The Federal Reserve Bank of New York poured billions of dollars into rescuing American International Group Inc. in September 2008 without drawing up documents that would cement the government’s control of the giant insurer, the bank’s lawyer testified, Bloomberg News reported yesterday. AIG’s dire condition required an immediate infusion of cash, and paperwork memorializing the terms of the loan wasn’t complete, Thomas Baxter, the New York Fed’s general counsel, told a judge in Washington yesterday in a trial over a shareholder challenge to the terms of the rescue. The Fed wanted to quickly get control of AIG because of concern that Rodgin Cohen, an attorney for the company, might try to re-negotiate the rescue terms, Baxter said. Cohen had succeeded in re-working the terms of JPMorgan Chase & Co.’s takeover of Bear Stearns and the Fed was worried that he might try again with AIG, Baxter testified.
