WASHINGTON BUREAU — American International Group Inc. may have to fight other financial services firms for a chance to repurchase mortgage-backed securities (MBS) it sold to Maiden Lane II L.L.C., a fund controlled by the Federal Reserve Bank of New York, in November 2008.
AIG, New York (NYSE:AIG), offered the New York Fed $15.7 billion for the securities earlier this month. Now AIG President Robert Benmosche says the New York Fed appears to be conducting an auction for the Maiden Lane II holdings.
Benmosche said he believes a number of firms are looking at the securities. Barclays P.L.C., London, is said to be one of the bidders.
The New York Fed created Maiden Lane II during the depths of the financial crisis, when the U.S. housing market had started to collapse and the credit markets were frozen. AIG used $22 billion in cash in obtained through the arrangement to meet securities lending obligations.
The securities in the fund are residential MBS backed by subprime mortgages.
The AIG Offer
Benmosche said Wednesday on CNBC that AIG has been talking to the New York Fed about buying the Maiden Lane II securities back since September 2010 and made a firm offer in December 2010.