American International Group (AIG.N) offered on Thursday to buy back, for $15.7 billion cash, mortgage-backed securities the U.S. government had taken off the bailed-out insurer's hands during the financial crisis. AIG, which is 92 percent owned by the government, said the Federal Reserve Bank of New York will make a profit of about $1.5 billion on its residual equity interest in Maiden Lane II, the entity that holds the securities, if it accepts the offer. AIG said in a U.S. Securities and Exchange Commission filing that the total outstanding assistance to it will be reduced by about $13 billion to some $26 billion if its offer is accepted. Maiden Lane II was formed in December 2008 and took over about $20.5 billion of residential mortgage backed securities in a bid to ease liquidity pressure on AIG due to its securities lending program. (Reporting by Paritosh Bansal; Editing by Tim Dobbyn)
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