It is reported today that
AIG surprised markets on March 10 with a $15.7 billion cash bid for the assets of Maiden Lane II, a vehicle established during the depths of the financial crisis to help save AIG from collapse by taking bad assets off its books.
“We expected that others would bid,” the source said on condition of anonymity. “We understood that a number of large institutions have already modeled it.”
And here are some basic facts:
- In November 2008, the Fed created Maiden Lane II LLC to alleviate capital and liquidity pressures on AIG associated with the securities lending portfolio of several regulated U.S. insurance subsidiaries of AIG.
- ML II LLC borrowed $19.5 billion from the N.Y. Fed to purchase a portfolio of residential mortgage-backed securities (RMBS) from US subsidiaries of AIG. $1 billion of the purchase price (fixed deferred purchase price) to be paid to the asset holding subsidiaries of AIG after the Fed loan is repaid in full.
- On the Fed’s Balance Sheet 2009:
Table 30. Maiden Lane II LLC Summary of Portfolio Composition and Cash/Cash Equivalents
|Type of asset||Fair value on 3/31/2009||Fair value on 12/31/2008|
|Cash & cash equivalents2||297||351|
- Compared to the most recent March 2011 balance sheet:
- And the balance of the loan
- The latest balance is $12,353M of principal, 488M of accrued interest and $1,079M of deferred payment to AIG.
- As of March 23, 2011 the portfolio was worth $15.9B,
- This 15.9B is explained as “fair value… estimate of the price that would be received upon selling an asset” on the H.4.1 release of the FRB.
- AIG is offering $15.7B
- Credit ratings of the assets:
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