircuit, overturned a lower court decision from July that saidBernanke should submit to a deposition by lawyers for formerchief executive 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 largestshareholder with a 12 percent stake, also did not meet the legalthreshold to depose senior government officials and have accessto the Fed's deliberative process or Bernanke's mentalprocesses, the panel said.

"Starr's efforts to inquire into these issues have all theappearance, and vices, of a fishing expedition rather than aneffort to establish legally material facts," it said.

Bernanke is due to step down from his role in January. Thepanel said Starr could seek Bernanke's testimony after he leftthat position, but would have to better make the case in orderto obtain that testimony.

A lawyer for Starr, David Boies, said they would seek todepose Bernanke after he leaves office.

"We are confident that we can make the showing of theimportance of this testimony that the Court requires," he saidin a statement.

Once the world's largest insurer by market value, AIG wasbailed out on Sept. 16, 2008, as losses were sky-rocketing fromrisky bets on mortgage debt through credit default swaps. Thegovernment initially took a 79.9 percent stake in the NewYork-based insurer.

Starr sued in 2011, and maintains that the bailoutshort-changed shareholders out of tens of billions of dollars.

The company called the government's action an illegal takingthat violated the 5th Amendment of the U.S. Constitution.

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