Friday, October 10, 2014

Withdraw and Correct the Error of Thy Ways: The Perry Capital Opinion

Withdraw and Correct the Error of Thy Ways: The Perry Capital Opinion

Financial Crisis Bailouts: What Did They Actually Cost Taxpayers?

Financial Crisis Bailouts: What Did They Actually Cost Taxpayers?

the 3 billion at the end of article was probably 500 billion with net profit of 46.2 billion in profit to US taxpayers. Look for the check in the mail for your portion. I doubt it will come. Wonder why they say they are doing it for the taxpayers benefit when its easy to see the govt is using the money for political slush funds and for $500 toilet seats. $1500 dollars to each person in the USA for this bailout or 500 billion to YOUR bank. Dont forget the DEBT of america is about 16 trillion or $45,500 dollars to each person in USA, including kids and retired people. Everyone needs to pay at least $3000 a year each just on the interest on that DEBT, yes kids and retired people too. House of cards.

Fannie Mae, Freddie Mac Payments Don’t Benefit Taxpayers

Fannie Mae, Freddie Mac Payments Don’t Benefit Taxpayers

The Third Amendment net worth sweep does not sweep money to taxpayers. 
I am a taxpayer. I have not received payment from the sweep
You have not either
The Wall Street Journal and the Washington Post voice the popular opinion and have a large audience. It’s difficult to tell what’s what when what is published by reputable sources raises more questions than answers.
You may find yourself, as I have, realizing that you are surprised by what is happening. This happens when I am wrong. This happens when the assumptions that I was using to derive conclusions were assumptions that I wished were true instead of assumptions that were actually true. If I am wrong, please reach out to me and set me right. In this case, I think that the way that I could be best put right is if I am missing some way that two of the world’s most profitable companies can be taken over by the government.

No, not running away. 10/9/14

Thursday, October 9, 2014

Wednesday, October 8, 2014

Geithner's testimony today (10/8) in AIG case

bobbyraymurcer2  12 minutes ago Flag

Highlights from Geithner's testimony today (10/8) in AIG case

Mr. Boies also entered into evidence Wednesday a draft essay for the Atlantic that Mr. Geithner had sent to a colleague on March 7, 2012. In the essay, he wrote:
“We force losses on shareholders proportionate to the mistakes of the firm. And we made it clear in the [case of mortgage-giants Fannie Mae and Freddie Mac] and AIG that they would be dismembered, not allowed to live on as independent entities with the scope and reach they had before the crisis.”
Mr. Boies then focused on this issue, “proportionate,” and asked Mr. Geithner if the shareholders for banks like Citigroup Inc. and Morgan Stanley had to face similar “proportionate” losses. Mr. Geithner said they had.
As he did on Tuesday, Mr. Boies peppered Mr. Geithner with questions about the book in an apparent attempt to show that government officials were willing to operate outside the manual’s parameters in some cases, but not when it came to AIG.
On Tuesday, Mr. Geithner played down its importance. “I don’t think it would be fair to say I consulted it extensively during that period,” he said.
Mr. Boies is pulling together material from an array of sources seeking to prove Starr’s contention that government officials viewed the treatment of shareholders as punitive, even as they considered it imperative for the then-giant financial-services company to accept the terms because an AIG bankruptcy would cause widespread harm to the economy.
Still, Mr. Boies drew confirmations of past statements of Mr. Geithner about potential damage from an AIG bankruptcy filing, including that a failure of AIG would have had catastrophic consequences for the broader economy.
Mr. Boies also focused on a past statement by Mr. Geithner that the AIG rescue “wiped out” the company’s shareholders. Mr. Geithner said he had been unartful, noting that shareholders got “a very substantial benefit.”


“We force losses on shareholders proportionate to the mistakes of the firm. And we made it clear in the [case of mortgage-giants Fannie Mae and Freddie Mac] and AIG that they would be dismembered, not allowed to live on as independent entities with the scope and reach they had before the crisis.”

He is right about that. in 2012 he decided to say that. After AIG was back to shareholders and Fannie was profitable, He also was right about not being independent. Thanks to the govt robbing them.
He was also right about the scope, before 2008 fannie & freddie were 40% of the mortgage market. In 2014 F&F are 90% of the market with a bigger reach than they ever had. But yet still being robbed by US govt.

Mr. Boies then focused on this issue, “proportionate,” and asked Mr. Geithner if the shareholders for banks like Citigroup Inc. and Morgan Stanley had to face similar “proportionate” losses. Mr. Geithner said they had.

Really? 80% warrants? 

What is our govt going to do to get private capital into the market when in a moments notice they will wipe out the insurers and anyone they feel like. Including the bond holder. 10% haircut. 
No one will show up!! This is evident in the begging by the US govt for participation in mortgages that is not appearing. PLS was 50% of the market in 2008. In 2014 it is 1% or less.


How much has been paid back to date


Fannie mae: 116B out, 130B in
Profit 14 Billion


Fannie Mae

$130BRevenue to Gov't


  • $3.71B Revenue

    Sep. 30, 2014 Dividend Payment

    The dividend was based on Fannie having a net worth of $6.1 billion as of June 30, 2014 minus the capital reserve amount of $2.4 billion.

Freddie mac: 71B out, 88B in
Profit 16 Billion


Freddie Mac


$71.3BDisbursed$0Returned$88.2BRevenue to Gov't$16.8B

  • $1.9B Revenue

    Sep. 30, 2014 Dividend Payment

    The dividend amount was based on a net worth amount of $4.3 billion at March 30, 2014 minus the capital reserve of $2.4 billion.
    More info from

Tuesday, October 7, 2014

We need a democrat win in senate. here is why.

Republican win in senate would put Watt in the power to release before republican president in 2016.


We need a democrat win in senate. here is why:

The Democratic majority in the Senate has blocked House attempts at sweeping changes to the reform law, agreeing only to a few revisions of a statute addressing insurance regulation. There is palpable concern on Wall Street that Sen. Sherrod Brown (D-Ohio), known for his tough stance on big banks, could take the helm of the committee if his party retains control of the chamber. The liberal Democrat has championed legislation to force big banks to sock away more capital to guard against another economic downturn, a bill the industry excoriated as being too severe.

Who is Brown? Apr 8, 2014

Brown said the measure could allow for more concentration of too-big-to-fail banks. He said there could be simpler ways to replace Fannie and Freddie.
“The affordable housing standards issue and the duty to serve I think are important,” Brown said. “I don’t think they’re addressed in the way they should be. I think there is increasing sentiment I hear from people from all over the financial services sector, from Wall Street to community banks tocredit unions, that say, ‘How is this going to work?’”

‘So Complicated’

He also said he doesn’t see pressure from the White House to move legislation since Gene Sperling, the former director of the National Economic Council, left the Obama administration. “Now that Gene’s gone, I feel a little less interest in the White House.”
Brown said eliminating Fannie and Freddie may not be necessaryHedge funds have lobbied Congress to re-capitalize the companies instead of winding them down.
“That this isn’t as broken as it was, or it isn’t as broken as people think it is, doesn’t mean we defend it, doesn’t mean we don’t improve it, but we don’t do something so complicated,” Brown said.

Brown is a possible future chairman of the banking panel. Johnson is retiring after the 2014 election, which may lead to Brown’s elevation should some Democrats opt for other panel slots and the Democrats retain majority control of the Senate.

Big Banks Face Another Round of U.S. Charges

Big Banks Face Another Round of U.S. Charges


Another smoking gun against the FHFA

This was on Timhoward717 this morning.

here are the three pictures that tell the story :

THE way the market actually was in OCT 2012. after the sweep was put in place. This is taken from today's perspective 2014.

As you can see at the end of 2011 and the biggining of 2012, the Home price index shot up at a 45deg angle. By August of 2012 when sweep was put in place the govt looked at this chart and KNEW the bottom was in. This is the TRUE baseline.

But the govt in Oct 2012 FHFA reported this AFTER the sweep.

You can see the FHFA in OCT moved the baseline of Case-Shiller to fit its baseline in this document OCT 2012. Three months after the 3rd amendment. This was a coverup. A lie!! 
In 2010 the FHFA Filed this and the projections look a little different. These are before the sweep.

As you can see as early as 2010 the FHFA believed in all cases by the 3rd quarter of 2012, or the sweep, that the market would be going back up. I think it should be noted that the Oct 2012 says the same. Even though the 2012 has the baseline moved to fit the narrative of the FHFA for the sweep. The thing they forget to Fix is IN ALL PROJECTIONS they see the 3rd quarter of 2012 as being the turning point in all scenarios that the FHFA labels as possible both in 2010 and in oct 2012. It would be impossible for the FHFA would not recognize that if the 3rd quarter of 2012 was the turning point in the housing index that it was also the turning point for Fannie and Freddie to profitability. This is a smoking gun. The FHFA knew the relationship between the housing index and the profitability of F&F.  The FHFA knew this before the FHFA and the Treasury entered the sweep in August 2012. The FHFA's own projections show this.

Monday, October 6, 2014

AIG Bailout Trial Bombshell II: Fed and Treasury Cornered AIG’s Board into Taking a Legally-Dubious Bailout

AIG Bailout Trial Bombshell II: Fed and Treasury Cornered AIG’s Board into Taking a Legally-Dubious Bailout

George Carlin "The American Dream" Best 3 Minutes of His Career

George Carlin "The American Dream" Best 3 Minutes of His Career

"The real owners are the big wealthy business interests that control things and make all the important decisions. Forget the politicians, they're an irrelevancy. The politicians are put there to give you the idea that you have freedom of choice. You don't. You have no choice. You have owners. They own you. They own everything. They own all the important land. They own and control the corporations. They've long since bought and paid for the Senate, the Congress, the statehouses, the city halls. They've got the judges in their back pockets. And they own all the big media companies, so that they control just about all of the news and information you hear. They've got you by the balls. They spend billions of dollars every year lobbying to get what they want. Well, we know what they want; they want more for themselves and less for everybody else." 

"But I'll tell you what they don't want. They don't want a population of citizens capable of critical thinking. They don't want well-informed, well-educated people capable of critical thinking. They're not interested in that. That doesn't help them. That's against their interests. They don't want people who are smart enough to sit around the kitchen table and figure out how badly they're getting *ucked by a system that threw them overboard 30 *ucking years ago. 

"You know what they want? Obedient workers people who are just smart enough to run the machines and do the paperwork but just dumb enough to passively accept all these increasingly chittier jobs with the lower pay, the longer hours, reduced benefits, the end of overtime and the vanishing pension that disappears the minute you go to collect it. And, now, they're coming for your Social Security. They want your *ucking retirement money. They want it back, so they can give it to their criminal friends on Wall Street. And you know something? They'll get it. They'll get it all, sooner or later, because they own this *ucking place. It's a big club, and you ain't in it. You and I are not in the big club."

“They call it the American dream, because you have to be asleep to believe it.”

"This country is finished."

Two years late on mortgage? No problem with new program

Two years late on mortgage? No problem with new program

You still think they will shut fannie down? The banks would never do this for homeowners. This is the FHFA directing F&F to do this.

Federal mortgage backers Fannie Mae and Freddie Mac announced a change to loan modification standards last week that lifts a ban on working with homeowners who are more than 720-days late on payments.
Although no paperwork is required to get the streamlined modification, Fannie Mae and Freddie Mac will try to screen out people who can still afford their mortgage but stop paying so they can qualify. According to a press release, the two mortgage backers have “proprietary screening measures,” which could include checking whether other bills are being paid on time or credit changes.

Dick Bove Gets Backup On Fannie Mae And Freddie Mac

Dick Bove Gets Backup On Fannie Mae And Freddie Mac

AIG comment to Ex-Treasury Secretary Paulson says AIG bailout was punitive

Ex-Treasury Secretary Paulson says AIG bailout was punitive

All you that bash AIG are being fooled by your government. Aig was taken and used as a bad bank for the TBTF banks. Aig had to be used because NO ONE could run on banks of AIG. But if your govt told you jpmporgan CHASE was going under on monday, you all would have run to the banks and removed all your money. This is classic shell game. Any of you going to withdraw your money from AIG? Your savings? Your money market? NO. cause you couldnt. but you could goto citibank and do just that. Dont be a fool. Understand every large bank was about to collapse. AIG was a bailout of the banks, not that AIG did wrong or was insolvent. AIG was the insurance against the bad loans that YOUR banks wrote. AIG was the one that was LIED to by the banks and the PLS market that they insured. YOUR BANK was the culprit. CITI, CHASE, Goldman, Morgan, Wamu, the list goes on. Everyone of them was bankrupt in less than 7 days if not for the takeover of AIG. Not cause of AIG's neglect but YOUR BANKS FRAUD. Know the story, quit continuing the lemmings story of the treasury. I own zero shares of AIG, but I can tell you believing the govt narrative is a LIE. Be an american and understand the second amendment was to protect you from your govt, NOT about guns. Start using your first amendment rights. Call these guys out for what they are. Crooks. Vote all incumbents out of office. Its time to get new faces in washington.

Fannie references in Stars AIG lawsuit

Fannie references in Stars AIG lawsuit

(a) Geithner: “Of the twenty-five largest financial institutions at the start of 2008,
thirteen had either failed (Lehman, WaMu), received government help to avoid failure
(Fannie, Freddie, AIG, Citi, BofA), merged to avoid failure (Countrywide, Bear, Merrill,
Wachovia), or transformed their business structure to avoid failure (Morgan Stanley,
Goldman)” (PTX 709 at 271-272).

1.4 On September 6, 2008, the Federal Housing Finance Agency (“FHFA”)
placed the two Government-Sponsored Entities (“GSEs”), Federal Home
Loan Mortgage Corporation (“Freddie Mac”) and the Federal National
Mortgage Association (“Fannie Mae”), into conservatorship (PTX 2097 at
15; PTX 2020 at 26).

(a) Financial Crisis Inquiry Commission Report: Over “the course of the second half of
2008, the OTC derivative market would undergo an unprecedented contraction, creating
serious problems for hedging and price discovery” (PTX 624 at 328). See also id. at 329
(“The market for nonconforming mortgage securitizations (those backed by mortgages
that did not meet Fannie Mae’s and Freddie Mac’s underwriting or mortgage size
guidelines) had also vanished in the fourth quarter of 2007”).

25.1.4 On or about March 26, 2014 Bank of America agreed to pay $9.3
billion to settle claims brought by the Federal Housing Financing
Agency under its statutory mandate to recover losses incurred by
Fannie Mae and Freddie Mac accusing the bank of misrepresenting
the quality of loans underlying residential mortgage-backed
securities purchased by the two mortgage finance companies
between 2005 and 2007 (PTX 2504).

25.1.8 On or about February 4, 2014, Morgan Stanley “agreed to pay $1.25
billion to the Federal Housing Finance Agency to resolve claims that
it sold shoddy mortgage securities to Fannie Mae and Freddie Mac. .
. . According to the agency’s lawsuit, Morgan Stanley sold $10.58
billion in mortgage-backed securities to Fannie and Freddie during
the credit boom, while presenting ‘a false picture’ of the riskiness of
the loans. . . . Many of the loans involved were originated by
subprime lenders, like New Century and IndyMac, bundled into
bonds and sold to Fannie and Freddie. One group of loans had
default and delinquency rates as high as 70 percent, according to the
lawsuit.” (PTX 2485).

(o) Rodgin Cohen (“Cohen”), who was then Chairman of Sullivan & Cromwell LLP,
advised AIG between March 2008 and the end of September 2008 (Cohen Dep. 35:13-
19). Cohen also advised Bear Stearns’ Board of Directors on its merger with JP Morgan
Chase in March 2008, Lehman Brothers in the period prior to its bankruptcy in
September 2008, and Fannie Mae in September 2008 (Cohen Dep. 6:15-24, 34:3-6,
34:16-35:4; PTX 709 at 163).

25.1.5 Defendant said on July 14, 2014 “after collecting nearly 25 million
documents relating to every residential mortgage backed security
issued or underwritten by Citigroup in 2006 and 2007, our teams
found that the misconduct in Citigroup’s deals devastated the nation
and the world’s economies, touching everyone” (PTX 2527 at 2).

2.1 As early as March 10, 2008, the Federal Reserve recognized that the prices
for subprime backed securities did not reflect underlying values and that:
“The prices out there were just being driven by fear” (PTX 1196 at 22).

2.2 During the days after Lehman’s collapse, it was virtually impossible to get a
price for subprime backed securities, including because of “Lack of liquid
quotes from market participants”; the fact that industry standard CDS
agreements “didn’t consider illiquid markets”; and the “Subjectivity
involved in pricing” (PTX 221 at 4).

From the lawsuit today AIG STAR:

Boies didn't draw much out of Paulson regarding how the government arrived at the terms for bailing out AIG. Paulson said he didn't recall many of the details of the rescue package.

The case is being heard by U.S. Court of Federal Claims Judge Thomas Wheeler.

Wheeler has rebuked government attorneys for attempting to rely on hearsay testimony, introducing exhibits in violation of trial rules about redactions, and dragging out proceedings by reading lengthy passages from documents.

express sharp disapproval or criticism of (someone) because of their behavior or actions

HERE is the truth AIG is same as FANNIE MAE and Freddie Mac

AIG... HERE is the truth

INC., on its behalf and on behalf of a class
of others similarly situated

1.3 From September 6 through September 22, the economy was essentially “in
free fall” (Geithner: PTX 563 at 15).
(a) The market conditions in mid-September 2008 were “unprecedented in the recent
history of financial markets” (PTX 2161 at 33).
1.4 On September 6, 2008, the Federal Housing Finance Agency (“FHFA”)
placed the two Government-Sponsored Entities (“GSEs”), Federal Home
Loan Mortgage Corporation (“Freddie Mac”) and the Federal National
Mortgage Association (“Fannie Mae”), into conservatorship (PTX 2097 at
15; PTX 2020 at 26).
1.5 In the two days prior to September 16: “Three major events shook the
financial system” (PTX 589 at 60).
(a) “Bank of America announced that it was buying Merrill Lynch amid concerns about
Merrill’s exposure to securities based on residential mortgages. In addition, at midday on
September 16, the assets of a money-market mutual fund that had exposure to Lehman
fell below $1 per share, a rare occurrence known as ‘breaking the buck,’ which further
stoked investors’ fears; that week, money-market mutual funds were subjected to
enormous withdrawals, especially by institutional investors. And finally . . . Lehman
Brothers filed for bankruptcy, in what became the largest bankruptcy case in U.S.
history” (PTX 589 at 60).
1.6 In the early hours of September 15, Lehman Brothers announced it would
file for bankruptcy, an event Secretary Geithner describes as “the most
destabilizing financial event since the bank runs of the Depression” (PTX 709
at 228).
(a) At around 12:30 am on September 15, 2008, Lehman Brothers Holdings Inc.
announced its intent to file a Chapter 11 bankruptcy petition. (PTX 69).
(b) After Lehman’s bankruptcy: “Key regulators feared that nearly all of the nation’s
major financial institutions were at risk of failure within a period of a week or two” (PTX
680 at 16).
(c) Geithner: The “fall of Lehman was a serious blow, shattering confidence around the
world. It was the most destabilizing financial event since the bank runs of the
Depression” (PTX 709 at 228). In the aftermath, regulators “had two death spirals” that
they “needed to stop immediately: the run on money market funds, which was killing the
market for commercial paper that provided America’s top corporations with short-term
operating loans, and the run on investment banks, which was threatening to ignite two
more Lehman-style explosions” (Id. at 218).
(d) Federal Reserve Chairman Ben Bernanke (“Bernanke”): The Lehman bankruptcy
“was an enormous shock that affected the whole global financial system” (PTX 708 at
(e) The “failure of Lehman Brothers created substantial disruption in the derivatives
market” (PTX 680 at 48).
1.7 In the days following Lehman’s bankruptcy announcement, a “run on the
bank” panic caused investors and depositors to withdraw hundreds of
billions of dollars in funds.
1.8 Investors withdrew more than $300 billion from money market funds (PTX
709 at 211).
(a) Bernanke: One effect of the Lehman bankruptcy was that there was “a very intense
bank run or, in this case, a money market fund run, in which investors in these funds
began to pull out their money just as quickly as they could.” In the days immediately
following the bankruptcy, “one hundred billion dollars a day was flowing out of these
funds” (PTX 708 at 89).
1.9 Morgan Stanley’s “liquidity pool had shrunk from $130 billion to $55 billion
in a week” (PTX 709 at 219).
1.10 “Goldman Sachs, the strongest of the investment banks, watched helplessly
as half its $120 billion in liquidity evaporated in a week” (PTX 709 at 214-
1.11 Between September 13 and 15, 2008, Defendant brokered the acquisition of a
failing Merrill Lynch by Bank of America (PTX 709 at 201, 204, 292).
1.12 During the day of September 16, the Reserve Primary Fund, a money market
fund announced that it was “‘breaking the buck,’ which meant it could no
longer promise investors 100 cents on the dollar” (PTX 709 at 211; see also
PTX 589 at 60).
1.13 As money market funds “began to face runs, they in turn began to dump
commercial paper as quickly as they could. As a result, the commercial
paper market went into shock” (PTX 708 at 90).
(a) Geithner: “The Reserve Fund debacle discouraged risk taking by other money funds,
which meant even less buying of commercial paper and less lending through repo, which
meant an even more intense liquidity crisis for banks and other institutions. Basically,
short-term financing—whether secured by collateral or not—was vanishing” (PTX 709 at
1.14 On Friday September 19, Geithner was told that Morgan Stanley “indicated
they cannot open on Monday” and, if it did not open, Goldman Sachs was
“toast” (PTX 175; Geithner Dep. 119:23-120:25).
2.1 As early as March 10, 2008, the Federal Reserve recognized that the prices
for subprime backed securities did not reflect underlying values and that:
“The prices out there were just being driven by fear” (PTX 1196 at 22).
2.2 During the days after Lehman’s collapse, it was virtually impossible to get a
price for subprime backed securities, including because of “Lack of liquid
quotes from market participants”; the fact that industry standard CDS
agreements “didn’t consider illiquid markets”; and the “Subjectivity
involved in pricing” (PTX 221 at 4).
(a) “In September 2008, the failure of Lehman Brothers created substantial disruption in
the derivatives markets” (PTX 680 at 48).
(b) “over the course of the second half of 2008, the OTC derivatives market would
undergo an unprecedented contraction, creating serious problems for hedging and price
discovery” (PTX 624 at 328).
3.2 In September 2008, AIG faced a severe liquidity crisis.
(a) Then Treasury Secretary Henry Paulson (“Paulson”): The Federal Reserve believed
“it could make a loan to help AIG because, with AIG, you were dealing with a liquidity
problem, not a capital problem” (Paulson Dep. 73:10-17).
3.7 AIG’s securities lending operations faced the same “run on the bank”
pressures as many other financial firms.
(a) Bernanke: On “September 16, AIG, the largest multidimensional insurance company
in the world, which had been selling credit insurance, came under enormous attack from
people demanding cash either through margin requirements or through short-term
funding,” (PTX 708 at 80), which was part of a pattern of “Whenever there was doubt
about a firm, as in a standard bank run, the investors, the lenders, and the counterparties
would all pull back their money quickly for the same reason that depositors would pull
their money out of a bank that was thought to be having trouble” (Id. at 79).
(c) Federal Reserve Vice Chairman Kohn: The “loan to AIG was meant to serve the
public purpose of preventing broader exacerbation of the financial crisis” (Kohn Dep.
(d) Geithner: when “you gave AIG a loan, you weren’t giving AIG a loan to benefit AIG,
you were giving AIG a loan to benefit the system” (Geithner Dep. 152:17-20).

6.1 The primary cause of the financial crisis of 2008-2009 was the bursting of a
bubble in the housing market.
(a) Paulson: “The crisis in the financial markets that I had anticipated arrived in force on
August 9, 2007. It came from an area we hadn’t expected—housing—and the damage it
caused was much deeper and much longer lasting than any of us could have imagined.”
(PTX 706 at 78).
(b) Bernanke: “Although a number of developments helped to trigger the crisis, the most
prominent was the prospect of significant losses on subprime mortgage loans that became
apparently [sic] shortly after house prices began to decline” (PTX 599 at 5).
6.2 Defendant kept interest rates artificially low in the years leading up to the
financial crisis, which created a housing bubble that began to burst in 2007.
6.2.1 The Federal Reserve kept the discount and federal funds rates low in
part to stimulate the economy by encouraging sales in the housing
(a) “At a congressional hearing in November 2002, Greenspan acknowledged—at
least implicitly—that after the dot-com bubble burst, the Fed cut interest rates in
part to promote housing” (PTX 624 at 116).
(b) “In the view of some, the Fed simply kept rates too low too long. John Taylor,
a Stanford economist and former undersecretary of treasury for international
affairs, blamed the crisis primarily on this action. If the Fed had followed its usual
pattern, he told the FCIC, short-term interest rates would have been much higher
6.2.2 Even as the Federal Reserve kept interest rates low, it recognized
that the boom in the housing market was a potential source of risk to
the financial system.
(a) Bernanke: “We always of course knew the housing prices were rising quickly,
but as of 2003-2004 there really was quite a bit of disagreement among
economists about whether there was a bubble, how big it was, whether it was just
a local or a national bubble. So we were certainly aware of that risk factor” (PTX
599 at 52).

6.3 As housing prices soared in the early to mid-2000s, mortgage originators,
including commercial banks, and investment banks, began to rely more
heavily on the so-called “originate and distribute” business model, whereby
originators would transfer mortgages to other entities instead of holding
them until maturity (PTX 624 at 117-119, 130-154).
(a) Defendant’s Expert Anthony Saunders: “The years preceding the financial crisis that
began in 2007 were characterized by a dramatic increase in systemic risk of the financial
system, caused in large part by a shift in the banking model from that of ‘originate and
hold’ to ‘originate and distribute’” (PTX 2161 at 23).
(b) “‘Securitization could be seen as a factory line,’ former Citigroup CEO Charles
Prince told the FCIC. ‘As more and more and more of these subprime mortgages were
created as raw material for the securitization process, not surprisingly in hindsight, more
and more of it was of lower and lower quality. And at the end of that process, the raw
material going into it was actually bad quality, it was toxic quality, and that is what ended
up coming out the other end of the pipeline’” (PTX 624 at 130-31)

6.7 Defendant failed to regulate the products and participants in the mortgage
market in the years leading up to the financial crisis.
(a) Geithner: “There was plenty of blame to go around, some of it was mine. Citi’s many
regulators, including the New York Fed, had failed to save Citi from itself during the
boom. We had recognized the vulnerabilities too late” (PTX 709 at 268).
(b) Bernanke, when asked by the FCIC whether the “actions of the Federal Reserve” in
regulating the mortgage market during the housing boom was “a very significant failure”
on the part of the Federal Reserve: “It was, indeed. I think it was the most severe failure
of the Fed in this particular episode” (PTX 599 at 27; see also PTX 708 at 57-58).
(c) Geithner: “Everyone could see there was ‘froth’ in some housing markets, as
Greenspan put it. We all knew lax lending standards were helping families buy more
expensive homes with less money down. Other families were staying put, then using
their existing homes as ATMs by borrowing against their soaring home values. I had
seen in Japan and Thailand how lavishly financed real estate booms can end in tears.

7.3.2 Defendant refused AIG’s request to become a bank holding
company while providing such assistance to others.
(a) On September 21, 2008, the Federal Reserve announced that it had approved
the applications of Goldman Sachs and Morgan Stanley to become bank holding
companies (PTX 198; PTX 200 at 3; PTX 201 at 3-4). The Federal Reserve
waived the usual five-day waiting period to make these approvals (PTX 220; PTX
(b) On November 10, 2008, the Board of Governors approved American Express
Company’s application to become a bank holding company upon conversion of
American Express’s subsidiary American Express Centurion Bank, an industrial
loan company, into a bank (PTX 1833).
(c) On December 24, 2008, the Federal Reserve approved GMAC LLC’s
(“GMAC”), General Motors’ partially-owned banking subsidiary, application to
form a bank holding company. (PTX 554 at 43; PTX 391 at 1, 10, 12).
(d) In August 2008, AIG outside counsel Cohen discussed with Defendant
whether AIG converting its thrift into a bank would increase AIG’s chances of
becoming a bank holding company. Government officials told Cohen such a
conversion would not make a difference (Cohen Dep. 113:21-24).

7.3.3 Defendant refused the suggestion that it provide AIG with a
guarantee while providing guarantees to others.
(a) During a meeting with representatives from JP Morgan, Goldman Sachs, and
FRBNY on September 15 or 16, 2008, Dinallo suggested that Defendant
guarantee AIG’s liabilities (Dinallo Dep. 161:24-166:6). Dinallo’s suggestion
was “slapped” down by Government officials (Dinallo Dep. 95:22).

7.4 Defendant discouraged private parties and the public from providing
liquidity to AIG by telling private parties that Defendant would not provide
any assistance to AIG.
7.4.1 Defendant repeatedly told private parties and the public, including
as late as September 15, that there would be no federal assistance for
(a) Around 11 am on September 15, 2008, Willumstad, New York State
Insurance Superintendent Dinallo, Geithner, Treasury contractor Dan Jester, and
other Government officials, as well as representatives of Morgan Stanley, JP
Morgan, and Goldman Sachs attended a meeting concerning AIG at FRBNY
(Dinallo Dep. 86:7-89:23). Geithner stated during the meeting that “just so it’s
clear, there’s no federal government money” or words to that effect (Dinallo Dep.

7.5 Defendant did not allow AIG management or AIG’s largest shareholder to
participate in the September 15-16, 2008 discussions between the Defendant,
JP Morgan, and Goldman Sachs concerning AIG.
(a) On September 15 and 16, 2008, “AIG did not participate in” and “was not
invited” to any meetings the Government had with JP Morgan and Goldman
Sachs concerning potential financing arrangements for AIG. (PTX 620 at 7; see
also PTX 587 at 116; Willumstad (Oct. 15, 2013) Dep. 239:12-240:22).
(b) On or before September 16, 2008, FRBNY declined to offer Greenberg a seat
at the table. Defendant intentionally excluded Greenberg and Starr – the largest
individual shareholder and former CEO of AIG, who was very familiar with all
aspects of the company, and the largest institutional shareholders – from the
meetings hosted by FRBNY on September 15 and 16, 2008 (see PTX 109;
Geithner Dep. 213:11-21).

7.7 On September 16, 2008, Defendant directly discouraged the New York State
Government from assisting AIG.
7.7.1 Around noon on September 15, 2008, New York Governor David
Paterson announced that he had “directed” the New York State
Insurance Department to permit AIG to access approximately $20
billion in liquid assets from certain AIG insurance subsidiaries. He
also urged the federal government to be involved in some type of
arrangement, whereby AIG would have the necessary resources and
bridge loans to tide AIG over until it could resolve its liquidity
problems. (PTX 61 at 1; see also PTX 67 at 1).

8.1 On the afternoon of September 16, 2008, the Federal Reserve determined
that it was in the national interest to offer an $85 billion 13(3) credit to AIG.
(a) Minutes of the Board of Governors September 16 meeting: “Given the unusual and
exigent circumstances, the Board authorized the Federal Reserve Bank of New York
under section 13(3) of the Federal Reserve Act to extend credit to AIG or any of its
subsidiaries, in an amount up to $85 billion” (JX 63 at 2).
(b) September 17, 2008 “Guidance” distributed to presidents of the Federal Reserve
Banks, copying Governors Donald Kohn, Randall Kroszner, Elizabeth Duke, and Kevin
Warsh: “The Board, with the full support and engagement of the Treasury Department,
decided late in the day yesterday to authorize the FRBNY to lend up to $85 billion to the
American International Group (AIG) under Section 13(3) of the Federal Reserve Act”
(PTX 122 at 2).
8.2 On September 16 after the Board of Governors meeting, Geithner called
Willumstad and offered AIG an $85 billion 13(3) credit.
(a) “I get on the phone with Willumstad and basically said we’re going to send you a
term sheet, you’re not going to like it, but you have an hour to get your Board to approve
it, two hours, we gave them a deadline, and you are not going to be running the
company” (PTX 673 at 24).

9.1 The only term sheet approved by the Board of Governors provided that
Defendant’s 79.9% equity interest in AIG would be in the form of warrants.
9.1.1 The Summary of Terms attached to the minutes of the September
16, 2008 meeting of the Federal Reserve’s Board of Governors was
the only term sheet reviewed and approved by the Board of
Governors in connection with Defendant’s loan to AIG (JX 63 at 5-
9.1.2 The term sheet approved by the Board of Governors states that the
form of equity interest will be: “Warrants for the purchase of
common stock of AIG representing 79.9% of the common stock of
AIG on a fully-diluted basis” (JX 63 at 6).
9.1.3 The term sheet approved by the Board of Governors includes a
“Summary of Terms of Warrants” which states that “Shareholder
Approval” was “Required to issue stock above authorized by
unissued shares”; provides when “The warrants may be exercised”;
and discusses the warrants’ “Exercise Price” (JX 63 at 10).
9.1.4 The Board of Governors did not discuss or authorize taking AIG
equity in any form other than warrants (JX 63).
(a) As of September 16, 2008, AIG expected that Defendant’s ownership would be in the
form of non-voting warrants (PTX 445 at 17; AIG 30(b)(6) (Reeder) Dep. 76:11-16;
Cohen Dep. 139:1-8).
9.3.1 Under New York Stock Exchange (“NYSE”) Listed Company
Manual Rule 312.03, shareholder approval is required prior to the
issuance of warrants exercisable into more than 20 percent of the
voting power of a corporation’s common stock (JX 75 at 2; JX 240 at
94-95) unless a company invokes an exception to Rule 312.03 that
waives the requirement of a shareholder vote when: “(1) the delay in
securing shareholder approval would seriously jeopardize the
financial viability of the Corporation’s enterprise and (2) reliance by
the Corporation on such exception is expressly approved by the
Audit Committee of the Board” (JX 75 at 2; JX 240 at 96).
9.3.2 On September 16, 2008, the Audit Committee of the AIG Board
approved the issuance of warrants without shareholder approval
under Rule 312.05 of the NYSE Listed Company Manual (JX 75 at 
(a) On the afternoon of September 16, 2008, Geithner told Willumstad that he was going 
to send him a term sheet and that Willumstad was “not going to like it, but you have an 
hour to get your Board to approve it, two hours, we gave them a deadline” (PTX 673 at 
(b) Geithner: The AIG Board “had no option”
(c) 2011 GAO Report: The “terms of the Government’s offer were unacceptable, given a 
high interest rate and the large stake in the company—79.9%—the government would 
take at the expense of current shareholders. AIG executives telephoned FRBNY officials 
during the AIG board meeting in an effort to negotiate terms of the Revolving Credit 
Facility, but the FRBNY officials said the terms were nonnegotiable and that the 
company had no obligation to accept the offer” (PTX 641 at 42-43). 
(d) During the September 16 Board meeting: “The Board as a whole instructed its 
advisors to go back to the government to negotiate for better terms” (JX 74 at 11) but 
Defendant refused to negotiate (id. at 12).
(e) FRBNY General Counsel Baxter’s handwritten notes reflect Defendant refused to 
reduce the percentage of equity it would take and refused to include a “fiduciary out”
provision for AIG in the agreement (JX 52 at 20).
12.1.3 Aside from Willumstad, no AIG Board member saw a term sheet on 
September 16, 2008. 
(a) During the September 16, 2008 Board meeting, AIG’s Board of Directors 
were not shown a term sheet. Instead, Defendant’s terms were orally described to 
the AIG Board of Directors (see Willumstad (Oct. 15, 2013) Dep. 276:2-13; 
Feldstein Dep. 67:15-69:11, 122:23-123:13; Simpson Thacher 30(b)(6) (Nathan) 
73:21-74:21; Kelly Dep. 51:6-13).
13.1 On September 16, 2008, prior to any discussions with the AIG Board, 
Defendant fired Willumstad as CEO of AIG and replaced him with a CEO of 
Defendant’s own choosing. 
(a) Paulson on the morning of September 16, 2008: “I worked on finding a new CEO for 
the company. . . . I asked Ken Wilson to drop everything and help. Within three hours he 
had pinpointed Ed Liddy, the retired CEO of Allstate” and Paulson “offered Ed the 
position of AIG chief on the spot” (PTX 706 at 263).
(b) Willumstad left on September 16 because “I was terminated by Mr. Paulson” (PTX 
617 at 68).
(c) At the September 18, 2008 AIG Board meeting the Board was informed that AIG 
CEO Edward Liddy (“Liddy”) understood “the Department of the Treasury and Federal 
Reserve Bank of New York to expect, that Mr. Liddy would be both Chief Executive 
Officer and Chairman” (JX 94 at 2).
13.8 Starting on September 17, 2008, Defendant began to implement a liquidation 
plan for AIG.
(a) Senior Federal Reserve officials on or around September 17, 2008: “An eventual 
liquidation of the company is most likely” (PTX 113 at 1).
(b) Paulson on Meet the Press on September 21, 2008: “what the government did was 
come in in a senior position, senior to the senior debt, well ahead of the shareholders, 
with, as you said, an $85 billion funding facility to allow the government to liquidate this 
company in a way in which it – we avoided a real catastrophe in our financial markets” 
(PTX 205 at 4).
14.1 Defendant drafted the Credit Agreement.
(a) Davis Polk as counsel to FRBNY had “responsibility for the drafting of . . . both the 
credit agreement and what became Annex D to the credit agreement” (Davis Polk 
30(b)(6) (Brandow) Dep. 77:15-77:25).
(b) FRBNY staff, in an interview with GAO: “That’s why there was language in the RCF 
that would allow the Fed to force changes in the support package without AIG consent” 
(PTX 634 at 4).
14.2 A summary of the Credit Agreement terms was presented to the AIG Board 
for the first time the evening of September 21.
(a) At 6:31pm on September 21, 2008, Eric Litzky (AIG Special Counsel and Secretary 
to the Board of Directors) emailed the AIG Board: “Attached is a summary of the terms 
of the Convertible Participating Serial Preferred Stock, which represents the United 
States Government equity participation. The terms of the Preferred Stock will be 
presented to the AIG Board at the Board meeting tonight” (PTX 196 at 1, 3).
14.3 Prior to the evening of September 21, the AIG Board had not been given any 
indication that Defendant was demanding equity in the form of voting 
preferred stock (AIG 30(b)(6) (Reeder) Dep. 105:8-13; Miles Dep. 154:9-25).
(a) Minutes of the September 21, 2008 AIG Board meeting: Although “the Board had 
originally been led to believe that the form of equity participation by the Treasury 
Department would be warrants, the form of equity participation to be issued in 
connection with the Credit Agreement is now proposed to be convertible preferred stock, 
the terms of which were reflected in a term sheet delivered to Board members prior to the 
meeting” (JX 103 at 3).
14.4 Even at the September 21 Board meeting, the AIG Board was not given a 
copy of the draft credit agreement.
(a) AIG Director Miles Offit:
“Q. Do you recall seeing a draft of a credit agreement document either during this 
meeting or sometime afterward? 
A. I do not” (Offit Dep. 179:16-19). 
15.1 The form of equity was material to AIG.
(a) AIG General Counsel and Chief Compliance and Regulatory Officer Anastasia Kelly 
emailed AIG executives and staff on September 21, 2008, at 9:27am regarding the 
forthcoming Credit Agreement: “We have not yet received the equity piece, which is the 
most important” (PTX 182 at 1). 
(b) At the September 21, 2008 AIG Board meeting: “Members of the Board noted that 
the change from warrants to preferred stock would give the Bank current voting rights 
and would not require shareholder approval to the issuance” (JX 103 at 3). 
15.2 Defendant changed the form of equity from non-voting warrants to voting 
convertible preferred stock in order to obtain immediate control of AIG. 
(a) “FRBNY considered whether it should seek equity in the form of warrants, but 
concluded that, among other shortcomings, this approach would not be consistent with all 
of its objectives because the warrants would not carry voting rights until exercised” (Def. 
Resp. to Pl. 2nd Interrogatories No. 2). 
(b) “If warrants were issued, how would anybody who got the warrants have the power 
to be the majority shareholder. The difficulty was with warrants, that you couldn’t 
exercise the power to vote, that would be a problem” (Baxter Dep. 212:18-23).
15.3 Defendant wanted immediate control of AIG to prevent AIG’s common 
shareholders from rejecting the terms of the Credit Agreement
(a) Treasury Counsel Stephen Albrecht to Treasury personnel responsible for “AIG 
Preferred Stock – Fed Credit Agreement”: “We originally pushed for voting rights to help 
fend off the shareholder attempts to ‘reclaim’ the company” (PTX 349 at 1). 
(b) “Major shareholders are trying to help pay off the federal government’s loan to 
American International Group Inc. in time to avoid having Washington take an 80% stake 
in the company” (PTX 179 at 1). 
(c) “AIG shareholders are seeking to pay off the loan quickly so a government takeover 
of the company could be averted” (PTX 179 at 1). 
(d) “AIG said Sept. 18 it would give the U.S. warrants entitling the government to get 
common shares equal to a 79.9 percent stake. Some investors surmised that the U.S. 
might hold onto the warrants for long enough for them to find enough new cash to make 
the government takeover unnecessary. . . . The company yesterday said the Treasury will 
instead get preferred shares with voting rights, guaranteeing the U.S. will control the 
outcome of any shareholder vote” (PTX 1658 at 2).

15.4 Defendant changed the form of equity from non-voting warrants to voting 
convertible preferred stock to avoid the shareholder vote that would be 
required to issue warrants.  after the board signed the terms.

15.6 Defendant required AIG not to comply with NYSE rules that required 10 
days notice to shareholders if a company planned to waive the rule requiring 
a shareholder vote for the issuance of preferred stock representing more 
than 20% of a company’s voting control.
(a) “A company relying on this exception must mail to all shareholders not later than 10 
days before issuance of the securities a letter alerting them to its omission to seek the 
shareholder approval” (JX 240 at 96).

16.1 The Board of Governors authorized a 13(3) loan to AIG based on a term 
sheet that called for warrants and did not mention a Trust. 
(a) The only term sheet considered by the Board of Governors provided that Defendant’s 
equity interest would be “Warrants for the purchase of common stock of AIG 
representing 79.9% of the common stock of AIG on a fully-diluted basis” (JX 63 at 6) 
and that “shareholder approval” would be required to issue stock above what was then 
authorized (JX 63 at 10). 
(b) The Board of Governors did not discuss or consider requiring AIG to issue voting 
convertible preferred stock or FRBNY’s creating a Trust (JX 63).
(c) Bernanke: “I don’t recall really any substantive discussion” about the “formation of 
the Trust” (Bernanke Dep. 192:1-16).
16.2 After September 16, 2008, none of the individual members of the Board of
Governors had any further involvement in how to structure the credit 
facility, how much to provide, or when to provide it.
(a) United States 30(b)(6) (Greenlee), Murray v. Geithner, Dep. 29:17-21:
“Q. So your testimony here today is that the Federal Reserve Board took no decision 
regarding that particular structure versus any other structure that the Federal Reserve 
Bank of New York might have used?
A. Yes” (PTX 545 at 29). 
(b) United States 30(b)(6) (Greenlee), Murray v. Geithner, Dep. 32:15-20:
“Q. So is it your testimony here today, Mr. Greenlee, that after September 16th none of 
the individual board members – and that includes Chairman Bernanke – had any further 
involvement in the decision as to how to structure the credit facility, how much to 
provide, when to provide it? 
A. Yes” (PTX 545 at 32).
16.3 The Board of Governors did not vote to approve the Credit Agreement
(a) The “United States admits that the Credit Agreement was not presented to the Board 
of Governors for a formal vote” (Def. Resp. to Pl. 2nd RFAs No. 550). 
(b) The Board of Governors “did not hold a meeting or vote to consider the terms of the 
Credit Agreement separate and apart from the two-part meeting on September 16, 2008” 
(Def. Resp. to Pl. 3rd Interrogatories No. 5).
16.4 The Board of Governors did not learn that FRBNY would demand voting 
convertible preferred stock or that FRBNY would create a Trust until after 
September 16, 2008.
(a) Bernanke was informed “a couple of days after September 16” that “the warrants had 
been changed to a preferred stock issuance and that there would be a Trust” (Bernanke 
Dep. 94:15-22).

18.1 The AIG Board of Directors’ outside counsel, Rodgin Cohen of Sullivan & 
Cromwell LLP, advised the Board during the September 21, 2008 meeting 
that “bankruptcy was a considerably worse alternative now than it was 
previously,” (JX 103 at 6), and that “if the Board accepted the Bank 
transaction, the Board would have properly exercised its business 
judgment,” but that “if the Board chose to file for bankruptcy, he was not 
prepared to render a similar opinion to the Board” (JX 103 at 5-6). (See also 
Bollenbach (Dec. 4, 2013) Dep. 165:6-25.)
18.1.1 By contrast, during the September 16, 2008 AIG Board meeting, 
Cohen had advised the Board that it “could accept either option” of 
accepting the proposed credit facility or filing for bankruptcy “if the 
Board believed in good faith that that option was in the best interests 
of the constituencies to whom the Board now owes its duties” (JX 74 
at 5). 
18.2 AIG’s Board had “no choice” except to accept Defendant’s offer on 
Defendant’s terms.
(a) Geithner: the AIG Board “had no option” (PTX 673 at 24).

(b) The minutes of the September 21 AIG Board meeting report: “Several of the directors 
commented that they did not feel as though they had any choice” (JX 103 at 5) and notes 
of the meeting state “GM [George Miles] doesn’t think we had choice” and “VR 
[Virginia Rometty]: don’t have choice” (PTX 195 at 4).
(c) On September 22, 2008, Jacob Frenkel, Vice Chairman of AIG and a former 
Governor of the Bank of Israel, wrote that the Board’s approval of the Credit Agreement 
“should not be confused with approval of the robbery – the government stole at a 
gunpoint 80 percent of the company” (PTX 228 at 1). 

18.3 The Credit Agreement was signed by Liddy on behalf of AIG (Def. Resp. to 
Pl. 2nd RFAs No. 457; JX 110 at 66) on the morning of September 23, 2008, 
with an effective date of September 22, 2008 (JX 110 at 1, 3). 
18.4 AIG’s obligation to issue to Defendant voting preferred stock representing 
79.9% of the shareholders’ equity and voting control (JX 107 at 46, § 5.11) 
was fixed as of the execution of the Credit Agreement even if Defendant later 
unilaterally substituted a different financing structure.

LIDDY worked for Goldman Sachs. 

(a) Def. Resp. to Pl. 1st RFAs No. 18.0: Since “1938 no federal reserve bank has 
received equity in any company in exchange for providing that company access to credit 
under Section 13(3).” 

20.1 Government officials neither conducted nor were aware of any analysis 
concerning the requirement of a 79.9% equity interest as a condition of the 
13(3) loan to AIG. 

21.1 The Federal Reserve had no authority to purchase or hold equity.
(a) Geithner: “Under section 13(3) of the Federal Reserve Act, the Fed is prohibited from 
taking equity or unsecured debt positions in a firm” (PTX 409 at 177).
(b) Bernanke: “The Federal Reserve is authorized under the Federal Reserve Act to 
extend credit in various forms, but is not authorized to purchase equity securities of 
financial institutions” (PTX 363 at 2).
(c) Bernanke: We “had only one tool, and that tool was the ability of the Federal Reserve 
under 13(3) authority to lend money against collateral. Not to put capital into a company 
but only to lend against collateral” (PTX 548 at 28).
(d) Paulson, referring to the Federal Reserve: “They legally couldn’t do preferred. They 
legally could only make a loan” (PTX 417 at 11).
(e) “The Federal Reserve is only, by statute only allowed to extend credit to 
organizations. It is not empowered to make any type of investments or equity injections” 
(PTX 545 at 82). 
(f) “FRBNY does not have authority to purchase equity under the Federal Reserve Act” 
(PTX 361 at 12).
(g) “Corporate debt and equity instruments are not included among the assets that may be 
acquired under Section 14” of the Federal Reserve Act (PTX 336 at 1 n.2).
(h) FRBNY General Counsel Thomas Baxter wrote to Federal Reserve General Counsel 
Scott Alvarez confirming “we agree that there is no power” for the Federal Reserve “to 
hold AIG shares” (PTX 320 at 1).
(i) FRBNY’s independent auditor Deloitte: “FRBNY cannot legally control a 
commercial company, and therefore it is not appropriate for them to consolidate an entity 
it cannot legally own” (PTX 448 at 6).
21.2 In September 2008, Treasury had no authority to purchase or hold equity.
(a) Defendant’s Rule 30(b)(6) witness: The “Treasury Department as of September of 
2008 had no budgetary authority to invest in equities, securities of any financial 
institution” (US 30(b)(6) (Millstein) (Dec. 18, 2012) Dep. 75:19-76:10).
(b) FRBNY counsel to Federal Reserve Board officials on September 17, 2008, 
concerning “Issues with regard to the NY Fed/Treasury’s equity participation in AIG:” 
Treasury “consider themselves legally unable to assume ownership. This leaves the 
NYFed as Treasury’s place to house the equity position” (PTX 143 at 2)
(c) September 17, 2008 report of Treasury’s external counsel at Wachtell: “Treasury 
legal is telling, as per doj, that they cannot hold voting shares” (PTX 135 at 1).
(d) TARP Chief Investment Officer Jim Lambright: In “September when the Fed 
extended the credit facility, the government didn’t have an equity tool” (PTX 402 at 7).
(e) Board of Governors Legal Division: “We understand that the Treasury lacks the legal 
authority to hold directly voting stock of AIG” (PTX 370 at 3). (See Alvarez Dep. 86:6-
(f) Paulson: 
“Q. And prior to TARP’s approval, Treasury did not have the authority to purchase 
equity, either. Right? 
A. Correct.” (Paulson Dep. 177:17-21). (See also PTX 362 at 1; PTX 278 at 20.)

(g) Even though Congress provided Treasury with authority to purchase equity in EESA, 
12 U.S.C. § 5223, that authority was still far more limited than the taking and/or illegal 
exaction provided for by the Credit Agreement. See COL ¶¶ 92-94. As FRBNY 
Assistant General Counsel Stephanie Heller recognized in March 19, 2009: “There were 
questions at that time which continue today as to whether Treasury or the FRBNY have 
authority to ‘own’ voting shares of a company. As I mentioned, the TARP legislation 
(section 113(d)) suggests that Treasury cannot have voting control” (PTX 2067 at 1).

22.5 The Trust was nothing more than a legal shell for Defendant.
22.5.1 Defendant was always the beneficiary of AIG Equity in all its forms.
(a) FRBNY paid $500,000 for the Series C Preferred Stock at the closing of the 
Credit Agreement, for which it would be reimbursed by the Trust (PTX 1635 at 
(b) The Trust ultimately reimbursed FRBNY for the payment of the $500,000 
credit given to AIG after the Trust was created (JX 107 at 37-38; PTX 448 at 2; 
PTX 1635 at 1; PTX 2009 at 1).
(c) The “United States performed the accounting and reporting on its financial 
statements for its beneficial interest in the Preferred Stock held by the Trust” 
(Def. Resp. to Pl. 2nd Set of RFAs No. 748).
(d) The 2009, 2010 and 2011 Financial Reports of the United States Government 
reflect the value of the United States’ beneficial interest in the Preferred Stock as 
of September 30, 2009 and as of September 30, 2010 (Def. Resp. to Pl. 2nd Set of 
RFAs No. 752). 
(e) Although the Trust held the Preferred Shares, it never held the AIG common 
stock. (Def. Resp. to Pl. 2nd Set of RFAs No. 745). The Trust dissolved on 
January 14, 2011 without having ever held or sold any AIG Common Stock (id.
Nos. 745-747).
(f) The Recapitalization Plan resulted in the direct transfer of AIG common stock 
exchange for the Series C Preferred Stock to Defendant (Def. Resp. to Pl. 2nd Set 
of RFAs No. 740). 
(g) Defendant eventually sold the common stock, holding on to the cash proceeds 
(Def. Resp. to Pl. 2nd Set of RFAs No. 741-744).
(h) In sum, there is no meaningful distinction between identifying the beneficiary 
of the Trust as the United States Treasury or the Department of the Treasury (JX 
106 at 1-2).

25.1.4 On or about March 26, 2014 Bank of America agreed to pay $9.3 
billion to settle claims brought by the Federal Housing Financing 
Agency under its statutory mandate to recover losses incurred by 
Fannie Mae and Freddie Mac accusing the bank of misrepresenting 
the quality of loans underlying residential mortgage-backed 
securities purchased by the two mortgage finance companies 
between 2005 and 2007 (PTX 2504).

26.2 AIG in fact did not take excessive risk from an ex ante standpoint (the only 
standpoint relevant to fault). 
(a) Scott Polakoff, Acting Director, Office of Thrift Supervision: “AIGFP’s role was not 
underwriting, securitizing, or investing in subprime mortgages” (PTX 449 at 58). 
(b) As of September 2008, AIGFP’s Multi-Sector CDS Portfolio accounted for 
approximately 3 percent of the notional value of AIGFP’s total credit and non-credit 
derivatives exposure, and less than 20 percent of AIGFP’s total credit derivatives 
portfolio (PTX 589 at 31-32). 
(c) Office of Thrift Supervision Acting Director Polakoff: “AIGFP’s procedures required 
modeling based on simulated periods of extended recessionary environments (i.e., ratings 
downgrade, default, loss, recovery). Up until June 2007, the results of the AIGFP models 
indicated that the risk of loss was a remote possibility, even under worst-case scenarios. 
The model used mainstream assumptions that were generally acceptable to the rating 
agencies, PwC, and AIG” (PTX 449 at 59). 
26.3 The collateral calls AIGFP was facing were based on artificially depressed 
prices driven in part by lack of information, which in turn led to 
indiscriminate liquidity flight, and market failure.

(a) Geithner: “As the crisis escalated, markets continued to run from mortgage assets that 
looked toxic, and as investors shunned them, they became toxic” (PTX 709 at 154).
26.3.1 Financial firms such as AIG are “particularly vulnerable” to a 
“crisis of confidence and panic selling” (PTX 168 at 1)

In September 2008, Defendant provided emergency assistance to money 
market funds.
(b) On September 19, 2008, Paulson announced that Treasury would use up to $50 
billion of the Exchange Stabilization Fund to guarantee shares in money market funds. 
(PTX 171). The announcement, combined with the other Federal Reserve provisions of 
liquidity to the broader markets, “helped prevent other funds from breaking the buck” 
(PTX 709 at 218-19).

26.12 In September 2008, Defendant allowed Morgan Stanley and Goldman Sachs 
to become bank holding companies.
26.12.1 On September 18-19, 2008, Defendant concluded that Morgan 
Stanley and Goldman Sachs would fail without additional assistance.

(a) By the morning of September 18, 2008, the remaining investment banks 
“were under siege”. Morgan Stanley’s clients withdrew $32 billion from the firm. 
Even Goldman Sachs, the strongest of the investment banks, lost approximately 
$60 billion in liquidity in a week. As Geithner would later acknowledge, 
“Goldman was getting killed” (PTX 709 at 214-15). 
(b) Geithner: On the morning of September 18, 2008, “I thought the investment 
banks were doomed, and I was worried about several major commercial banks. 
As the unprecedented runs on money market funds and commercial paper 
accelerated, a wave of defaults by major nonfinancial corporations seemed likely 
as well. My colleagues and I thought we were looking at another global 
depression that would hurt billions of people” (PTX 709 at 215). 
(c) On September 19, 2008, Morgan Stanley and Goldman Sachs expressed 
concerns to FRBNY that they would not be able to open for business on Monday 
(PTX 175 at 1; PTX 174 at 1).

26.12.2 After learning that Morgan Stanley and Goldman Sachs were likely 
to fail, Defendant provided immediate non-punitive assistance by 
allowing them to become bank holding companies. 
(a) On the weekend of September 20-21, 2008, Defendant attempted to find 
potential acquirers for Morgan Stanley and Goldman Sachs, but could not. (PTX 
709 at 220-21). 
(b) On the morning of September 20, 2008, Geithner’s Chief-of-Staff Michael 
Silva reported to several senior officials at FRBNY that options being actively 
discussed for Morgan Stanley and Goldman Sachs included sovereign wealth fund 
capital injections, mergers with or acquisition by a bank, or becoming a bank 
holding company (PTX 174 at 1). 
(c) On September 21, 2008, FRBNY Executive Vice Presidents William Dudley 
and Terrence Checki told Geithner that they were unable to find buyers for 
Goldman Sachs and Morgan Stanley. They proposed the alternative that the 
Federal Reserve approve the conversion of both investment banks into bank 
holding companies like Citi and JP Morgan. The conversion “would create the 
impression that they were under the umbrella of Fed protection” (PTX 709 at 221; 
see also Geithner Dep. 127:6-12). 
(d) Morgan Stanley and Goldman Sachs first applied to be bank holding 
companies on the weekend of September 20-21, 2008 (Checki Dep. 74:12-75:21, 
80:20-23). Morgan Stanley and Goldman Sachs were, “at that point, at the risk of 
failing” (Geithner Dep. 117:7-19).

(e) Neither Morgan Stanley nor Goldman Sachs were regulated by the Federal 
Reserve prior to September 21, 2008 (Morgan Stanley 30(b)(6) (Setya) Dep. 12:3-
15; PTX 202). 
(f) On September 21, 2008, the Federal Reserve announced that it had approved 
the applications of Goldman Sachs and Morgan Stanley to become bank holding 
companies (PTX 198). The Federal Reserve waived the usual five-day waiting 
period to make these approvals (PTX 220). 
(g) The approval of Goldman Sachs’ and Morgan Stanley’s applications to 
become bank holding companies “benefitted” both firms (Geithner Dep. 152:7-
16). Geithner: Morgan Stanley and Goldman Sachs “transformed their business 
structure to avoid failure” (PTX 709 at 272). Absent their conversion into bank 
holding companies, there was “significant risk that both would fail” (Geithner 
Dep. 118:6-14).

26.13 In September 2008, the Federal Reserve continued to provide non-punitive 
assistance to primary dealers, including Morgan Stanley, Merrill Lynch and 
Goldman Sachs.
(a) Geithner: On September 19, 2008, “the SEC temporarily banned the short selling of 
799 financial stocks….The ban’s most immediate beneficiary appeared to be Morgan 
Stanley…. Its liquidity pool had shrunk from $130 billion to $55 billion in a week; it was 
borrowing nearly $70 billion from the Fed to make up the difference. Its stock price fell 
60 percent before word of the short-selling ban leaked” (PTX 709 at 219-20). 
(b) On September 29, 2008, Morgan Stanley’s outstanding borrowing from all federal 
loan facilities was approximately $107 billion (Morgan Stanley 30(b)(6) (Setya) Dep. 
22:9-14, 28:5-10, 29:25-30:15). 
(c) On September 29, 2008, Morgan Stanley’s borrowing from the PDCF exceeded $60 
billion (Morgan Stanley 30(b)(6) (Setya) Dep. 17:18-18:4, 29:25-30:15). 
(d) PDCF borrowing was a benefit for Morgan Stanley because it was a source of 
liquidity (Morgan Stanley 30(b)(6) (Setya) Dep. 19:20-23). 
26.14 In 2008 and 2009, Defendant provided non-punitive assistance to Citigroup 
and Bank of America.
(a) On October 3, 2008, the Emergency Economic Stabilization Act (“EESA”) was 
enacted (P.L. 110-342, Oct. 3, 2008, 122 Stat. 3765). EESA authorized Defendant to 
purchase up to $700 billion in troubled assets (PTX 2156 at 14).
(b) On October 28, 2008, Treasury purchased $125 billion in non-voting preferred stock 
from nine financial institutions, including $15 billion from Bank of America and $25 
billion from Citigroup (PTX 1864 at 8). 
(c) On November 23, 2008, Treasury announced the Targeted Investment Program 
(“TIP”) and Asset Guarantee Programs (“AGP”) (PTX 554 at 20). 
(d) TIP gave Treasury “the necessary flexibility to provide additional or new funding to 
financial institutions that were critical to the functioning of the financial system” (PTX 
554 at 34). Treasury “invested $20 billion in each of Bank of America (BofA) and 
Citigroup under the TIP” (Id.). 
(e) The AGP was designed “to provide protection against the risk of significant loss in a 
pool of assets held by a systemically significant financial institution” (PTX 554 at 36). 
(f) On November 23, 2008, the Federal Reserve, Treasury, and the FDIC announced that 
they would provide a package of guarantees, liquidity access, and capital to Citigroup. 
Case 1:11-cv-00779-TCW Document 281-1 Filed 08/22/14 Page 65 of 99Under the terms of the support package, Defendant guaranteed up to $306 billion in 
assets (PTX 379 at 1, 3).
(g) The Federal Reserve provided its guarantee to Citi using its Section 13(3) authority 
(PTX 379 at 1). 
(h) On December 31, 2008, under TIP, Treasury purchased another $20 billion in 
Citigroup perpetual preferred stock and warrants (PTX 1864 at 4). 
(i) On January 15, 2009, Treasury, FDIC, and the Federal Reserve agreed to provide 
Bank of America with assistance, including the purchase of “an additional $20 billion in 
newly issued senior preferred stock of Bank of America” under TIP (PTX 406 at 1, 3). 
The Defendant also agreed to provide an “Eligible Asset Guarantee” on a pool of assets 
up to $118 billion. (Id. at 6 (Attached “Summary of Terms”)). 
26.15 In 2009, Defendant provided non-punitive assistance to a major insurance 
(a) On June 26, 2009, Treasury purchased $3.4 billion in preferred stock from Hartford 
Financial Services Group, Inc., a thrift holding company primarily engaged in the 
business of insurance (PTX 2150 at 13; PTX 2189 at 203).

27.3.1 The Defendant recruited directors for AIG. 
(a) Defendant admits that “FRBNY employees participated in the recruitment” 
“of new AIG board members” (Def. Resp. to Pl. 2nd RFAs No. 806).
(b) FRBNY Vice President Dahlgren told Michael Hsu of Treasury that the Board 
of Governors “wanted FRBNY to have people lined up to replace the board of 
directors” (PTX 428).
(c) In April 2009, Defendant planned to replace the Board of Directors and 
appoint two lead directors to serve as the “governmental face of” AIG. Defendant 
also planned to require the new directors to replace AIG management (PTX 496 
at 3).
(d) On April 3, 2009 FRBNY Vice President Dahlgren told Liddy that Treasury 
“would be recruiting two very high profile directors (‘wow factor’) in the 
immediate term” (PTX 2077 at 1).
27.3.2 Defendant decided which directors would stay and which would be 
(a) AIG Director Martin Feldstein left the Board because Treasury “decided that 
it wanted to have different representation on the Board” (Feldstein Dep. 259:20-
(b) Defendant asked AIG Director George Miles to “stay on and then, over the 
course, they’d put new directors on and then we would resign.” He agreed to do 
so (Miles Dep. 183:4-185:25).
(c) AIG Director Bollenbach “chose not to stand for reelection to AIG’s board” 
because Defendant proposed that he “stand for reelection, but then be prepared to 
resign when someone else was brought on” (Bollenbach Dep. (Dec. 4, 2013) 
(d) With respect to the election of directors to the AIG Board proposed in the 
2009 proxy statement, Glass Lewis, a proxy advisory service which provided the 
AIG Board of Directors with an analysis on June 18, 2009 of the proxy statement 
for the 2009 annual meeting of AIG shareholder, stated: “Following the 
resignation of Mr. Bollenbach from the board at the 2009 annual meeting, the 
Company will not have an independent chairman or an independent lead or 
presiding director” (PTX 528 at 58).
(e) At the June 30, 2009 annual meeting of AIG shareholders, six new directors 
were elected to AIG’s Board (JX 251 at 22-23). All were selected by Defendant.
(f) In 2010, Treasury appointed Donald H. Layton and Ronald A. Rittenmeyer to 
AIG’s Board of Directors pursuant to its rights under the Series E and F Preferred 
Stock (JX 256 at 2).
(g) The terms of the Series E and Series F stock did not impose any restrictions 
on Treasury’s discretion in appointing directors (JX 208 at 4).

29.3 Defendant developed the Reverse Stock Split as an alternative in order to 
circumvent the shareholder vote requirement.
(a) A November 19, 2008 e-mail from FRBNY outside counsel James Brandow, Davis 
Polk & Wardwell LLP: We “have an alternative for the sale of the investment if the 
convertible preferred can’t be converted” (JX 156 at 1). 
(b) A December 19, 2008 draft AIG proxy statement received by Defendant includes 
votes on charter amendments necessary to enable conversion of the Series C Preferred 
Stock as well as a proposed reverse stock split of outstanding common stock at a ratio of 
one for ten (JX 164 at 4; Def. Resp. to Pl. 2nd Interrogatories No. 5).
(c) A member of the FRBNY Monitoring Team attended the February 10, 2009 meeting 
of the Finance Committee of the AIG Board of Directors at which the ratio for the 
proposed reverse stock split was discussed (JX 178 at 1, 7).
29.3.1 In order to implement Defendant’s planned “exchange,” it was still 
necessary to have enough common shares to satisfy Defendant’s 
desire to exchange its AIG preferred stock for AIG common stock.
29.3.2 Defendant caused AIG to engage in a 20 to 1 reverse stock split 
(“RSS”) that applied only to issued shares and not authorized shares 
(JX 197 at 2; JX 201 at 5).
29.4 The Reverse Stock Split was coercive and deceptive.

30.1 Defendant paid only $500,000 for 79.9% of AIG’s shareholders’ equity.
30.1.1 The only payment made to AIG for AIG’s Series C Preferred Stock 
was $500,000 in loan forgiveness that FRBNY provided to AIG in 
September 2008 (JX 107 at 37-38 § 4.02(e), 138).
30.1.2 As AIG’s Senior Vice President Brian Schreiber on January 13, 
2010 told the AIG Board of Directors: The “Treasury Department’s 
priority is the repayment of the Series E and Series F Preferred 
Stock, as the Series C was essentially received for nothing” (PTX 584 
at 17).
(a) A presentation for the AIG Board of Directors by Bank of America and Citi 
on September 29, 2010: “Series C was received by UST for no financial 
consideration; merely to obtain governance rights until FRBNY Facility repaid” 
(PTX 609 at 86).
30.2 Defendant asserts that market-based valuations are the most reliable way to 
value equity generally and Defendant’s 79.9% equity interest in AIG 

(a) Bernanke: 
“THE WITNESS: I don’t think that economists can do much better than seeing the share 
price in terms of valuing a company.
Q. So from, from your perspective, the best an economist can do to figure out what the 
value of the company is is to look at the share price on any given day and multiply it by 
the number of outstanding shares? . . . Is that what you’re saying?
A. That’s what I’m saying” (Bernanke Dep. 163:4-16).
(b) Def. Resp. to Pl. 3rd Interrogatories No. 18: Because “the Series C Preferred Stock 
was economically equivalent to AIG’s common stock and AIG’s common stock was 
actively traded on the New York Stock Exchange, the market value per share of AIG’s 
common stock represented the best independent valuation available for valuing the 
government’s beneficial interest in the Trust.”
30.3 Defendant, AIG, KPMG and Deloitte all utilized market-based approaches to 
calculate the value of Defendant’s 79.9% equity interest. 
(a) “In its annual financial statements for the years ended September 30, 2009 and 2010, 
Treasury recorded the value of its beneficial interest in the Trust based on the market 
Case 1:11-cv-00779-TCW Document 281-1 Filed 08/22/14 Page 82 of 99value of the Trust’s holdings of the AIG Series C Preferred Stock at the date of each such 
financial statement” (Def. Resp. to Pl. 3rd Interrogatories No. 18). 
(b) “The United States admits that its financial statement reported that the value of the 
Government’s beneficial interest in the Trust was $23.5 billion, based on the market 
value of the Trust’s AIG holdings on September 30, 2009” (Def. Resp. to Pl. 2nd RFAs 
No. 658).
(c) AIG in its 10-Q for the third quarter of 2008 reported that the obligation to issue the 
Series C Preferred Stock had a “fair value” of $23 billion (JX 150 at 28). 
(d) KPMG, AIG’s auditor hired to conduct the valuation of the Series C, determined that 
the fair market value of the Series C Preferred Stock as of September 16, 2008 was $23 
billion (PTX 375 at 21). 
(e) On September 21, 2008, Deloitte & Touche, the independent auditor of the Federal 
Reserve System, calculated that Defendant’s 79.9% equity interest in AIG had a value 
approximately $24.478 billion, based on the September 17, 2008 market price for AIG’s 
common stock (PTX 185 at 1-2).

30.5.1 Under a market-based valuation approach, the property taken from 
the AIG common shareholders had a fair market value of $50.449 
billion, $53.442 billion and $35.378 billion on September 22, 23, and 
24, 2008, respectively (PTX 2494 at 29), and, on a per share basis, 
the property taken from the Credit Agreement Class had a fair 
market value of $18.76, $19.88 and $13.16 per share on September 
22, 23, and 24, 2008, respectively (PTX 2494 at 34 ). 
30.6 Defendant sold the common stock exchanged for the Series C Preferred for 
at least $17.6 billion. 
30.6.1 From May 24, 2011 through December 14, 2012, Defendant sold 
1,655,037,962 shares of AIG common stock at prices ranging from 
$29 to $32.50 per share for a total of $51,610,497,475 (see PTX 2453 
at 72). 
30.6.2 Assuming that the common shares received in exchange for Series C 
Preferred are treated as being sold pro rata with common shares 
received in exchange for Series E and F Preferred (which for the 
reasons stated in Findings 29.7 to 29.9 understates what the proceeds 
from the common shares received in exchange for Series C Preferred 
should be) the amount received for the common shares received in 
exchange for the Series C Preferred would be $17.6 billion (Kothari 
Report n.197; PX 2494 at 50).
30.7 The prices received by Defendant for its sales of AIG common shares was 
artificially reduced by damage done to AIG’s business, operations, and assets 
as the result of Defendant’s control over AIG. 
30.7.1 Defendant reduced the value of AIG common shares by giving up 
value to Defendant in ML II and ML III.

(a) Government Accountability Office Interview with AIG Executives: “In 
general, AIG ‘got skinned’ on ML III, with terms unfavorable to the company. 
ML III forced AIG to ‘crystallize’ a loss, which severely hurt existing 
shareholders. This is because they then had no chance of recovery, other than 
through AIG’s minor participation in the structure. There was little upside for 
shareholders if asset values increased, because they had the first loss position, but 
little equity return; nearly all the upside went to the structure. Also, unrealized 
market value losses on the CDOs going into ML III became realized losses when 
the CDS were torn up. Further, collateral that AIG had posted went to the 
counterparties. ‘It was a tough set of terms’” (PTX 620 at 10).
(b) AIG Senior Vice President for Strategic Planning Brian Schreiber: “ML II and 
ML III, when they were created, transferred the bulk of the upside to the Treasury 
or to the Fed at the time. The AIG shareholders, as a result, wouldn’t be able to 
participate fully in the recovery” (Schreiber Dep. 260:10-261:2)

30.7.2 Defendant reduced the value of AIG common shares by not 
negotiating discounts from ML III counterparties and by giving such 
counterparties 100% par value plus releases of claims that had 
substantial value to AIG. 
30.8 Defendant diluted the value of the common stock it received in exchange for 
its Series C Preferred Stock by using its control of AIG to exchange its Series 
E and Series F Preferred Stock for common stock and then selling those 
additional shares pro rata with the shares exchanged for the Series C 
30.8.1 “Between fiscal years 2011 and 2013, the Department sold all of its 
1.7 billion AIG common shares held by the General Fund and TARP 
together, on a pro-rata basis, in the open market” (PTX 685 at 89).
30.9 Defendant reduced the value of the common stock it received in exchange for 
the Series C Preferred Stock by its decision to liquidate when and how it did.
30.9.1 Plaintiffs’ Expert S.P. Kothari: “The choice of when to liquidate 
these securities was an investment decision by the Government” and 
if the Government had “chosen to continue to hold all its AIG stock 
until December 31, 2013” the value of the value of the Series C 
Preferred Stock would have been $28.7 billion (Kothari Report ¶