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Investments

Fed sells remaining AIG securities

The Federal Reserve Bank of New York sold the remaining securities in the American International Group (AIG) disaster fund for a $6.6 billion net gain.

The residential and commercial mortgage bonds and collateralized debt obligations in Maiden Lane III once totaled more than $27 billion in December 2008. The completed unwinding followed the finished sale in February of the Maiden Lane II portfolio of private-label mortgage-backed securities owned by AIG.

The Fed terminated its extended line of credit to the monoline insurer in January 2011.

After interest and profits, the New York Fed said taxpayers netted $17.7 billion in profits from unwinding the AIG bailouts.

"The completion of the sale of the Maiden Lane III portfolio marks the end of an important chapter—our assistance to AIG—that was undertaken to stabilize the financial system in the midst of the financial crisis," said NY Fed President William Dudley.

AIG still has to pay back $36 billion in Troubled Asset Relief Program funds as of June 30. The government still owns a 61% equity stake in the company, according to the Special Inspector General of TARP. Shares sold so far from the TARP bailout resulted in losses to the taxpayer.

Still, at one point, the government committed more than $180 billion to bailout AIG at the height of the crisis.

"I am pleased that we were able to achieve our principal goal, which was to protect the U.S. economy from the potentially devastating effects of AIG's failure, while demonstrating sound stewardship of taxpayer interests. I am proud of and commend all of the people at the New York Fed who worked tirelessly and diligently to get us here," Dudley said.

jprior@housingwire.com

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