Testimony to end, but AIG case far from over

AIG headquarters in New York City.
Adam Jeffery | CNBC
AIG headquarters in New York City.

The last witness in an eight-week trial over the government's role in AIG's bailout is expected to be called Friday, but a verdict is still months away.

The trial, being heard in federal claims court in Washington, D.C., is a bench trial. Overseen by Judge Thomas Wheeler, it has pitted the government against a high-powered team of lawyers representing former AIG CEO Hank Greenberg and other current and former shareholders of the insurance giant.

The plaintiffs claim the Federal Reserve overstepped its powers by imposing unusually high interest rates on AIG, and taking what became a 92 percent stake in the company as part of a $182 billion bailout of AIG. During the trial, financial luminaries including former Treasury secretaries Hank Paulson and Timothy Geithner, along with former Fed Chairman Ben Bernanke, were called to testify.

In an opening statement at the trial, a lawyer from the Department of Justice, Kenneth Dintzer, said AIG received assistance only because of the potential global consequences of the company filing for bankruptcy, and that the loan terms made sense given market conditions. "The goal was not to save AIG, it was to save the world from AIG," Dintzer said.

Fed's emergency powers
Fed's emergency powers   

A ruling in the plaintiffs' favor could significantly change the government's response to future financial crises, but a decision by Wheeler is not expected until at least the first quarter of next year. Whatever his decision, the losing side is expected to appeal, meaning the case will be in the legal system for years to come.

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In the interim though, the plaintiffs, represented by superstar attorney David Boies, are expected to ask for a rebuttal on Friday. This means the government will then have a chance to respond.

The public proceedings are likely to wind up Monday, and after that Wheeler will outline a post-trial briefing schedule. This allows him to ask for and review various files and other evidence that was submitted during the course of the trial.

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Once Wheeler reviews the information, both sides will present their closing arguments. These are likely to take place in January, after which the wait for Wheeler's decision begins, and it could last for months.

The case is Starr International Co. v. U.S., 11-cv-00779 U.S. Court of Federal Claims

—Reuters contributed to this article.