American International Group Inc., the insurer bailed out by the U.S. government, sold residential mortgage-backed securities with a face value of $39.3 billion to a facility funded by the Federal Reserve, Bloomberg reported.
AIG will receive about $19.8 billion for the assets, which were held by the insurer's securities-lending program, the New York-based company said today in a statement.
The Fed has committed a total of $152.5 billion to rescue AIG from insolvency and reduce losses at firms that did business with the insurer. AIG stumbled when it lent securities to investors and used the collateral to buy mortgage-backed securities that plunged in value.
"The creation and launch of this financing entity will eliminate the liquidity issues associated with AIG's U.S. securities-lending program," Chief Executive Officer Edward Liddy said in the statement.