May 30 American International Group Inc
has agreed to drop litigation against the Federal Reserve Bank
of New York over who has the right to sue over losses suffered
by the insurer on residential mortgage-related securities.
The insurer and Maiden Lane II, a vehicle created by the
Federal Reserve Bank of New York to buy troubled RMBS from the
insurer, agreed to dismiss the case without prejudice, according
to a May 28 court order, which was made public on Thursday.
At issue was whether AIG had assigned to Maiden Lane II its
right to sue over losses on RMBS it sold to that entity.
Earlier this month, in a case involving Bank of America
Corp's Countrywide unit, a federal judge in California
said AIG may sue over RMBS sold to Maiden Lane II.
"In light of the recent ruling that AIG did not assign its
fraud claims to ML II, we have agreed to dismiss our declaratory
judgment action, without prejudice to our right to reinstitute
it if necessary," AIG spokesman James Ankner said.
Jack Gutt, a New York Fed spokesman, declined to comment.