The Federal Reserve Bank of New York’s loan to a fund created to rescue American International Group Inc. will be repaid, AIG SunAmerica Chief Executive Officer Jay Wintrob said.
Proceeds from asset auctions of the fund, called Maiden Lane III LLC, will be used to pay off the loan, Wintrob said today during an investor conference. New York-based AIG will receive proceeds from future auctions, he said.
Maiden Lane III was created in 2008 to assume collateralized debt obligations as part of a government bailout of AIG that grew to $182.3 billion. The New York Fed lent the entity $24.3 billion and AIG contributed $5 billion in equity.
“With the auctions completed prior to this week, the Fed loan will be fully repaid,” Wintrob said during the conference sponsored by Morgan Stanley in New York. “We’re pleased that the Federal Reserve has decided to cash in now and capitalize on the strong demand for those MLIII assets.”
AIG will receive the next $5.6 billion in proceeds from auctions of Maiden Lane III assets, Wintrob said. After that, the New York Fed will receive two thirds of the cash and AIG will get one third.
Andrea Priest, a spokeswoman for the New York Fed, declined to comment.