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February 09, 2012 at 09:53 AM
The Federal Reserve Bank of New York today ended one chapter from the bailout of American International Group, selling a group of mortgage-backed securities that closed out its Maiden Lane II facility.
The FRBNY said it sold securities with a face value of of $6.2 billion from its Maiden Lane II LLC (“ML II”) portfolio through a competitive process to Goldman Sachs & Co.
AIG said it would decline comment on the sale at this time.
The Fed said that the proceeds from this sale and a Jan. 19 sale to Credit Suisse will enable the repayment of the entire remaining outstanding balance of the senior loan from the New York Fed to ML II on the next payment date in early March. The original amount of the senior loan was $19.5 billion.
The Fed created two facilities in November 2008 to provide $44 billion in cash to AIG in late 2008 that paid off a part of a loan made earlier. The facilities were called Maiden Lane II and Maiden Lane III.
They constituted the second Fed effort to bail out AIG.
Earlier, the Fed on Sept. 16, 2008 provided $85 billion in cash to AIG in return for 79.9 percent of its stock.
The Maiden Lane facilities were backed with approximately $79 billion in MBS and collateralized debt obligations of various quality purchased by AIG Financial Products and backed by high quality bonds held by AIG in its life insurance subsidiaries, whose assets were also guaranteed by its property and casualty operating subsidiaries.
