According to the NY Daily News, there are talks about bring back Al Leiter.

The Yankees announced a one-year deal with utility infielder Miguel Cairo yesterday, and also had discussions to bring back lefty Al Leiter. The Yanks are talking to Leiter's agents about a nonroster invitation to spring training, where he would compete for a bullpen job and offer insurance. Leiter had talked at the end of last season about possibly retiring, but "he's receptive to this," Yankee GM Brian Cashman said.

Worst case scenario: In spring training, Al somehow harnesses his stuff again and pretends that he is pitching against the Toronto Blue Jays all the time (he killed them last year to the tune of a 2.20 ERA and a .210 AVG against), ensuring that Joe somehow finds a way to get him on the 25 man squad at some point in the season, bypassing Matt Smith in the process. Other than that, this isn't a bad move really, akin to signing Ramiro Mendoza to a AAA deal as a just-in-case backup.