In 2008, Bernanke followed Treasury Secretary Hank Paulson’s lead. He supported a $182 billion bailout of AIG, which was about to go bankrupt. Had it gone bankrupt, it would not have paid Goldman Sachs $22 billion in mortgage insurance. So, AIG got its money, and Goldman Sachs got its money. The payouts to big banks by AIG totaled $46 billion.
Paulson had been CEO of Goldman Sachs before becoming Treasury Secretary.
The former head of AIG now says the terms of the bailout were too onerous. He is taking the federal government to court over this. Not only can beggars be choosers in the USA, they can be plaintiffs. The story is here.
He wanted Bernanke to testify in the case. Bernanke refused. The courts have decided in favor of Bernanke. But there is a time limit. His term as Chairman will end officially on February 1. His immunity ends then.
Why should he be granted such immunity? Because the courts do not want to establish a precedent. The Chairman of the Board of Governors of the Federal Reserve is a senior agent of the United States government. For as long as he us in office, he is as immune from cross-examination under oath in a court as the President of the United States is.
There are some people who think the Federal Reserve System is 100% private. They are wrong. The Board of Governors is a government agency. The proof is its Web address: www.federalreserve.gov. The .gov designation is only available to agencies of civil government. The 12 branch banks in the Federal Reserve have .org as their designation.