Saturday, June 13, 2009

FED Loans to AIG for Credit Default Swaps (Maiden Lane III, Graph)

On November 25, 2008, the Federal Reserve Bank of New York began extending credit to Maiden Lane III LLC.

This limited liability company was formed to purchase multi-sector collateralized debt obligations (CDOs) on which the Financial Products group of American International Group, Inc (AIG) had written credit default swap (CDS) contracts.

Net portfolio holding of Maiden Lane III at peak $28.085 billion (December 24, 2008). Current holding $19.876 billion.

FED continuing to assume risks of these credit default swap transactions.

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