Maiden Lane goes public | FT Alphaville

Maiden Lane goes public

Here’s something to keep you busy over Easter break — 161-pages of CUSIPS and principal balances for the securities held by the Federal Reserve’s three Maiden Lane special purpose vehicles.

As a reminder, the central bank created Maiden Lane I to acquire assets from the failed Bear Stearns. Meanwhile, Maiden Lane II and III are part of the Fed’s controversial bailout of mega-insurer AIG.

The vehicles have been the subject of some scrutiny in recent months.

Many accuse the Fed of effectively subsidising the banks by taking on junk assets like CDOs and CMBS, while others argued that the Fed should release the details of its portfolio in the interests of transparency. Bloomberg News, for instance, sued the bank for some of the information back in 2008.

In any case, the Fed had been providing partial information on the three portfolios, specifically values and ratings for groups of the securities, on a monthly basis. Its last report, for March, is available here.

Wednesday’s data release is rather different however. From the Fed statement:

The Federal Reserve Bank of New York today announced that it has expanded the information that it makes available to the public related to the Maiden Lane portfolios. The new information includes nearly all of the holdings of Maiden Lane LLC (ML)—with the exception of residential whole loans as that would violate individual borrowers’ privacy—and all of the holdings of Maiden Lane II LLC (MLII) and Maiden Lane III LLC (ML III).

You can view the details of the three portfolios, which are as at the end of January, here, here and here.

Without hiring a specialist valuation firm to assess the securities, or hand-entering reams of CUSIPS onto FT Alphaville’s Bloomberg terminal, it’s difficult to immediately say much about the content of the portfolios.

What we can give you, however, are some snippets from other sources:

(Wall Street Journal) One loan controlled by the government is $12.75 million in financing Bear provided to the owner of the 167-room Radisson Hotel in Jacksonville, Fla. The hotel is owned by a venture controlled by Philadelphia real-estate investment company AMC Delancey Group Inc. Kenneth Balin, AMC chairman and chief executive, said he believed Bear provided the loan with plans to include it in a debt pool known as a securitization. But that never happened, leaving Bear, and now the U.S. government, with the note.

(Bloomberg) The AIG assets include $247.7 million of bonds sold in March 2007 and backed by adjustable-rate mortgages written by American Home Mortgage Investment Corp. The Melville, New York-based lender filed for bankruptcy in August 2007. That debt is now rated B+, four notches below investment grade, with almost 36 percent of the underlying loans at least 60 days late and already realized losses of about 9 percent, according to data compiled by Bloomberg. About 84 percent were given to borrowers required to produce limited documentation.

Portfolio content aside, one thing that has been noticed straight away is that the Fed is keeping $283m of cash from Maiden Lane II and $383m of cash from Maiden Lane III in custodial accounts held by Goldman Sachs. Goldman is of course one of the banks thought to have benefited from the bail-out of AIG, and the financial institution most often accused of having close links with government agencies.

And if there’s even more to Maiden Lane than meets the eye, we’ll post on it.

Related links:
Wait. What are the Fed’s holdings exactly? – Money Supply
The Maiden (Lanes) beauty contest – FT Alphaville
Dead deals, or AIG in pics – FT Alphaville
AIG and the Fed, not above water, but drowning? – FT Alphaville