New York Fed May Sell More of Its A.I.G. Assets
By MICHAEL J. DE LA MERCED
The Federal Reserve Bank of New York said on Wednesday that it was considering selling pieces of a final special entity created to hold assets once owned by the American International Group. If it is carried out, the move would further unwind the insurer’s government bailout.
The financial vehicle, Maiden Lane III, was created in 2008 to hold $24.3 billion worth of credit-default swaps that A.I.G. once owned. Those swaps were among the instruments that nearly brought the insurer to its knees, leading to the government’s huge $182 billion lifeline.
The New York Fed’s new plan is to sell off assets in that portfolio if a particular offer represents a good value and does not disrupt the financial markets, a spokesman for the regulator said in a statement.
It follows the disposal of a similar entity, Maiden Lane II, earlier this year through asset sales. A.I.G. has also taken additional steps to pay off its government obligations, including sales of $6 billion worth of stock and the paying down of an additional $1.5 billion.
“The change in the investment objective for Maiden Lane III reflects a strategic decision to explore possible sales of some of the assets in the portfolio in light of improving market conditions and the success of the Maiden Lane II sales,” the New York Fed spokesman, Jack Gutt, wrote in an e-mail to DealBook.
Previously, the New York Fed had sought to unwind the portfolio over time, rather than selling off pieces of it. To begin sales of Maiden Lane III securities, however, the regulator needed to change the financial entity’s investment objective to one that allowed for sales.
Mr. Gutt declined to comment on whether the New York Fed had received any offers for Maiden Lane III’s assets.
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