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Scott Alvarez, general counsel, Board of Governors of the Federal Reserve Systems, told a judge they did not want to bail out AIG in 2008. (AP Photo/Carolyn Kaster)

(Bloomberg) — The Federal Reserve Board of Governors didn’t want to bail out American International Group Inc. with an $85 billion loan, preferring that the insurer find a savior in the private marketplace, the Fed’s top lawyer told a judge.

“We were telling AIG we were not interested in making this loan,” Scott Alvarez, the Fed’s general counsel, testified in the lawsuit brought by Maurice “Hank” Greenberg’s Starr International Co.’s lawsuit alleging the U.S.’s assumption of 80 of AIG’s equity was illegal. “We did everything we could to encourage them to pursue other options.”

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