NY Fed Sells Off Last of Legacy AIG Debt
Start each day with GlobeSt.com's New York AM Alert for original coverage of the latest transactions and trends shaping the commercial real estate industry. Sign Up Today!
NEW YORK CITY-The Federal Reserve Bank of New York has closed the books on its role in the 2008 bailout of then-beleaguered AIG, announcing Thursday that it had sold the remaining CDOs tied to residential and commercial mortgages in the Maiden Lane III LLC portfolio. The sale—worth $3.4 billion, according to Bloomberg—brings the taxpayer’s profit on ML III to $6.6 billion, the New York Fed says in a release.
In April, GlobeSt.com reported that a consortium consisting of Barclays Capital and Deutsche Bank Securities had purchased the MAX CDO portion of the ML III portfolio. The New York Fed said at the time that the MAX CDO sale significantly reduced the ML III portfolio “at a desirable price.”
William Dudley, president of the New York-based central bank, says in a statement issued Thursday that completing the sale of the ML III portfolio marks “the end of an important chapter—our assistance to AIG—that was undertaken to stabilize the financial system in the midst of the financial crisis. I am pleased that we were able to achieve our principal goal, which was to protect the US economy from the potentially devastating effects of AIG’s failure, while demonstrating sound stewardship of taxpayer interests.”
Maiden Lane II was wound down this past February, producing another $2.8 billion for the taxpayer, according to the New York Fed. When taken together with the New York Fed’s January 2011 termination of its extension of credit to AIG and the sell-off of ML III, the total net profit to taxpayers is $17.7 billion, the central bank says.
In its second-quarter earnings release issued earlier this month, AIG—which reported Q2 net operating income of $2.3 billion—said it had purchased $7.1 billion of ML III securities year to date. The New York Fed says net proceeds from the final sale of ML III securities will be reported as part of the portfolio’s normal reporting schedule on Oct. 15.
For thought leadership on accounting and capital investment, check out GlobeSt.com's Building Opportunities, presented by the leadership team of brought to you by Moss Adams LLP and Moss Adams Capital LLC
You can now be notified via email if this story is updated by clicking on the "Follow this Story" link. You must be a registered member to take advantage of this "members only" benefit.