02/06/2012 08:34 pm ET Updated Apr 07, 2012

New York Fed Invites Banks To Bid For AIG's Mortgage Bonds

Feb 6 (Reuters) - The Federal Reserve Bank of New York has invited five banks to bid for mortgage bonds of insurer American International Group, the Wall Street Journal reported.

The five banks selected were the U.S. securities units of Barclays PLC, Credit Suisse Group AG , Goldman Sachs Group, Morgan Stanley and Royal Bank of Scotland PLC.

The Fed could sell the residential mortgage bonds from its Maiden Lane II portfolio around Feb. 8 if a favourable offer comes through, the report said citing people familiar with the matter.

The Maiden Lane II portfolio was created to absorb risky mortgage securities from AIG and help prevent the collapse of what was then the world's largest insurer.

In March last year, the New York Fed had rejected a $15.7 billion bid from AIG, saying it would sell off the bonds over time instead.