WASHINGTON BUREAU — The Federal Reserve Bank of New York will be using a unit of BlackRock Inc. to sell residential mortgage-backed securities (RMBS) that American International Group Inc. handed over to the bank in 2008.
The New York Fed put the RMBS in a limited liability company, Maiden Lane II L.L.C., when AIG, New York, turned to the New York Fed for emergency financing for help with meeting collateral calls linked to troubled credit default swaps operations.
AIG recently announced that it has made a $15.7 billion offer for the RMBS, which are valued at $21.7 billion at par, and AIG President Robert Benmosche reported that the company was having trouble getting a response from the New York Fed.
The New York Fed has decided to decline AIG’s offer because of improving market conditions for the Maiden Lane II portfolio, New York Fed officials say.
Black Rock, New York, will help the New York Fed sell the Maiden Lane II RMBS “individually and in segments rather than as a single block,” officials say.
BlackRock will begin “begin more extensive asset sales while taking appropriate care at all times to avoid market disruption,” officials say.
The New York Fed and the Federal Reserve Board “judged that the public interest in maximizing returns from any sale and promoting financial stability would be better served by an alternative approach to realizing value that is also more consistent with normal market practice,” officials say.