Excerpts from the depositions - Wall Street Journal

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Case 2:11-cv-10549-MRP-MAN Document 254-1 Filed 03/28/13 Page 28 of 35 Page ID #:16617 • “Q. Am I correct that you don’t recall ever having a discussion with any of your advisers in which you instructed the advisers to seek an assignment of AIG’s fraud and tort claims? [Objection] A. I’m not aware of that.” 89:13–22. • “Q. And you also didn’t direct any adv[is]ers to effect the transaction in a way that would result in AIG giving up those rights of recovery, correct, sir? A. There was no specific direction to someone about any type of claim like that.” 124:20–25. • “Q. Did you ever have a discussion with BlackRock—now I’m asking in the period post-closing of ML II . . . where you on the one hand, and BlackRock on the other hand, discussed the issue of whether AIG had assigned or given up its tort or fraud claims to ML II? [Objection] A. No. No.” 150:7–17. • “[Referring to Morgan Stanley presentation] Q. [Morgan Stanley] w[as] advising the New York Fed on . . . the structure for the ML II transaction? A. Yes. . . . Q. And am I correct that what it shows in the lower half is, from the AIG’s insurance companies, whether a sec lending pool, what’s being transferred to ML II is $40 billion par face amount of residential mortgage-backed securities; do you see that, sir? A. Yes, I do. . . . Q. [W]ould you confirm for me, sir, that in Exhibit 6A, there is no indication at all of AIG transferring or assigning away any rights that it may have in connection with seeking recoveries for the losses on the residential mortgage-backed securities it was selling to ML II? [Objection] A. That is true . . . .” 230:2–233:12. • No discussions with anyone about transferring fraud claims. • “Q. Okay. And at any point in time . . . after the consummation of Maiden Lane II . . . do you recall ever discussing with anyone the concept of, Hey, don’t worry, because if these securities go down in value, we have AIG’s claims that we can pursue against the banks? A. No, I don’t recall having any such conversations.” 137:15–25. • “Q. [B]ut at the time . . . you were unaware of any actual claims that may have existed, correct? A. We had no specific knowledge of any claims that were in the making; we had no specific knowledge of any reasons why there was something special―’special’ in the negative sense―about these issues. That’s right.” 65:10–19. • “Q. At the time in 2008 that ML II was being consummated, you weren’t even thinking about the concept that AIG may have had tort claims against particular entities that sold it the security? A. Right . . . We didn’t think, Wow, that’s got a lot of value there, and we want that transferred to us; we have a lot of value there.” 133:10–134:8. • No documents discussing transferring fraud claims. • “Q. [Referring to BlackRock presentation] [Y]ou would agree with me, Mr. Mahoney, there is no reference at least here in this document to a . . . in the page we’re looking at in terms of objectives and structure, there is no reference here to the ML II or the New York Fed seeking to obtain AIG’s rights to pursue EXHIBIT 4 4
Case 2:11-cv-10549-MRP-MAN Document 254-1 Filed 03/28/13 Page 29 of 35 Page ID #:16618 recoveries with respect to the $18 billion in losses that AIG was going to ultimately be realizing? [Objection] A. That’s correct. There is no reference on this page to that. Q. Are you aware of a reference to that effect on any document that you’ve seen anywhere? A. No.” 200:4–19. • “Q. Do you know whether there’s a document in existence or that has ever been in existence in which the New York Fed has stated publicly that it believes that it acquired from AIG, AIG’s fraud or tort claims with respect to the residential mortgage-backed securities that were sold into ML II? [Objection] A. No. Q. Have you ever seen any such statement to that effect by the New York Fed? A. No. Q. . . . Have you ever seen a non-public statement to that effect? [Objection] A. No.” 248:18–249:22. Mahoney testified that he did not understand the term “Related Instruments” to include litigation claims. • “Q. In that respect, the terms RMBS . . . we’re focused on the words ‘Related Instruments.’ Do you recall in 2008 having discussions with anyone at AIG as to what that provision in the APA meant? A. No. . . . [T]he legal documents were drafted by legal counsel, outside counsel. And I would not have gotten involved in those types of discussions with AIG, with members of AIG or AIG’s counsel. Q. . . . Do you remember discussing what the phrase or term ‘Related Instruments’, the defined term in the Asset Purchase Agreement, meant with anyone internally at the New York Fed? A. No, I do not. Q. And how about with respect to your outside advisers? Do you remember discussing it with any of your outside advisers, legal or banking or accounting advisers? A. No.” 50:9–51:8. • “Q. [] Is it fair to say you also don’t recall spending any time in 2008 focused on that provision, ‘Related Instruments’, as the Maiden Lane transaction was being consummated? [Objection] A. It would be fair to say I did not focus on that. I read the legal documents more for things that contradicted my understanding of what should be in it. But . . . it’s a pretty involved definition that I would interpret has meanings beyond a laymen’s interpretation of those meanings. So, I did not probe, it would have taken too long to probe every single thing I didn’t fully understand.” 51:9–52:2. • “A. For example, when I first read of ‘related instruments,’ I thought of derivative contracts, maybe interest rate swaps or FX swaps that are related to the RMBS. Because CDOs, for example, do have embedded derivative contracts.” 37:20–25. • “A. From a business perspective reading this, you would think that this would include the legal documentation and the governance supporting that is being transferred in the purchase of these assets over to Maiden Lane II.” 159:7–12. • “Q. [D]o you recall the issue of ‘Related Instruments’, or the definition of ‘Related Instruments’, ever being the subject of any discussion . . . irrespective of whether you ever partook in it, being the subject of any discussion between AIG on the one hand and the New York Fed on the other? [Objection] A. So, there were a lot of conversations that I was not privy to. But no, I’m not familiar with any . . . conversations with third parties.” 52:12–53:3. EXHIBIT 4 5
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Excerpts from the depositions - Wall Street Journal

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