Geithner: AIG losses were exceptional compared with other firms

Former U.S. Treasury Secretary Timothy Geithner defended the 2008 bailout of American International Group Inc for a second day on Wednesday, struggling at times to respond to increasingly contentious questions about the government’s efforts to rescue the insurance company as it stood minutes from bankruptcy.

The questions came in the second week of trial in a lawsuit brought by Hank Greenberg, a major AIG shareholder until the bailout and the company’s chief executive until 2005. He contends the terms of the government $85 billion loan to AIG, which was extended in exchange for a nearly 80 percent stake in the company, cheated its shareholders.

A lawyer for Greenberg, David Boies, pressed Geithner Wednesday morning with questions about the extent of the government’s control of the company and whether his team at the New York Fed had assessed whether AIG had taken imprudent risks.

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