Keeping you up to date on the latest data releases.
All three of the Maiden Lane portfolios were revalued last week according to third-quarter fair market values for the securities in the portfolios. Maiden Lane I jumped from $27.95 billion to $28.47. Maiden Lane II jumped from $15.68 billion to $16.47 billion, and Maiden Lane III grew from $22.84 to $23.53. All three of the portfolios still have a net value above the amount of the outstanding loan from the Federal Reserve Bank of New York. Central bank liquidity swap operations by the European Central Bank fell back to their previous trend of $60 million during the past two weeks, after a jump up to $560 million three weeks ago. Also, the amount of reverse repos doubled last week as more preparatory operations were conducted, with the balance jumping to $1.6 billion before falling back to zero this week.
There were two important changes to the balance sheet recently that did not involve a major shift in the data. First, the Federal Open Market Committee announced the start of a Treasury securities purchase program of $600 billion that will inflate the size of the balance sheet. The purchases, coined quantitative easing II, will be conducted in conjunction with the agency debt and mortgage-backed securities reinvestment strategy, with estimates of total purchases near $850-$900 billion by the end of the first quarter of 2011. An initial operation took place November 4, but it is not included in this week’s data. The purchase came in the amount of $4.765 billion and was weighted entirely in 4-6 year securities.
Also, a new line has been added to the balance sheet this week. American International Group (AIG) has recently completed the sale of its American Life Insurance Company unit to MetLife and the initial public offering of its Asian life insurance unit, AIA Group Limited. The sale and IPO drew over $27 billion in cash and another $9 billion in MetLife shares. The cash will eventually go toward repaying AIG’s credit facility and the New York Fed for its preferred shares in the two units, but until the plan is closed (expected by the first quarter of 2011), the cash proceeds will be held by the New York Fed as agent. The holdings currently total $18.85 billion.