In what has been described as a Quixotic legal mission, Starr International Company, Inc. challenged the government’s takeover of A.I.G. Insurance at the height of the national’s financial crisis in 2008. Then, the U.S.A. seized ownership of 79.9% of the company in exchange for a forced bailout loan. The Plaintiffs sought $40 billion in damages from the government in the litigation.
Judge Thomas C. Wheeler of the United States Court of Federal Claims found that the government was free to make loans to distressed entities, but to seize the ownership interest “constituted an illegal exaction under the Fifth Amendment.”
The decision and important briefs in the case are here. A New York Times story on the decision is here.