Maiden Lane Transactions refers to three limited liability companies created by the Federal Reserve Bank of New York in 2008 as financial vehicles to facilitate transactions involving three entities: the former Bear Stearns company as the first entity, the lending division of the former American International Group (AIG) as the second, and the former AIG's credit default swap division as the third.
Bear Stearns held an asset portfolio that JPMorgan found too risky to assume in whole, and consequently the Federal Reserve Bank of New York created Maiden Lane LLC and extended a $28.82 billion loan to it.
The federal government's total investment in the AIG bailout, including both Maiden Lane II and III and actions by the U.S. Treasury, was $182 billion.
[7] Maiden Lane II LLC aimed to purchase residential mortgage-backed securities (RMBS) held by AIG's subsidiaries which were considered very risky.
[11] Maiden Lane III LLC aimed to purchase these multi-sector CDOs in order to provide a cap on AIG's collateral payments.
[8] As markets recovered and issuance of new securitized products dried up, private investors including banks became interested in purchasing the assets in Maiden Lane III.