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Thursday, March 31, 2011

AIG (AIG) Mortgage Offer Rejected by Federal Reserve

The offer by American International Group (NYSE:AIG) to acquire mortgage-related assets held in its Maiden Lane II portfolio has been rejected by the Federal Reserve, according to the U.S. central bank.

Rather than selling the entire group of assets to AIG as a whole, the Fed said they're going to sell the assets in blocks and individually in what they called a "competitive process," which probably points to an auctioning of the securities.

The assets are held by the Federal Reserve as a result of acquiring them at the time AIG was getting bailed out.

The Federal Reserve noted, "In light of improved conditions in the secondary market for non-agency residential mortgage backed securities (RMBS), and a high level of interest by investors, the Federal Reserve believes that conditions are right for ML II to begin more extensive asset sales while taking appropriate care at all times to avoid market disruption."

AIG offered $15.7 billion for the assets, which have a face value of $30 billion.

AIG closed Wednesday at $36.05, falling $0.13, or 0.36 percent.

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