Fed Gives Peek At Maiden Lane Portfolios

One of the entities formed to help American International Group Inc. unwind complicated financial transactions did better this summer than the other entity did, according to the Federal Reserve System.

The entities are Maiden Lane II and Maiden Lane III, two Delaware companies that are controlled by the Federal Reserve Bank of New York.

The Fed has published a report on the status of the entities here.

Maiden Lane II

In November 2008, the Federal Reserve Board authorized the New York Fed to lend up to $22.5 billion to Maiden Lane II to help it buy residential mortgage-backed securities from the securities lending portfolio of several regulated U.S. insurance subsidiaries of AIG (NYSE:AIG), Fed officials write in a monthly report on Fed credit and liquidity programs.

The New York Fed used the Maiden Lane II authority to lend that entity $19.5 billion in December 2008, officials write.

The fair value of the Maiden Lane II portfolio fell to $15.3 billion on June 30, down from $16.7 billion on March 31, officials report.

The value of Alt-A adjustable rate mortgage holdings held steady at about $4.4 billion, but the value of subprime mortgage assets fell to about $8.3 billion, from $9.7 billion, officials report.

About 72% of the assets in the portfolio now have ratings of BB plus or lower, officials report.

But AIG has reduced the amount of principal it owes the government to $17.7 billion, from $19.5 billion, officials report.