Bernanke to Give Deposition|in AIG Bailout Lawsuit

     (CN) – Federal Reserve Chairman Ben Bernanke can be questioned for a class action challenging the government’s 2008 bailout of American International Group, a U.S. judge ruled.
     Judge Thomas Wheeler of the U.S. Court of Federal Claims ordered the deposition of Bernanke by lawyers for AIG shareholders, including lead plaintiff Starr International Co.
     The shareholders say the bailout constituted an unconstitutional government “taking,” and Bernanke’s testimony would help unravel the decision-making process leading up to the bailout.     
     Wheeler agreed.
     “Mr. Bernanke repeatedly has acknowledged that he was a key decision-maker on behalf of the government, and his testimony unquestionably is relevant to the Fifth Amendment taking and illegal exaction claims before the court,” he wrote.
     At the height of the financial crisis, the government gave the financial services company an $85 billion revolving credit line in exchange for a 79.9 percent equity stake in AIG. The move came amid fears that AIG would collapse and take other Wall Street firms with it, causing unsustainable ripples in the U.S. economy.
     Federally appointed trustees also oversaw a 1-for-20 reverse stock split approved by AIG’s board of directors.
     Wheeler certified two classes in March: a credit agreement class and a stock split class.
     Shareholders sought to depose the Fed chairman, but the government asked for a protective order, claiming the plaintiffs needed to show that the information he could give was “essential to his case” and “not obtainable from another source.”
     Wheeler denied the government’s motion Monday and ordered Bernanke’s deposition.
     “The court is persuaded that Mr. Bernanke is a key witness in this case, and that his testimony will be highly relevant to the issues presented,” Wheeler wrote. “Because of Mr. Bernanke’s personal involvement in the decision-making process to bail out AIG, it is improbable that plaintiff would be able to obtain the same testimony or evidence from other persons or sources.”
     He added that the court would “extend appropriate deference and courtesies” to the Fed chairman, including “appropriate judicial oversight” to ensure “that proper and efficient use of time is maintained.”
     Starr International tentatively set the deposition for Aug. 13, though Wheeler told its lawyers to coordinate the date with Bernanke.

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