The Federal Reserve Bank of New York late Tuesday finally closed out one chapter of the controversial bailout of American International Group by selling the last remaining securities held in the Maiden Lane II facility.
Under the arcane system used to account for such financings, the sale will result in full repayment of the $19.5 billion loan extended by the New York Fed to ML II.
Sale of the final or residual component of the facility meant that the New York Fed made more money selling the securities in Maiden Lane II itself.
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Last April, AIG CEO Robert Benmosche made an offer through a letter made public through an 8k securities filing with the SEC to re-purchase the securities held in Maiden Lane II.
The Fed declined, and decided to sell the securities itself. The first sale, in June, depressed the marketing, according to comments last fall by officials of Trepp LLC, a New York firm which tracks the prices and volume of such instruments.
But, the latest sales, Jan. 19th, Feb. 9 and Tuesday, resulted in gains to the Fed, and therefore the government, greater than the offer made by AIG.
AIG’s bid promised a $ 1.5 billion profit for taxpayers, excluding accrued interest of $580 million which was included in the Fed’s profit calculation.
The latest sale means that the government will have a net gain of approximately $2.8 billion, including $580 million in accrued interest on the loan, the Fed said.