Judge seems skeptical of government's AIG bailout terms

April 22, 2015 11:28 PM

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WASHINGTON — A federal judge on Wednesday appeared openly skeptical toward the government's claim that it had the authority to take a majority stake in American International Group (AIG) in exchange for a bailout at the height of the 2008 financial crisis.

Judge Thomas Wheeler repeatedly challenged a government lawyer's argument that the Federal Reserve's decision to take an 80% interest in the insurance giant was not an illegal taking of property and was justified because it rescued the firm from bankruptcy.

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