By Hester Peirce, from August 2012, includes “Last week, the Federal Reserve Bank of New York announced with great fanfare the sale of all of the remaining assets in Maiden Lane III. Maiden Lane III was one of the special purpose vehicles set up by FRBNY to hold mortgage-related assets in connection with the government's rescue of AIG. The sale of the securities in Maiden Lane III, which was just one small part of the AIG rescue, is not a cause for celebration to the taxpayers who subsidized it. The $6.6 billion gain from these sales looks less than impressive when the full cost to taxpayers considered. … Making money in the long-term is irrelevant, though, if you can't survive the short-term. AIG survived the short-term only because the government came in at AIG's moment of desperation with truckloads of cash. That initial infusion of taxpayer money - at least the portion of it that went to pay off derivatives counterparties -- is relevant context for both Mr. Cassano's and FRBNY's profit analyses. Mr. Cassano may feel vindicated now that FRBNY has proclaimed Maiden Lane III a success, but taxpayers should still be mad that they were forced to subsidize the AIG-FRBNY joint venture and are now being told they made a profit because some of the money they put in was returned.”
Read the full article on: Mercatus Center, George Mason University