Greenberg’s lawyer hammers Fed’s e-mails in AIG trial

WASHINGTON — Hank Greenberg’s lawyer continued to hammer a Federal Reserve official on Tuesday about its 2008 bailout of AIG — zeroing in on some Fed e-mails allegedly casting doubt on the Central Bank’s authority to undertake such a rescue.

Daivd Boies, during Day 2 of the trial here pitting Greenberg and other AIG shareholders against the federal government, peppered Scott Alvarez, the Fed’s general counsel, about e-mails he and his colleagues wrote that said the Central Bank didn’t have the authority to purchase the 79.9 percent stake in AIG that it did.

Greenberg claims the $182 billion bailout included “extortionate” interest rates, was carried out against Fed policy, unjustly singled out AIG for harsh treatment and violated the Constitution.

The suit seeks to claw back $40 billion in value taken by the Fed and regulators.

AIG isn’t taking part in the suit, which is being tried in the US Court of Claims here.

Boies argued that the preferred stock agreement the New York Fed put together wasn’t authorized because the Fed board didn’t specifically approve it.

The trial next week will feature high-wattage testimony from Ben Bernanke, the former Fed chair, Tim Geithner, the former president of the New York Fed, and Hank Paulson, the then-Treasury Secretary.