…WHILE REGULATORS WERE CONCERNED ABOUT POTENTIAL SHAREHOLDER ACTION

Turning to the government’s view of AIG shareholders, Boies introduced another email to Baxter written days after the bailout by an unidentified New York Fed attorney, who said, “I am trying to keep this moving because of concern that there will be a shareholder action”. Asked to explain, Alvarez told the court that regulators were worried that shareholders would “do things that would not be in the interest of repaying the loan”. Boies also questioned Alvarez about the Fed’s takeover of negotiations between AIG and its counterparties in November 2008, introducing an email from then associate general counsel Kieran Fallon to Fed officials that said AIG’s collateralised debt obligations would be settled “at par, less negotiated concession”. A follow-up email later that day said that “there will be no concessions”, meaning AIG would pay counterparties at 100 cents on the dollar. The trial is scheduled to include 85 witnesses over six weeks.