Monday, June 15, 2015

The government is an ass ...

rules Judge Thomas Wheeler, but so what? 
The U.S. set illegal terms in demanding American International Group Inc. stock for an $85 billion bailout during the financial crisis, but that doesn’t mean AIG investors deserve compensation, a court ruled.
Quite a bill of particulars (from the judge's decision);
...the weight of the evidence demonstrates that the Government treat AIG much more harshly than other institutions in need of financial assistance.
Such as Morgan Stanley, Goldman Sachs, and BOA, the judge continued;
...while the Government publicly singled out AIG as the poster child for causing the September 2008 economic crisis...the evidence supports a conclusion that AIG actually was less responsible for the crisis than other institutions.
Wait for it ...
The Government's justification for taking control of AIG's ownership and running its business operations appears to have been entirely misplaced. [....]
Indeed, with the exception of AIG, the Government has never demanded equity ownership from a borrower in the 75-year history of Section 13(3) of the Federal Reserve Act. .... The Government did realize a significant benefit in nationalizing AIG. Since most of the other financial institutions experiencing a liquidity crisis were counterparties to AIG transactions, the Government was able to minimize the ripple effect of an AIG failure by using AIG’s assets to make sure the counterparties were paid in full on these transactions.
And the government acted knowingly and cunningly in doing this illegally.

...there is nothing in the Federal Reserve Act or in any other federal statute that would permit a Federal Reserve Bank to take over a private corporation and run its business as if the Government were the owner. Yet, that is precisely what FRBNY did. It is one thing for FRBNY to have made an $85 billion loan to AIG at exorbitant interest rates under Section 13(3), but it is quite another to direct the replacement of AIG’s Chief Executive Officer, and to take control of AIG’s business operations. A Federal Reserve Bank has no right to control and run a company to whom it has made a sizable loan.
At this point you'd think Hank Greenberg is rubbing his hands in glee over being vindicated, right? Be prepared to have logic turned upside down;
 A ruling in Starr[Greenberg]'s favor on the illegal exaction claim, finding that the government's takeover of AIG was unauthorized, means that Starr's Fifth Amendment taking claim necessarily must fail. If the Government's actions were not authorized, there can be no Fifth Amendment taking claim.
Because the government acted illegally, it's home free.

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