Home / News / Government / AIG Files Suit Against New York Fed
Print This Post Print This Post

AIG Files Suit Against New York Fed

Less than a week after turning away from a lawsuit against the government over the terms of its bailout, ""American International Group"":http://www.aig.com/home_3171_411330.html (AIG) Inc. filed a suit against the ""Federal Reserve Bank of New York"":http://www.newyorkfed.org/index.html over its right to sue other institutions.

[IMAGE]

AIG's suit seeks no money for damages. Rather, it revolves around an asset purchase agreement (APA) made in 2008 between itself and Maiden Lane II, a vehicle specially made by the New York Fed to purchase RMBS and take off some of AIG's financial burden.

AIG estimates the company lost approximately $18 billion in discounts on the RMBS sold to Maiden Lane II and [COLUMN_BREAK]

additional tens of billions as a result of securities fraud from other institutions.

In the time since its bailout, AIG has pursued Bank of America--referred to by the company as ""one of the most blatant offenders""--for $10 billion in damages related to the alleged fraud. By the company's estimates, more than $7 billion of those damages are connected to RMBS later sold to Maiden Lane II.

However, according to a ""complaint"":https://iapps.courts.state.ny.us/fbem/DocumentDisplayServlet?documentId=hbB1KqUwkjpHugSj/mrSuA==&system=prod filed Friday in the New York State Supreme Court, executives from the New York Fed told BofA that AIG had transferred litigation rights over the securities at the time of sale. Lawyers for AIG say the APA for the sale contained no such language. They also assert that Maiden Lane II had never before claimed ownership on litigation rights and even agreed that it only owned contractual rights for the securities.

""Indeed, any argument that AIG assigned its tort claims to Maiden Lane II is contrary to the plain language of the APA ... It is also contrary to controlling New York law requiring that any assignment of fraud and other tort claims be both explicit and unambiguous,"" the complaint says. ""It also cannot be squared with ... Maiden Lane II's inaction with respect to the claims it now purports to hold.""

A representative for the New York Fed declined to comment on the issue.

About Author: Tory Barringer

Tory Barringer began his journalism career in early 2011, working as a writer for the University of Texas at Arlington's student newspaper before joining the DS News team in 2012. In addition to contributing to DSNews.com, he is also the online editor for DS News' sister publication, MReport, which focuses on mortgage banking news.
x

Check Also

Recent HUD, Census Bureau Survey Provides Insight on Housing

According to the new 2021 American Housing Survey released by the U.S. Department of Housing ...