The heads of Goldman Sachs Group Inc. and JPMorgan Chase & Co. told federal regulators days ahead of the 2008 government bailout of American International Group Inc. that they were putting together a private rescue of the insurance giant, a New York Fed lawyer testified, Bloomberg News reported yesterday. When AIG’s name came up in a Sept. 12 meeting of financial regulators and creditors of Lehman Brothers Holdings Inc., which was teetering toward bankruptcy, Goldman Sachs Chief Executive Officer Lloyd Blankfein and JPMorgan CEO Jamie Dimon said, “That’s another problem we’re taking care of,” said Thomas Baxter, general counsel of the New York Federal Reserve Bank. “I took careful note of that colloquy and it led me to believe that we had another issue in AIG but it was being addressed by the private sector,” Baxter told a judge in Washington, D.C., yesterday in a trial over the terms of the U.S. bailout. Maurice “Hank” Greenberg’s Starr International Co., the biggest shareholder in AIG when the financial crisis struck, sued the U.S. in 2011 seeking more than $25 billion for losses from the insurer’s bailout. Starr claims the assumption of 80 percent of AIG’s stock in exchange for an $85 billion loan was an unconstitutional “taking” of private property because the Federal Reserve Board of Governors lacked the legal authority to take equity in a company in consideration of a loan.
