Geithner saw 'unprecedented risk' when lending AIG $85bn

Timothy Geithner

American International Group Inc. (AIG)’s unique set of risks was seen by one of the primary orchestrators of its rescue as requiring tough conditions that included the government’s taking most of the insurer’s stock.

Bloomberg News reports that the fight over whether those terms were fair is set to continue Thursday in a federal trial in Washington.

'I thought we were taking an enormous, unprecedented risk,' said Timothy Geithner, who was the head of the Federal Reserve Bank of New York in September 2008 when it agreed to lend AIG $85 billion. 'We might lose billions or tens of billions of dollars.'

Geithner, scheduled for a third day of testimony Thursday, will be followed by another architect of the bailout, Ben Bernanke, the former chairman of the Federal Reserve Board of Governors.

Maurice 'Hank' Greenberg’s Starr International Co., which was AIG’s largest shareholder before the bailout, accuses the government of illegally taking 80 percent of the company’s equity in consideration for the loan and seeks more than $25 billion in damages. 

Hit the link below to access the complete Boomberg News article:

AIG’s Risks Seen by Geithner as Requiring Tough Terms

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