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The Federal Reserve Bank of New York is still sitting on a pile of assets it received in return for bailout loans to help rescue American International Group in September 2008 and steer Bear Stearns into the arms of JPMorgan Chase six months earlier, but any further sales will be pure profit according to a statement Thursday.
The New York Fed says the loans it made to the Maiden Lane and Maiden Lane III entities, $28.8 billion and $24.3 billion respectively, have been fully repaid with interest as the assets within either matured or were sold. Maiden Lane II repaid its obligations earlier this year.
"This is a major milestone for the Bank and for the public. The successful repayment of the New York Fed’s loans to ML LLC and ML III LLC marks the retirement of the last remaining debts owed to the Bank that stemmed from the crisis-era interventions with Bear Stearns and AIG," said New York Fed President William Dudley. " The Maiden Lane entities were established to protect the U.S. economy at a time of great economic stress, and I am pleased we were able to accomplish that policy objective and be fully repaid."
All three Maiden Lane portfolios were comprised of mortgage-related assets that were almost impossible to trade at the height of the financial crisis, but proved to have sufficient value to recover at least the full amount of the loans that capitalized the facilities.
Thursday's news was particularly welcome for AIG, which is entitled to a piece of the profits from sales of the remaining assets in Maiden Lane III. Buyers of the Maiden Lane assets have included a range of brokerage firms, including Goldman Sachs Group, Credit Suisse and others. BlackRock, which has managed the sales process for the New York Fed, will remains in charge of unloading the remaining assets.
AIG Chief Executive Robert Benmosche said paying back the Maiden Lane III loan "represents another significant milestone in the transformation of AIG."
Shares of AIG, which is still under the overhang of the Treasury Department's 55.8% stake, gained 2.4% Thursday.