The Federal Reserve has taken some knocks for giving banks 100 cents on the dollar for credit insurance bought from AIG, but that may have been a sound investment. According to the Financial Times, the Fed is sitting on billions in paper profits from that part of the bank bailout. During the bailout, a Fed-financed vehicle called Maiden Lane III bought underlying derivatives so that insurance contracts written on them could be terminated. At the time of purchase, the derivatives had a face value of $62.1 billion and a market value of $29.6 billion, but thanks to a rallying credit market, their estimated market value is now at least $45 billion. It won't be easy to realize that profit, though, since derivatvies are generally illiquid and therefore hard to sell.