Tags: Fed’s Maiden Lane Holding Bear Stearns Mortgage Assets Shrinks

Fed’s Maiden Lane Holding Bear Stearns Mortgage Assets Shrinks

Friday, 29 Apr 2011 12:41 PM

Maiden Lane LLC, the company created by the Federal Reserve Bank of New York in its rescue of Bear Stearns Cos. in 2008, is shrinking at a faster pace as it sells holdings.

The assets of Maiden Lane, used by the U.S. central bank to facilitate the sale of the New York-based investment bank to JPMorgan Chase & Co., were valued at $24.8 billion on April 27, down from $25.6 billion on March 30 and $30 billion at inception, according to weekly Fed data released yesterday. The 4.7 percent decline in the holdings, which are mostly government-backed mortgage bonds, is the largest since October 2008.

The New York Fed also this month began selling $31 billion of mortgage bonds without government backing acquired in the U.S. bailout of American International Group Inc. after refusing the insurer’s offer to buy back that debt for $15.7 billion. While more-detailed past disclosures indicate some of the Bear Stearns-related bonds were sold last year, the Fed may be ready to speed the pace, according to BNP Paribas SA analysts.

With the AIG-related non-agency mortgage-backed securities being off-loaded by a vehicle called Maiden Lane II at “sizable clips, we see no reason why this wouldn’t be expanded to ML1’s agency MBS,” Anish Lohokare and Timi Ajibola, the New York-based analysts at BNP, France’s largest bank, wrote in an April 21 report. ML1 refers to Maiden Lane, sometimes called Maiden Lane I.

Jack Gutt, a New York Fed spokesman, declined to comment.

Dealers auctioned off slices of collateralized mortgage obligations held by Maiden Lane with a total notional size of about $400 million this week, according to three people familiar with the sale who declined to be identified because the transaction was private.

© Copyright 2015 Bloomberg News. All rights reserved.

1Like our page

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

© Newsmax Media, Inc.
All Rights Reserved