Starr International Co.’s lawsuit against the Federal Reserve Bank of New York over the government bailout of American International Group Inc. (AIG:US) should be dismissed, the bank argued in court papers.
Starr, an AIG shareholder that is headed by AIG’s founder, Hank Greenberg, filed related complaints in November against the bank in Manhattan federal court and the U.S. government in the U.S. Court of Federal Claims in Washington. Starr claims the government used its 2008 bailout of New York-based AIG to channel money improperly to the insurer’s trading partners.
The Federal Reserve Bank said in a filing yesterday that the case should be thrown out because Starr failed to make a demand on AIG’s board before filing the suit and because its decisions about terms of the bailout loans aren’t reviewable under state law.
“AIG sought and freely accepted FRBNY’s rescue, and AIG’s current corporate existence as a going concern confirms the wisdom underlying the AIG board’s decision to do so,” the reserve bank said in its court filing. “No cognizable cause of action arises from FRBNY’s decisions regarding specific proposed terms for its rescue or from the AIG board’s decision to accept those terms.”
Dawn Schneider, a spokeswoman for Starr’s lawyer, David Boies, didn’t immediately return a voice-mail message seeking comment on the court filing.
The federal claims case is Starr International Co. v. U.S., 11-779, U.S. Court of Federal Claims (Washington). The Federal Reserve case is Starr International Co. v. Federal Reserve Bank of New York, 11-8422, U.S. District Court, Southern District of New York (Manhattan).
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