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26 Fed. Cir. B.J. 157 (2016-2017)
The Power to Act: An Analysis of the Potential Implications of Starr International Co. v. United States and How the Federal Reserve's Emergency Powers Are Threatened

handle is hein.journals/fedcb26 and id is 171 raw text is: The Power to Act: An Analysis of the Potential Implications of Starr International Co. v. United States and How the Federal Reserve's Emergency Powers are Threatened John De Vito* Introduction In September 2008, in the wake of the housing market crash, American International Group, Inc. (AIG) was on the brink of bankruptcy.' Unable to secure capital on the open market,2 AIG sought an $85 billion loan from the Federal Reserve Board of Governors that, pursuant to Section 13(3) of the Federal Reserve Act, the Federal Reserve was authorized to provide as lender of last resort.3 The terms of the loan included a 12% interest rate and 79.9% equity interest.' The terms also provided that the Government would choose a temporary replacement for AIG's CEO. AIG's board of directors approved the Government's terms, ultimately saving AIG from bankruptcy.' The Federal Reserve Bank of New York's (FRBNY) decision to bail out AIG is largely credited as integral in preventing the total collapse of the United States economy. Despite saving AIG from bankruptcy and preventing the collapse of the economy, in Starr International Co. v. United States, two classes of stockhold- ers sued the Federal Government in the Court of Federal Claims for damages stemming from the Government's alleged violation of the Fifth Amendment when it took an equity interest in AIG and replaced AIG's CEO with a CEO * John De Vito is a J.D. candidate at The George Washington University Law School. See Starr Int'l Co. v. United States, 121 Fed. Cl. 428, 430 (2015). 2 See id. at 440. See id. at 466; Federal Reserve Act § 13(3), 12 U.S.C. § 343 (2006) (amended 2010). See Starr, 121 Fed. Cl. at 431. See id. 6 See id. See id. at 443. 121 Fed. Cl. 428 (2015).

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