“Hurrah for former AIG CEO Hank Greenberg and his courage (and money). Three cheers for Judge Wheeler who has restored our faith in our country as a beacon of free enterprise, the rule of law and individual liberty.”, Sam Baker, “The Wall Street Journal: Letters to the Editor”
Fed Broke the Law With AIG but May Keep the Profits
No, the government can’t illegally take over a company. No, the government can’t favor its cronies at the expense of others.
Regarding your editorial “Washington’s Illegal Bailout” (June 16): Who cares if the judge awarded no monetary damages? What matters is that Judge Thomas C. Wheeler gave America a great legal victory. No, the government can’t illegally take over a company. No, the government can’t favor its cronies at the expense of others.
Hurrah for former AIG CEO Hank Greenberg and his courage (and money). Three cheers for Judge Wheeler who has restored our faith in our country as a beacon of free enterprise, the rule of law and individual liberty.
By my count, it’s Mr. Greenberg 2, Eliot Spitzer 0.
Your editorial quotes Judge Wheeler as being troubled that “the Government is able to avoid any damages notwithstanding its plain violations of the Federal Reserve Act.” Perhaps the court overlooked the possibility of considering the defendants as two groups—the government and the New York Federal Reserve—and then awarding the plaintiffs just punitive damages payable by the New York Fed.
The federal government itself is immune from paying punitive damages, but the Federal Reserve is not immune. It isn’t a part of the government. The courts have held that the Federal Reserve banks are not federal agencies for purposes of the Federal Tort Claims Act.
Clearly the New York Fed conspired with the Treasury to carry out an illegal act—just the type of act punitive damages were designed to deter. If the Fed has to pay up, it might actually show more respect for both the law and its supposed independence from political persuasion.
Regarding Seth Lipsky’s (“Will Congress Now Rein in the Fed?,” op-ed, June 17) dissection of the rogue nature of our own federal regime in Hank Greenberg’s Fifth Amendment Takings Clause suit over the seizing of AIG: The court has established a precedent for government. It’s now above the law because it keeps ill-gotten gains. The court’s decision says that government could do it because the alternative for AIG would likely have been bankruptcy. We cannot know for sure because this constitutionally protected due process found in Article I Section 8 of the Constitution, which empowers Congress to establish “uniform Laws on the subject of Bankruptcies throughout the U.S.,” was blocked by the very government formed to ensure protection of the right.
In 2008 I communicated to the AIG board why the government, which committed funds to AIG before the final terms were settled would never withdraw those funds. I asked the board to strengthen itself by adding directors and also asked that the shareholders have a chance to vote on any deal.
After all, if the feds withdrew the funds already promised, the government could have been in the strange position of being the entity that put the company into bankruptcy.
John A. Levin