WASHINGTON — After two years of secrecy, the Federal Reserve Bank of New York is disclosing key details about billions of dollars of financial products it bought while rescuing insurance giant American International Group Inc. and supporting the sale of failed investment bank Bear Stearns.
The New York Fed on Wednesday released the names of the securities held by three companies it created to buy toxic derivatives, mortgage loans and mortgage-backed bonds from Bear Stearns, AIG and AIG’s business partners. The New York Fed also revealed their current values.
These toxic mortgage assets were central to the 2008 financial crisis. Their values often are based on the values of thousands of underlying mortgage loans. As homeowners started defaulting on risky subprime mortgages in record numbers, banks didn’t know how much the mortgage-backed bonds were worth. That made it nearly impossible to sell or trade the assets.
When Bear Stearns teetered in March 2008, the New York Fed brokered the firm’s sale to JPMorgan Chase & Co. The New York Fed created Maiden Lane LLC to buy $30 billion of financial instruments that JPMorgan was unwilling to take over.
The New York Fed created Maiden Lane II LLC and Maiden Lane III LLC to support the $182 billion AIG rescue. The former bought mortgage-backed bonds from AIG’s insurance subsidiaries. The latter bought securities from AIG’s business partners.
Send questions/comments to the editors.
-
Arts & Entertainment
Andra Day astonishes as Billie Holiday in Lee Daniels’s maddeningly uneven biopic
-
Columns
Black History Month: The past shows the way forward
-
Arts & Entertainment
Portland filmmakers hope to build on success at Sundance
-
Local & State
Maine takes vaccinations to seniors in independent living facilities
-
Business
Costly power grid upgrade to boost renewables will test Maine’s commitment
Success. Please wait for the page to reload. If the page does not reload within 5 seconds, please refresh the page.
Enter your email and password to access comments.
Hi {SUB NAME}, to comment on stories you must . This profile is in addition to your subscription and website login.
Already have one? .
Invalid username/password.
Please check your email to confirm and complete your registration.
Only subscribers are eligible to post comments. Please subscribe or login to participate in the conversation. Here’s why.
Use the form below to reset your password. When you've submitted your account email, we will send an email with a reset code.