Two entities formed to help American International Group Inc. unwind complicated financial transactions cut their principal balance levels this fall.
The entities are Maiden Lane II and Maiden Lane III, two Delaware companies that are controlled by the Federal Reserve Bank of New York.
In late 2008, the New York Fed formed Maiden Lane II to help insurance subsidiaries of AIG, New York, get residential mortgage-backed securities out of their securities lending portfolios.
The New York Fed formed Maiden Lane III to help AIG unwind collateralized debt obligation transactions involving AIG’s AIG Financial Products Corp. units.
The government also has set up a revolving credit facility for AIG.
Maiden Lane II
The principal balance at Maiden Lane II fell to $16.8 billion Sept. 30, from $17.7 billion June 30, according to the Federal Reserve System. The original balance was about $19.5 billion.
The fair value of the entity’s investment portfolio has increased to $16.2 billion, from $15.4 billion, because of an increase in the value of Alt-A and subprime RMBS.