AIG ventures back into subprime mortgages

CEO Robert Benmosche has increased non-government-guaranteed residential and commercial-mortgage backed securities holdings by $11.1 billion since 2010 to $28.4 billion at the end of March, according to regulatory filings. The New York insurer has acquired debt sold by the Federal Reserve that the central bank acquired from AIG when the company was rescued, including $600 million of commercial-mortgage backed securities last month.

This is rather interesting not only for the choice of assets (which were, of course, previously owned by the collapsing AIG) but also because the Treasury is still majority-owner of AIG. So basically, if these assets were to tank again, the government would still be mostly on the line. But we suppose that's not as big a deal anymore, what with an implicit Fed "put" under all markets.

Even better: if AIG is getting a good price, the Fed must be giving something up (and indirectly, the Treasury benefits).

So to the extent AIG is still publicly owned/supported, it would seem to us all this shuffling does is effectively give AIG execs a "call" on the performance of said toxic waste...