David Boies spent much of the past month interrogating the architects of the 2008 Wall Street bailout, making the case that the U.S. cheated American International Group Inc. (AIG) shareholders of at least $25 billion partly for the benefit of an elite club of banks, Bloomberg reported today. This week, the government is set for its turn to respond to claims by Boies and his client, former AIG Chairman Maurice “Hank” Greenberg, describing the lawsuit as the ultimate case of biting the hand that feeds you. Boies represents Greenberg’s Starr International Co. in a trial challenging the government’s demand for AIG equity in consideration for an initial $85 billion loan. He has framed the rescue as a series of deals rigged by regulators in favor of Goldman Sachs Group Inc. (GS) and other investment banks at the insurer’s expense. Goldman Sachs, Morgan Stanley and other banks borrowed tens of billions of dollars at rates of no more than 4 percent, while New York-based AIG was saddled with a 14 percent interest rate and was forced to surrender 80 percent of its equity.
