AIG offloads $39.3bn of toxic assets to Maiden Lane II
American International Group (AIG) has sold $39.3 billion (£25.7 billion) of its residential mortgage-backed securities to Maiden Lane II, a newly formed trust backed by the Federal Reserve.
The stricken US insurance company secured an $85 billion government bail out in September, only hours after the collapse of Wall Street investment bank, Lehman Brothers.
The group went on to return for a $37.8 billion top-up in early October and in November was forced to call on the US Government for further help, having reported a third-quarter net loss of $24.5 billion.
At this point, the US Government announced it would increase its stake in the group and set up vehicles that could buy mortgage-backed securities and other toxic debt from the insurer.
Maiden Lane II has since been established as a trust that will hold mortgage liabilities from an AIG lending portfolio that has caused the company huge losses.
The trust will be borrowing the money to buy the securities from the Federal Reserve.
AIG’s chairman and chief executive, Edward Liddy, has affirmed that the company’s highest priority is the full repayment of the Federal loan facility, with interest.
He explains that the launch of Maiden Lane II will eliminate the liquidity issues associated with AIG’s US securities lending programme and thereby facilitate the group’s repayment plan.
Category: Companies News, Financials, Insurance News
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