New York Fed Is Back To Transacting Opaquely, Sells AIG Holdings To Goldman

Tyler Durden's picture

The last time the Fed tried to dump Maiden Lane 2 assets via a public auction in a BWIC manner, it nearly crashed the credit market. This time, the FRBNY, headed by one ex-Goldman Sachs alum Bill Dudley, has decided to go back to its shady, opaque ways, and transact in private, with no clear indication of the actual bidding process or transaction terms, and sell $6.2 billion in Maiden Lane 2 "assets" to, wait for it, Goldman Sachs, the same firm that would benefit in the first place if AIG's assets imploded (remember all those CDS it held on AIG which supposedly prevented it from losing money if AIG went bankrupt?). One wonders: does Goldman have a put option on the ML2 portfolio if the market experiences a sudden and totally impossible downtick some day? But all is well - we have assurance from the Fed that the sale happened in a "competitive process." Luckily, that takes care of any appearance of impropriety.

From the NY Fed:

New York Fed Sells $6.2 Billion in Face Amount of Maiden Lane II LLC Assets

The Federal Reserve Bank of New York ("New York Fed") today announced that it has sold assets with a current face value of $6.2 billion from its Maiden Lane II LLC ("ML II") portfolio through a competitive process to Goldman Sachs & Co. Proceeds from this sale and the January 19, 2012 transaction, will enable the repayment of the entire remaining outstanding balance of the senior loan from the New York Fed to ML II on the next payment date in early March. The original amount of the senior loan was
$19.5 billion.

The transaction was prompted by an unsolicited offer from Credit Suisse Securities (USA) LLC to BlackRock Solutions, the investment manager for ML II, to buy ML II assets. Consistent with its March 2011 announcement regarding the disposition procedures for ML II, which allowed for these types of reverse inquiries, the New York Fed directed BlackRock Solutions to conduct a sale via a competitive process. The five broker-dealers included in the competitive process were Barclays Capital Inc., Credit Suisse Securities (USA) LLC, Goldman Sachs & Co., Morgan Stanley & Co. LLC, and RBS Securities Inc. The broker-dealers were selected based on the strength of each of their recently submitted reverse inquiries for large parcels of the portfolio.

The New York Fed decided to move forward with the transaction only after determining that the winning bid represented good value for the public. Net proceeds from the sale will be reported as part of the portfolio’s normal reporting schedule on April 16, 2012.

William C. Dudley, President of the New York Fed, said, "I am pleased with the continued interest in these assets and am especially gratified that the New York Fed's loan to ML II will be repaid as a result of the sale announced today."

As stated previously, the New York Fed, through BlackRock Solutions, will dispose of the remaining securities in the ML II portfolio individually and in segments over time as market conditions warrant through a competitive sales process, while taking appropriate care to avoid market disruption. There will be no fixed timeframe for the sales; at each stage, the Federal Reserve will only transact if the best available bid represents good value for the public.

Following repayment of the New York Fed’s senior loan, additional proceeds will be allocated as per the ML II agreement. Proceeds from additional asset sales that are allocated to the New York Fed will be included in the Federal Reserve’s remittances of income to the U.S. Treasury.

The New York Fed publishes on its website a list of all the securities in the ML II portfolio. In order to allow the public to track progress on asset dispositions, the New York Fed provides monthly updates on portfolio holdings and a list of the securities sold within the prior month. In addition, it provides quarterly updates on total proceeds from sales, including a breakdown by counterparty. The New York Fed will also provide further details regarding all ML II transactions, including an account showing the acquirer and the price paid for each individual security three months after the last asset is sold, ensuring timely accountability without jeopardizing the ability to generate maximum sale proceeds for the public.

For more information, including the most recent holdings report as of December 31, 2011,
visit Maiden Lane II LLC.

Andrea Priest
(212) 720-6139
(646) 720-6139

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Mr Lennon Hendrix's picture

Welcome to the Fiat Ponzi, bitchez!

Chief KnocAHoma's picture

Anyone holding any paper is about to get slaughtered!

Buy tangibles:

TruthInSunshine's picture

Bernank & Dudley are going to be really little beavers liquidating toxic waste from Maiden Lanes I through XXXXXXXXXXXXXVII for a while, in order to buy Timmay's bonds.

mrgneiss's picture

Has anyone seen this article implicating Goldman and AIG in having links to covert activities?  I guess its no big surprise......



vast-dom's picture

Jail motherfuckers! I'm dreaming beyond /sarc, but hey a man can dream, right? I am gonna write myself a check for a few million and do High Frequency Cashing such that I'm running out the bank with cash before they settle my ponzi accounts I withdrew from...there's some sputum on my chin...

Fidel Sarcastro's picture

And with QE3, Goldman Suchs will resell the junk to the Fed at a hefty profit - thus completing the circle jerk.

LongSoupLine's picture


un...f'ing...real.  I'm so sick of this shit.

Theta_Burn's picture

Well, as long as they are looking out for our best interest....

hedgeless_horseman's picture



But all is well - we have assurance from the Fed that the sale happened in a "competitive process."

"I find your lack of faith disturbing."

-Lord Blankfein

NotApplicable's picture

A "competitive process" amongst five banks for billions worth of all manner of assets that resulted in a single winner, I might add.

I guess that box of junk wasn't valuable enough to sort through and auction items separately? Nope, one box, one bid, winner take all.

non_anon's picture

fare maiden, where hast thou gone?

carbonmutant's picture

I wonder how Goldman is going to package this toxic waste...

NotApplicable's picture

My guess is that Obummer's gonna buy it all in effort to Save America!

As per the logo on Ginnie Mae's website.

"The only mortgage-backed security that enjoys the full faith and credit of the United States Government."

carbonmutant's picture

I don't know if he can afford it. This sounds like he needs the money.

"In a major reversal, President Obama is endorsing the activity of Super PACs, whose unlimited spending the he previously called a threat to democracy."

Dick Darlington's picture

This must be the true and deep definition of wash, rinse and repeat. Oh dear...

Atlantis Consigliore's picture

What?   what?  wheres the flip first to Snoro;s   as the baggie man, for the quick scalp;?  .05 bond, sovereign debt Scalp.


thats how its done isnt it?  MF 'D  ers.......


how about that MF Plane,  run out of gas, and crash you MF ers.

hedgeless_horseman's picture



The beatings lootings will continue until our moral IRR improves.


JW n FL's picture



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Anonymouse's picture

Of course they have a put.  It's called TBTF.

It may have been an arm's length transaction, but it was the arms of Warwick Davis


Global Hunter's picture

Maiden Lane is the banking/central bank equivalent of "The Jeffrey".  What could go wrong with a security called a Maiden Lane?  Sounds like a romantic horse drawn carriage ride on Christmas eve...

dwdollar's picture

If Goldman Ballsachs took it, I'm sure it's a win-win for them and a lose-lose for the public.

Debeachesand Jerseyshores's picture

Maiden lane just lost it's 'Cherry".

pazmaker's picture

does this bullshit ever end?

pods's picture

So Goldman uses all the $ it steals from poor investor slobs due to a program that might manipulate the market unfairly if in the wrong hands,  and through arbitrage on treasuries to buy assets in order to repay a loan to make the other private bank whole that was responsible for making Goldman solvent?


Going to go scrub myself in a Silkwood shower now.


NotApplicable's picture

You could've just said "doing God's work."

Sandmann's picture

Goldman Sachs would have made a better James Bond movie than Charles Engelhardt as Goldfinger. One day we will get a real Godfather type movie

Downtoolong's picture

Capitalism of destruction. Pump and dump. Call it what you will. It’s all the same thing really, and it’s just about the only thing going on in the markets anymore. Manipulate the price of something down, then buy it back cheap, and manipulate the price back up. Profit from the pain you cause.

Waterfallsparkles's picture


I thought that within the last few days you were saying that the "investors" that had CDS exposure were buying the underlying assets. 

Could this be the case? 


Waterfallsparkles's picture

Someone said on Fast Money on CNBC that Goldman would sell it back to the FED in a few months for a profit.  Kind of like a Repo action.

non_anon's picture

i recall the maiden lanes were incorporated out of state for tax sheltering

New American Revolution's picture

More secretive deals, this time via the NYC Fed, bypassing Washington, but still in the hands of "unprincipled men".   Competitive, but secret.   Fair, but not open.   Trust me...   Let's have lunch sometime.... I love you.... No, I would never cum in your mouth....

Catullus's picture

Does a rainbow party count as a competitively bid process?

Magua's picture

I have done quite a few program trades and Goldman has never been high bidder. You do business with them for one reason, because of who they are. "Competitive" means they were in the neighborhood ..... maybe.

steelhead23's picture

I am quite skeptical of the assertion that this sale extinguished ML2's debt.  If I correctly understand the assets in ML2, they are CDOs and other MBS purchased to keep AIG from imploding.  AIG would have imploded if the trillions in reinsurance on subprime CDOs it had issued was triggered by a significant loss event.  And the Fed bought these securities at par when they were widely considered to be worth far less.  Now, the Fed sells these securities and ends up even?  How could that be?  Going a tad further, if those ML2 CDOs were sold for less than face value, would that have triggered the CDS held by others on those securities?  I am beginning to believe that either the Fed, secretly gave money to the bidders to ensure it took no obvious losses, or I don't understand what the heck is going on.  Shouldn't the Fed have suffered severe losses on its ML2 assets?  Help me Tyler.

Contra_Man's picture

Unlimited authority without democratic oversight & compliance enforcement = No Contest Settlements (@.01% penalty)

Thus, Ground Hog Day 4ever2nnth

Pass Just introduce this Bill: ban corporate persons from all political monetary contributions! It's that simple... make the 531 or so of 'em in Congress vote on it.  Then, vote the nay's out next time until the job gets done.  Easy peasy.

StychoKiller's picture

Look up Hercules vs the Hydra...

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