Excerpts from the depositions - Wall Street Journal

More documents

Recommendations

Info

Case 2:11-cv-10549-MRP-MAN Document 254-1 Filed 03/28/13 Page 34 of 35 Page ID #:16623 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 EXHIBIT 4 10
Case 2:11-cv-10549-MRP-MAN Document 254-1 Filed 03/28/13 Page 35 of 35 Page ID #:16624 your understanding that it was their view or it was their instruction, or both? A. Both.” 194:24–195:18. • “Q. [D]o you think that that view of . . . BlackRock . . . that there was a very low likelihood of failing to repay the senior debt, including principal and interest even under extremely severe stress scenarios, remained all the way through the closing of ML II in December? A. I would say that’s true in the way they modelled it.” 195:19–196:6. • “Q. And then it says, ‘Results at very low likelihood of failing to repay the senior debt even under severe stress scenarios.’ That was the view. I understand it may have been based upon the advisers’ model, but that was the view, at least as of October 25, 2008, within the New York Fed? A. Right. That was—we did believe that the models were—the bases for our pricing and bases for our feeling that the loan was secured to our satisfaction.” 213:11–21. • “Q. At any point in time, did BlackRock advise the New York Fed, even in that period in the next quarter, did BlackRock or any of the Feds advisers advi[s]e the New York Fed that the prior conclusions, which were that the loan would be repaid in full, had changed? A. So, we were provided in each quarter, in the type of analyses that we discussed this morning, that quarterly BlackRock decks on Maiden Lane II and III; each quarter revised a new estimated date on which the loan would be repaid. And [in] the base case, we were always going to be repaid; and under the adverse conditions, we would also be repaid.” 292:20–293:11. EXHIBIT 4 11
Page 1 and 2: Case 2:11-cv-10549-MRP-MAN Document
Page 33: Case 2:11-cv-10549-MRP-MAN Document

Excerpts from the depositions - Wall Street Journal

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?