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AIG Falls as Fed Postpones Maiden Lane Sale: New York Mover

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Treasury Sells $5 Billion of AIG Stock, Reducing Stake to 63%
The U.S. rescued AIG in 2008 as the New York-based firm was overwhelmed by losses on bets tied to mortgages. Photographer: JB Reed/Bloomberg

May 17 (Bloomberg) -- American International Group Inc. posted the biggest decline in the Standard & Poor’s 500 Financials Index after the Federal Reserve Bank of New York postponed the sale of assets acquired in the company’s rescue.

AIG dropped $1.29, or 4.2 percent, to $29.16 at 9:55 a.m. in New York trading.

The Fed committed as much as $52.5 billion in 2008 to buy mortgage-related assets that were owned or backed by New York-based AIG. The insurer invested a combined $6 billion in two Fed facilities, and is entitled to a portion of any profits after the regulator recovers its investment

The planed transaction from the Maiden Lane III LLC portfolio was to include $1.7 billion of debt and was scheduled for completion today. The sale was postponed so that market participants would have more time to weigh information about the collateralized debt obligation, according to a person familiar with the matter, who declined to be identified without authorization to speak publicly. The district bank announced the delay in a posting on its website.

To contact the reporter on this story: Zachary Tracer in New York at Ztracer1@bloomberg.net

To contact the editor responsible for this story: Dan Kraut at dkraut2@bloomberg.net

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