NEW YORK (Reuters) – A federal appeals court upheld the dismissal of a lawsuit by former American International Group Inc Chief Executive Maurice "Hank" Greenberg accusing the Federal Reserve Bank of New York of unlawfully bailing out the insurer at the height of the 2008 financial crisis.
The 2nd U.S. Circuit Court of Appeals in New York said the New York Fed's authority to address threats to the economy in "unusual and exigent circumstances" justified the dismissal of state law breach of fiduciary duty claims by Greenberg's Starr International Co, which once held a 12 percent AIG stake.
Writing for a unanimous three-judge panel on Wednesday, Circuit Judge John Walker said letting Greenberg pursue his Delaware state law claims would have forced the New York Fedto shirk its obligation to act in the public interest, and instead act in the best interests of AIGshareholders.
Walker said this would have improperly "compromised" the federal effort "to rescue AIG from bankruptcy at the height of the direst financial crisis in modern times."
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