On Monday, [Judge Thomas C. Wheeler of the United States Court of Federal Claims] handed down his decision -- a split judgment that in many ways agreed with both sides' main points of contention. Yes, he ruled, the Fed had indeed crossed the legal line by demanding a 79.9 percent equity stake in A.I.G. as a condition of the bailout in 2008. But at the same time, the government was also correct that A.I.G. shareholders had not been damaged; in fact, they had been saved from bankruptcy and certain doom. He declined to award any damages. In his 75-page opinion, Judge Wheeler found that the Fed's action indeed "constituted an illegal exaction under the Fifth Amendment" and that it "did not have the legal right to become the owner of A.I.G."
The split decision will likely be appealed by both parties, likely all the way to the Supreme Court. The government will argue that Monday's decision by Judge Thomas Wheeler of the U.S. Court of Federal Claims would set a dangerous precedent that limits the ability of government to deal with future financial crises. Shareholders, led by former AIG chief executive Maurice "Hank" Greenberg, will claim that their right not to have 80 percent of their company seized by the government is meaningless if the government is not forced to pay a penalty for doing so.