New York Fed Sells the Rest of Maiden Lane III

The Federal Reserve Bank of New York announced Thursday the sale of the rest of the securities in the Maiden Lane III (ML III) portfolio.

Taxpayers will enjoy a net gain of roughly $6.6 billion from the bank's management of the ML III portfolio. This includes $737 million in accrued interest on the New York Fed’s loan to ML III.

The New York Fed formed ML III, along with ML II, in November 2008 to prevent the collapse of the American International Group. ML III funded the purchase of $29.3 billion in fair value CDOs on which AIG had written protection while ML II bought $20.5 billion in fair value of RMBS from AIG's securities lending portfolio.

The New York Fed also set up the ML I vehicle in early 2008 to facilitate the sale of Bear Stearns to JPMorgan Chase.

The wind-down of the ML III vehicles means the nonagency market will lose a consistent source of bonds it has had throughout 2012, said Bank of America Merrill Lynch analysts in a report released late July.