Excerpts from the depositions - Wall Street Journal
Excerpts from the depositions - Wall Street Journal
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 30 of 35 Page ID<br />
#:16619<br />
• “Q. Which provisions of <strong>the</strong> legal contracts at issue in this case do you believe have<br />
ambiguity? [Objection] A. So, I think this revolves . . . around <strong>the</strong> ‘Related<br />
Instruments.’ . . . So, this term ‘Related Instruments’ is supposed to be more<br />
broad, more comprehensive. But if you read it, it doesn’t say tort claims; it doesn’t<br />
say litigation claims. So was that <strong>the</strong> intent or not?” 134:19–135:20.<br />
• “Q. Do you have any recollection of having considered that question . . . in 2008? That<br />
is, what are we referring to here when we’re talking about <strong>the</strong>se various documents<br />
within—<strong>the</strong> definition of ‘Related Instruments’? Do you have any recollection of<br />
considering that question in 2008? [Objection] A. In 2008, I wouldn’t necessarily have<br />
tied—I certainly don’t recall, tying <strong>the</strong> language in this definition with <strong>the</strong> transfer<br />
of those types of rights, litigation or tort rights.” 159:17–160:9.<br />
In fact, Mahoney could identify no provision in <strong>the</strong> contracts that transfers AIG’s litigation<br />
claims.<br />
• “A. But when I read this, <strong>the</strong> ‘Related Instruments’ definition, I doubt very much<br />
at <strong>the</strong> time I was thinking, Oh, that’s where we’re going to get <strong>the</strong>se nonstandard<br />
rights transferred to us. Q. Okay. Do you remember thinking any o<strong>the</strong>r provision in <strong>the</strong><br />
APA which did, to your . . . understanding at that time, affect those nonstandard transfer<br />
of rights to you? A. No.” 160:22–161:10.<br />
Mahoney testified that no premium was paid to AIG for <strong>the</strong> transfer of litigation claims.<br />
• “Q. And before <strong>the</strong> Fed, as a matter of law, could lend nearly $20 [b]illion to ML II, what<br />
did <strong>the</strong> Fed have to do to assure itself that <strong>the</strong>re was adequate security for that loan?<br />
[Objection] A. Well, <strong>the</strong> 13(3) clause is that <strong>the</strong> Reserve Bank has to be secure to its<br />
satisfaction in <strong>the</strong> collateral that supports <strong>the</strong> loan. So, that’s why we spend a lot of<br />
resources to ensure that <strong>the</strong> collateral had <strong>the</strong> value we were ascribing to it that<br />
could support <strong>the</strong> loan. Q. And you did a lot of work using outside advisers to come to<br />
that conclusion? A. That’s right. We hired a set of outside advisers with legal counsel<br />
as well as three different types of advisers externally to support that.” 70:10–71:5.<br />
• “Q. And is it correct that <strong>the</strong> valuations that were arrived at by BlackRock were arrived at<br />
by projecting <strong>the</strong> future cash flows <strong>from</strong> <strong>the</strong> underlying mortgages in each of <strong>the</strong><br />
residential mortgage-backed securities? A. That’s correct. So, it was estimated future<br />
cash flows based on how similar RMBS performed to term. Q. And o<strong>the</strong>r than using<br />
future cash flows in arriving at a valuation, was <strong>the</strong>re anything else that was done in<br />
terms of arriving at what would be paid by Maiden Lane II to AIG for each of <strong>the</strong>se<br />
securities? A. So, that’s what we relied upon.” 77:20–78:10.<br />
• “Q. Am I correct, sir, that in terms of <strong>the</strong> values, those—that BlackRock came up with,<br />
those became <strong>the</strong> actual prices at which <strong>the</strong> RMBS were sold? A. Those became <strong>the</strong><br />
prices at which <strong>the</strong> RMBS were sold into <strong>the</strong> vehicle. Q. And am I correct that <strong>the</strong>re<br />
was no particular price or value that was associated with <strong>the</strong> surrendering or giving up of<br />
any rights AIG might have had to seek recovery on <strong>the</strong> $18 billion of losses that it<br />
suffered? [Objection] A. Right. . . . [T]he price estimates were based solely on <strong>the</strong><br />
cash flows generated by <strong>the</strong> securities in―were purchased into <strong>the</strong> vehicle.” 78:22–<br />
79:14.<br />
EXHIBIT 4<br />
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