The Federal Bank of New York will sell $3.4 billion in “toxic” mortgage debt it inherited from American Insurance Group, Bloomberg News reported.
Amid rising prices for subprime mortgage debt and collateralized debt obligations, AIG — which was the world’s largest insurer before it tanked spectacularly during the Lehman crisis — has actually made more than $6 billion through the sale of its toxic assets sold at auction, Bloomberg News said.
The assets that will be sold today represent the last batch of funds from the notorious $62 million Maiden Lane III LLC fund.
“These auctions are good for the Treasury because the Fed selling its interest in Maiden Lane III has allowed AIG to raise liquidity,” Josh Stirling, an analyst at Sanford C. Bernstein & Co., a sell-side investment advisor, told Bloomberg News. “People will debate forever if the bailouts worked and how they should have happened, but you can say the Treasury has been a good owner of AIG.” [Bloomberg News] — Guelda Voien