Judge: Fed chair Bernanke should be deposed in AIG bailout case

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Staff reports CNBC.com

21 hours ago

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Federal Reserve Board Chairman Ben Bernanke testifies before the Senate Banking, Housing and Urban Affairs Committee July 18, 2013 in Washington, DC.

Federal Reserve Chairman Ben Bernanke should testify in the lawsuit by American International Group Inc's former chief Maurice "Hank" Greenberg against the United States over the insurer's 2008 bailout, a judge ruled on Monday.

Judge Thomas Wheeler of the U.S. Court of Federal Claims rejected the government's effort to keep Bernanke from being deposed, saying the Fed chairman was a "central figure" in the decision to bail out AIG.

"Indeed, the court cannot fathom having to decide this multi-billion dollar claim without the testimony of such a key government decision maker," Wheeler wrote. "These facts constitute 'extraordinary circumstances' for the taking of Mr. Bernanke's deposition."

(Watch: Who will succeed Bernanke?)

Greenberg's Starr International Co, which once had a 12 percent stake in AIG, is suing over the government's taking of a 79.9 percent stake in the insurer in September 2008 and a separate 1-for-20 reverse stock split in June 2009.

Greenberg's attorney, Alanna Rutherford of Boies, Schiller & Flexner, said his team was pleased with the judge's decision.

Earlier this year Greenberg tried to force AIG to join his suit against the government over the $182.3 billion bailout, an effort the company ultimately rejected.

Greenberg is seeking tens of billions of dollars in compensation over the losses he incurred when the government rescued the company.

"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," Wheeler wrote in his four-page order.

Wheeler said the court would extend "appropriate deference and courtesies" to Bernanke in scheduling the testimony; the judge also said he would attend the deposition himself.

It is tentatively scheduled for Aug. 16, the order noted.

Reuters contributed to thisreport.

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