US insurer American International Group has offered to buy back $15.7 billion in mortgage-backed securities from the central bank as part of its efforts to emerge from a government bailout. In a filing Thursday to US market regulators, AIG offered the Federal Reserve Bank of New York to purchase all of the residential mortgage-backed securities in Maiden Lane II, a special entity created to house toxic assets in the government's 2008 rescue of the foundering insurance giant.
"AIG believes this offer is in the best interest of the US taxpayers, the US government and AIG itself," Robert Benmosche, AIG president and chief executive, said in the letter to the New York Fed filed with the Securities and Exchange Commission. "If accepted, this offer will substantially reduce the amount of outstanding government assistance to AIG (and) help AIG ensure that the US government recoups all of the money it has invested in AIG," AIG said.
It will also "guarantee that the Federal Reserve Bank of New York earns a profit on its interest in Maiden Lane II while reducing the amount of AIG-related assets on the FRBNY's balance sheet." The Fed would gain a $1.5 billion profit on the deal, and it would reduce AIG's debt to the government by $13 billion to $26 billion, AIG said.
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