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Benmosche Says Bid to Fed on Mortgage-Backed Securities Is "Fair"

Source: Dow Jones

Posted on 23 Mar 2011

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Robert Benmosche, CEO of American International Group Inc. (AIG), said on Wednesday that the insurer's bid of $15.7 billion to the Federal Reserve for a portfolio of mortgage-backed securities is "fair," and the central bank in effect is conducting an auction for the bonds.

Mr. Benmosche in an interview on CNBC urged the government to move quickly with its decision, and said that AIG hasn't had a response from the Fed on the company's offer.

"Time is of the essence," Mr. Benmosche said of the Fed's decision-making process. "We want to be able to get this behind us and decide what the company will be looking like on a go-forward basis."

The offer, he said, "we feel is fair. And we feel we need a decision pretty soon here as we go forward to help the Treasury [Department] sell off this massive amount of stock."

Asked about the Fed's delay in making a decision, Mr. Benmosche maintained that the government is taking an auction approach.

"This is an auction. Everyone sees what it is.

"You've got people scrambling out there. We've already gotten rumors that people are trying to figure out whether they want to come up with a cash offer." The Financial Times Tuesday reported that Barclays PLC is weighing a rival bid for the assets, citing people familiar with the matter.

The assets, Benmosche said, are a good fit for AIG.

"We now have long-term insurance liabilities. These are assets that fit that pattern of duration, and therefore this makes sense [for AIG] over the next four to five years to have these assets in house," he said.

Asked what taxpayers will in the end see as a result of the government bailout of the company, Mr. Benmosche said he expects taxpayers to realize a profit of between $10 billion to $15 billion.