Geithner affirms in court need for AIG bailout

WASHINGTON (AP) — Timothy Geithner, a key player in the U.S. government's bailout of American International Group, has affirmed in court his belief that the insurer's rescue was needed to avert disaster for the financial system.

A lawyer on Tuesday grilled Geithner during the trial of a lawsuit brought by former AIG Chairman and CEO Maurice Greenberg. He is suing the federal government for about $40 billion in damages over its handling of the bailout.

The $85 billion loan package for AIG, which was teetering toward bankruptcy in September 2008, gave the government control of 80 percent of the company's stock. Geithner was president of the New York Federal Reserve at the time and later Treasury secretary. In his testimony, he also acknowledged that he had said the bailout "wiped out" AIG shareholders.