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 #:16619 • “Q. Which provisions of the legal contracts at issue in this case do you believe have ambiguity? [Objection] A. So, I think this revolves . . . around the ‘Related Instruments.’ . . . So, this term ‘Related Instruments’ is supposed to be more broad, more comprehensive. But if you read it, it doesn’t say tort claims; it doesn’t say litigation claims. So was that the intent or not?” 134:19–135:20. • “Q. Do you have any recollection of having considered that question . . . in 2008? That is, what are we referring to here when we’re talking about these various documents within—the definition of ‘Related Instruments’? Do you have any recollection of considering that question in 2008? [Objection] A. In 2008, I wouldn’t necessarily have tied—I certainly don’t recall, tying the language in this definition with the transfer of those types of rights, litigation or tort rights.” 159:17–160:9. In fact, Mahoney could identify no provision in the contracts that transfers AIG’s litigation claims. • “A. But when I read this, the ‘Related Instruments’ definition, I doubt very much at the time I was thinking, Oh, that’s where we’re going to get these nonstandard rights transferred to us. Q. Okay. Do you remember thinking any other provision in the APA which did, to your . . . understanding at that time, affect those nonstandard transfer of rights to you? A. No.” 160:22–161:10. Mahoney testified that no premium was paid to AIG for the transfer of litigation claims. • “Q. And before the Fed, as a matter of law, could lend nearly $20 [b]illion to ML II, what did the Fed have to do to assure itself that there was adequate security for that loan? [Objection] A. Well, the 13(3) clause is that the Reserve Bank has to be secure to its satisfaction in the collateral that supports the loan. So, that’s why we spend a lot of resources to ensure that the collateral had the value we were ascribing to it that could support the loan. Q. And you did a lot of work using outside advisers to come to that conclusion? A. That’s right. We hired a set of outside advisers with legal counsel as well as three different types of advisers externally to support that.” 70:10–71:5. • “Q. And is it correct that the valuations that were arrived at by BlackRock were arrived at by projecting the future cash flows from the underlying mortgages in each of the residential mortgage-backed securities? A. That’s correct. So, it was estimated future cash flows based on how similar RMBS performed to term. Q. And other than using future cash flows in arriving at a valuation, was there anything else that was done in terms of arriving at what would be paid by Maiden Lane II to AIG for each of these securities? A. So, that’s what we relied upon.” 77:20–78:10. • “Q. Am I correct, sir, that in terms of the values, those—that BlackRock came up with, those became the actual prices at which the RMBS were sold? A. Those became the prices at which the RMBS were sold into the vehicle. Q. And am I correct that there was no particular price or value that was associated with the surrendering or giving up of any rights AIG might have had to seek recovery on the $18 billion of losses that it suffered? [Objection] A. Right. . . . [T]he price estimates were based solely on the cash flows generated by the securities in―were purchased into the vehicle.” 78:22– 79:14. EXHIBIT 4 6
Case 2:11-cv-10549-MRP-MAN Document 254-1 Filed 03/28/13 Page 31 of 35 Page ID #:16620 • “Q. So, is it correct, sir, that there was no value or price associated with any tort claim that AIG may have been giving up? [Objection] . . . A. [T]here was no premium added on to the prices above and beyond the estimated cash flows discounted back. . . . That’s correct.” 79:19–80:17. Mahoney testified that, when he sent a March 12, 2012 Letter advising AIG that the “RMBS Issue” had been disposed of, he was referring to the securities—and nothing else. • “Q. [T]he circumstances or the reasons for this letter, Exhibit 32, March 12, 2012, is it correct to say this was advising AIG of the fact that the New York Fed had sold off all of the residential mortgage-backed securities that were owned by ML II? [Objection] A. Right. In my understanding, this was a letter to AIG to inform them of developments―material developments on the vehicle which they owned a billion dollars stake in. So, I believe that was the intent of the letter. It was addressed to AIG from, effectively, the Maiden Lane II vehicle.” 30:12–31:2. • Q. [] If you turn to the second page, you will see that at the top of the second page, it says, ‘Recognizing that all the RMBS Issues have been disposed of.’ . . . And do you see that that ‘RMBS Issues’ is a capitalized term? A. Yes, I do. Q. And do you understand that it is the capitalized term to mean the definition that’s found in the Credit Agreement and the Asset Purchase Agreement for Maiden Lane II? A. In my mind, I didn’t jump to look up for a definition of that. I thought it was not a legal term but, rather, a business term, the ‘RMBS issues.’ I understood it to be, as I said earlier, the 855 CUSIPs or issues that were bought into the AIG—Maiden Lane II vehicle. Q. All right. So, your understanding of the statement that ‘all the RMBS Issues have been disposed of’, was a statement that said that all of the 855 CUSIPs for the residential mortgage-backed securities had now been disposed of, sold? A. Sold. Q. Am I correct, though, on the preface to my statement? A. That all hundred―855 RMBS, what I’ll call CUSIPs, have been sold to external parties for cash receipt into the vehicle.” 31:3–32:11. • “Q. Okay. Did you understand that statement regarding RMBS Issues in any way related to tort claims that the Maiden Lane II vehicle may or may not have owned? A. I would not have jumped to that, that statement. I looked at that more from a business perspective. . . . The RMBS issues, CUSIPs, had been sold.” 32:12–21. • “Q. [Referring to the letter] [I]t was presented to you to sign on behalf of Maiden Lane II because you had historical knowledge of Maiden Lane II from the 2008 time frame; is that fair? A. That’s right. The institutional knowledge from the original Maiden Lane vehicle set-up. Q. And before you signed, did you, i[n] fact, review this letter carefully to make sure that any statements in it that related to that historical knowledge were, in fact, accurate? A. That’s really what I would be reviewing this letter for. Anything subsequent to my involvement in the origination of Maiden Lane II, I would be relying on my internal counsel to verify the accuracy of those statements. But I was looking at it for anything that would contradict, in my mind, things that I knew to be factual.” 29:9–30:5. EXHIBIT 4 7
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Excerpts from the depositions - Wall Street Journal

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