Statement For Fed On AIG Repurchase (AIG)

Last night AIG AIG announced its intentions to buy back all of the holdings in Maiden Lane II LLC for $15.7 billion.

Here is a statement from the Federal Reserve of New York on this:

The Federal Reserve has received a formal offer from American International Group, Inc. (AIG) to purchase the assets in Maiden Lane II, LLC (MLII). The Fed has been aware of AIG's interest in those assets for some time. Any decision on a possible disposition of these assets will be made in a way that maximizes the proceeds to the taxpayer and that is consistent with the goal of fostering financial stability.

There has been a lot of anger already on this, as many feel that the Fed if they want to auction off this portfolio, should not just let AIG buy it back without holding a fair auction open to all bidders.

Currently, the U.S. government owns 92% of the insurer, but will lower its stake in a "re-IPO" to be held sometime in May.

The value of the portfolio now stands at $15.9 billion, which is actually less than what AIG is seeking to pay for it. AIG would be paying about 50 cents on the dollar for these securities. Despite the issues at hand, CEO Robert Benmosche said that the Fed would reap a benefit of $1.5 billion on this deal.