Excerpts from the depositions - Wall Street Journal

Case 2:11-cv-10549-MRP-MAN Document 254-1 Filed 03/28/13 Page 34 of 35 Page ID
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it your expectation that those advisers would be exploring ways to pursue those claims?
A. Yes.” 168:3–16.
• “Q. Am I correct that through the period of early 2011, which is when you told us the
Investment Committee dissolved, you’re not aware of any discussions with or among ML
II’s advisers about pursuing recoveries with respect to any AIG assigned tort claims?
[Objection] A. I am not aware of any such discussion.” 169:14–24.
Mahoney testified that the FRBNY created ML II in order to secure AIG’s ongoing viability.
• “Q. And you agree that it was not the purpose of the New York Fed to try to make a
profit in connection with ML II? A. . . . [W]e did not have a profit motive in entering
into Maiden Lane II.” 120:24–25.
• “Q. . . . Was it your view—First of all, was the restructuring done at least in part to assist
AIG in avoiding a ratings downgrade? A. It was responsive to the concerns of a
variety of [stake] holders. And important [stake] holders there were the credit
rating agencies.” 282:21–283:6.
• “Q. But at that point in time, you believed that those four components of the
restructuring— A.—avoided a near term downgrade by the rating agencies, yes. Q.
And did you believe that, at least in the near term, it assured AIG’s viability? A. In the
near term, yes. Q. And then you’re saying that there was always risk and you didn’t
know what the future had in store, but at least at that point in time, you believed it was
sufficient for AIG to continue as a going concern, correct? A. Going concern. Q. And to
be a viable entity, correct? A. Right.” 283:14–284:7.
• “Q. And you agree that it was not the purpose of the New York Fed to try to make a
profit in connection with ML II? A. We have policy objectives in creating the
instrument. The LIBOR plus 100 interest rate would be a low interest rate relative
to what a private sector institution would require for the risk that were being
obtained. So, we did not have a profit motive in entering into Maiden Lane II.”
120:15–25.
Mahoney testified that the FRBNY’s loan to ML II was always extremely likely to be repaid.
• “Q. And is it true, sir, that all of those outside advisers, after evaluating the collateral,
their conclusions were that the New York Fed was unlikely to take any losses on the loan
even in severe stress scenarios? [Objection] A. That is the conclusion that our
advisers arrived at, communicated to us, and which we understood.” 71:6–14.
• “Q. And in all of those instances, all of your advisers—in other words, in all of those
scenario, stress test scenarios, your advisers’ conclusions were that, even under the
worse stress case scenario that they used, their model showed that the Fed’s loan would
be repaid in full, correct, sir? A. That is the results of their modelling, yes.” 72:2–10.
• “Q. [Referring to BlackRock presentation] [I]t says ‘Very low likelihood of failing to
repay senior debt (P&I)’—principal and interest—’even under extremely severe stress
scenarios.’ Do you see that? A. Yes, I do. Q. And that was BlackRock’s view at the
time, correct? A. So, it was their view at the time, but maybe you can reinterpret
that that was their direction to structure something that would pay off the Federal
Reserve principal plus interest even under extremely stressed scenarios. Q. And is it
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