By Aruna Viswanatha WASHINGTON (Reuters) - Former U.S. Treasury Secretary Timothy Geithner on Tuesday defended the government's rescue of American International Group Inc (N:AIG) in September 2008, saying the action was necessary to prevent the country from plunging into a possible second Great Depression.
Geithner's comments came in testimony he provided in the trial of a lawsuit brought by Hank Greenberg, AIG's top executive from 1968 to 2005, who contends the terms of the government $85 billion loan to AIG cheated its shareholders.
Greenberg's lawyer, star litigator David Boies, spent much of Tuesday morning introducing emails Geithner wrote and received when he served as president of the New York Federal Reserve in the chaotic days around the initial bailout offer.
Many of the emails were sent from other New York Fed officials after midnight, underscoring the round-the-clock effort the government undertook to contain the 2008 financial crisis.
Boies also read aloud, in Washington federal court, comments Geithner made in his book about AIG's deteriorating condition and the consequences the company's collapse could have on the broader financial system.
"It sounds like you are quoting me," Geithner said on multiple occasions after hearing a passage from Boies, who cited the book with enough frequency that the judge overseeing the case asked if he should go get his own copy at Barnes & Noble (N:BKS).
Geithner, who appeared relaxed during his more than three hours on the stand, did attempt to walk back some comments he had made in the past about the AIG bailout, including statements that the insurance company's shareholders had been "effectively wiped out" and that the government had essentially "nationalized" AIG.
That was "not the most precise language," he said, to laughter in the courtroom.
Geithner is expected to continue his testimony on Tuesday afternoon.
(Reporting by Aruna Viswanatha)