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Bernanke Needn’t Testify in AIG Bailout Suit, U.S. Says

Fed Chairman Ben S. Bernanke
U.S. Federal Reserve Chairman Ben S. Bernanke was served with a deposition notice on June 21 by Starr International Co., which seeks to interview him on Aug. 16. Photographer: Scott Eells/Bloomberg

July 9 (Bloomberg) -- U.S. Federal Reserve Chairman Ben Bernanke shouldn’t be compelled to testify in Maurice “Hank” Greenberg’s lawsuit over the government’s bailout of American International Group Inc., the Justice Department said.

Starr International Co., Greenberg’s closely held investment firm and an AIG shareholder, hasn’t shown the “extraordinary circumstances” needed to warrant the testimony because information on Bernanke’s role in the 2008 bailout can be obtained from other sources, the U.S. argued in a filing in the U.S. Court of Federal Claims in Washington.

“As a general rule, high-ranking government officials are not subject to depositions regarding the reasons for taking official actions,” Brian Mizoguchi, a Justice Department lawyer, wrote in the filing yesterday.

Starr sued the government for $25 billion in 2011. Greenberg called the assumption of 80 percent of the AIG’s stock by the Federal Reserve Bank of New York in September 2008 a taking of property in violation of shareholders’ constitutional rights to due process and equal protection of the law.

The AIG board on Jan. 9 declined to join the suit, saying it was unlikely to succeed and risked harming the company’s reputation after the bailout. A trial has been set for Sept. 29, 2014. A related case brought by Starr against the New York Fed was dismissed in November by a judge in New York.

‘Important Testimony’

“Mr. Bernanke has important testimony to give in this case,” David Boies, a lawyer for Starr at Boies, Schiller & Flexner LLP, said in an e-mail. He said Starr will respond in court to the U.S. filing within the next couple of weeks.

Bernanke, 59, was served with a deposition notice on June 21 by Starr, which seeks to interview him on Aug. 16, according to the government’s filing. The U.S. contended that whatever Bernanke has to say is available from sources such as Board of Governors meeting minutes or depositions of lower-ranking officials.

Greenberg, 88, stepped down as AIG’s chairman and chief executive officer in 2005 amid an investigation tied to an accounting scandal.

The case is Starr International Co. v. U.S., 1:11-cv-00779, U.S. Court of Federal Claims (Washington).

To contact the reporter on this story: Tom Schoenberg in Washington at tschoenberg@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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