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The Federal Reserve Bank of New York on Thursday told a federal judge it acted lawfully in bailing out American International Group Inc during the 2008 financial crisis, and should not face a $25 billion lawsuit by the insurer’s former chief executive, Maurice “Hank” Greenberg.

Greenberg’s case, brought on behalf of his company Starr International Co, accused the New York Fed of wasting more than $60 billion of AIG and taxpayer funds in a “backdoor bailout” that let “favored” trading partners, such as Goldman Sachs Group Inc, be repaid in full and freed from legal liability.

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