Mortgage-backed securities sold to Fed-backed company

Troubled US insurer AIG has sold $39.3bn (£25.7bn) of residential mortgage-backed securities to the newly formed Federal Reserve-backed Maiden Lane II to clear part of its massive rescue loan.

Edward Liddy, AIG chairman and chief executive, said: "AIG's highest priority is the full repayment of the federal loan facility with interest. The creation and launch of this financing entity will eliminate the liquidity issues associated with AIG's US securities lending program, which will facilitate our repayment plan. Although we have more work ahead of us, this is an important step forward. We appreciate the support of the Federal Reserve Bank of New York in implementing this transaction."