AIG “sold” (was bailed out) a huge portfolio of residential mortgage-backed securities to the Fed via the Maiden Lane vehicles. AIG claims that it retained its tort claims against Bank of America. Therefore:
In August 2011, AIG filed a $10 billion lawsuit against one of the most blatant offenders, Bank of America and certain of its affiliates (“BoA”), for fraudulent inducement, aiding and abetting fraudulent inducement, negligentmisrepresentation, and violation of the Securities Act of 1933 (the “BoA Action”). Of the nearly $10 billion in damages AIG is seeking in the BoA Action, more than $7 billion relate to RMBS
involving BoA that AIG later sold to Maiden Lane II.
Now, the Fed is claiming that AIG sold the tort claims to the Fed with Asset Purchase Agreement.
But the Fed has done nothing to prosecute these claims against BoA, unlike AIG.
AIG has filed a new suit against the Fed, calling them out on the sudden new claims to the causes of action (worth billions).
The Complaint and commentary can be found on Allison Frankel’s Reuters column here.