American International Group Inc.’s bailout by the U.S. in 2008 was seen by the company’s board as its only rescue option at the time, former Chief Executive Officer Robert Willumstad testified, Bloomberg News reported today. The insurer’s board acted in “the best interest of all the stakeholders of AIG” when it approved an $85 billion loan requiring it to surrender 80 percent of AIG’s equity and pay a 14 percent interest rate, Willumstad said in the trial of Maurice “Hank” Greenberg’s lawsuit challenging the rescue. The board voted for the loan deal after exhausting private-sector lifeline possibilities that included discussions with Warren Buffett, Jay Fishman of Travelers Cos. and J.C. Flowers & Co., Willumstad told the court. A last-minute private bank bailout led by JPMorgan Chase & Co. and Goldman Sachs Group Inc. also didn’t pan out, he said. John Roberson, a Justice Department lawyer who called Willumstad to testify, asked him what AIG’s alternative was to accepting the government’s offer. “Bankruptcy,” he replied.
