THE NEW York Federal Reserve said yesterday it has asked eight investment banks to bid on risky assets from its Maiden Lane III portfolio, which was created during its 2008 bailout of insurer American International Group (AIG).
This move would trim the US central bank’s balance sheet which about tripled from the emergency measures it has enacted to help the banking system and the economy since the global credit crunch.
It also signals some confidence that collateralised debt obligations, a once-fledgling asset class because of its tie to the US mortgage market, might have finally stabilised after they were battered since the housing meltdown.
Barclays Capital, Citigroup, Credit Suisse , Deutsche Bank, Goldman Sachs, Bank of America's Merrill Lynch broker, Morgan Stanley and Nomura have been invited to submit bids for the assets, “based on the strength of their expressions of interest” in the bonds, the Fed said in a statement.
City A.M. Reporter