The first witness called by Boies, Scott Alvarez, the general counsel of the Federal Reserve Board of Governors, testified about the credit terms extended by the government to financial institutions earlier in 2008 and about the terms offered to AIG.Under questioning by Boies, Alvarez insisted that when the bailout began on Sept. 16, 2008, the government had not decided that its equity interest in AIG would take the form of warrants for common stock.Boies argued in his opening that the government imposed a demand for warrants and then changed the deal, insisting on preferred stock to avoid shareholder challenges to its control.He pointed to Sept. 21, 2008, AIG board minutes stating that a bailout involving warrants was “now proposed to be convertible preferred stock.” Alvarez’s hand-written meeting notes from Sept. 18 said “there may be issues with warrants at AIG.”

via AIG Bailout by U.S. Was ‘Extortion,’ Greenberg Lawyer Says – Bloomberg.