Maiden Lane and the financial crisis
"Maiden Lane" is both a street in the Financial District of New York and the name of three different bailout funds that the Federal Reserve Bank created as the financial crisis reached flood stage. "Some critics of the government action in the crisis described those bailouts as monstrous, criminal thefts from the public. They said that the government had purchased "toxic assets" at absurdly high prices in order to dump money on "banksters". People like Yves Smith said that the valuations the government had used for those "toxic assets" were literally fraudulent. Duncan Black ("Atrios") said that losses from these funds would be many many billions and that the government had purchased a "shitpile". All this was, in the words of Colbert, "widely reported" across the media and blogs. Since 2012, the loans from the three Maiden Lane funds have all been paid back
- There were no losses at all. In fact the Federal Reserve Bank made billions of dollars of profit from those Maiden Lane “toxic assets”. And most of that went to the US Treasury to help pay for the cost of government operations.
- Nobody who participated in the hysterical predictions of ruin and doom, let alone the accusations of criminal fraud, nobody involved has ever admitted error or even discussed what they got wrong. They just moved on to other scandals.
From the Federal Reserve Bank site:
November 15, 2012: Net proceeds from additional sales of securities in Maiden Lane LLC enabled the full repayment of the subordinate loan made by JPMorgan Chase & Co. plus accrued interest. The New York Fed will receive 100 percent of future cash flows generated from the remaining ML LLC assets, in accordance with the ML LLC waterfall.
August 23, 2012: Maiden Lane III LLC sold all remaining securities. Subsequent to the repayment of ML III LLC’s liabilities to the New York Fed and AIG, net proceeds from sales of the securities, as well as cash flow the securities generated while held by ML III LLC, provided a net gain of approximately $6.6 billion for the benefit of the U.S. public.
July 16, 2012: Net proceeds from additional sales of securities in Maiden Lane III LLC enabled the full repayment of AIG’s equity contribution plus accrued interest and provided residual profits to the New York Fed. The New York Fed will continue to receive 67 percent of residual profits generated by future sales of ML III LLC assets.
June 14, 2012: Maiden Lane LLC and Maiden Lane III LLC repaid the loans made by the New York Fed, with interest. The successful repayment of the loans marks the retirement of the last remaining debts owed to the New York Fed from the crisis-era interventions with Bear Stearns and AIG.
February 28, 2012: Maiden Lane II LLC sold all remaining securities*. Net proceeds from sales of all the securities, as well as cash flow the securities generated while held by ML II LLC, enabled the full repayment of ML II LLC’s liabilities to the New York Fed and AIG while also providing a net gain of approximately $2.8 billion for the benefit of the U.S. public.