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Notes to Chapter 9 585

112. Angelo Mozilo, email to John McMurray (cc Dave Sambol, Carlos Garcia), re: Pay Options, Au-
gust 12, 2006; John McMurray, email to Angelo Mozilo (cc Kevin Bartlett, Carlos Garcia, Dave Sambol,
re: Pay Options, August 13, 2006.
113. The cost of borrowing is reflected by credit spreads, the portion of interest rates that compensate
investors for credit risk. Credit spreads are the interest rates that investors require above the so-called
risk-free interest rate, usually measured in terms of Treasuries or interest rate swaps with similar charac-
teristics.
114. Congressional Oversight Panel, “Commercial Real Estate Losses and the Risk to Financial Stabil-
ity,” February 10, 2010, pp. 58–60.
115. Loan Syndication Trading Association, “The US Loan Market Today,” presentation.
116. Loan Syndication Trading Association, “Financial Reform and the Leveraged Loan Market,”
presentation.
117. Ibid., Loan Syndication Trading Association, “Challenges Facing CLOs … and the Loan Market,”
presentation.
118. Ibid., p. 14. SEC, “Risk Management Reviews at Consolidated Supervised Entities,” memoran-
dum, April 26, 2007.
119. Michael Flaherty and Dena Aubin, “For Private Equity Market, All Eyes on First Data,” Reuters,
September 4, 2007.
120. SEC, “Risk Management Reviews of Consoldated Supervised Entities,” memorandum, July 5,
2007.
121. Charles Prince, quoted in “Citigroup chief stays bullish on buyouts,” Financial Times, July 9,
2007; testimony before the FCIC, Hearing on Subprime Lending and Securitization and Government-
Sponsored Enterprises (GSEs), day 2, session 1: Citigroup Senior Management, April 8, 2010, transcript,
pp. 49–50.
122. Roben Farzad, Matthew Goldstein, David Henry, and Christopher Palmeri, “Not So Smart,” Busi-
nessWeek, September 3, 2007.
123. Joseph Gyourko, “Understanding Commercial Real Estate: Just How Different from Housing Is
It?” NBER Working Paper 14708, National Bureau of Economic Research, February 2009, pp. 23, 38.
124. CRE Finance Council, Compendium of Statistics, November 5, 2010, Exhibits 3, 2.
125. Joe Keohane, “Heartbreak Hotels,” Portfolio, November 11, 2008.
126. “Hilton Debt Clogs Lenders’ Balance Sheets,” Commercial Mortgage Alert, February 20, 2009.
127. Tom Marano, interview by FCIC, April 19, 2010.
128. Jeff Mayer and Tom Marano, “Fixed Income Overview,” Bear Stearns, March 29, 2007, p. 18.
129. Gyourko, “Understanding Commercial Real Estate: Just How Different from Housing Is It?” p. 1.
130. New York Federal Reserve Bank, “Maiden Lane LLC Holdings as of 9/30/2008.”
131. Anton R. Valukas, Report of Examiner, In re Lehman Brothers Holdings Inc., et al., Chapter 11
Case No. 08-13555 (JMP), (Bankr. S.D.N.Y.), March 11, 2010, 2:356 (hereafter cited as Valukas).
132. Ibid., 2:356–58.
133. Madelyn Antoncic, “Lehman Brothers Risk Management,” August 7, 2007, p. 5; and Antoncic, in-
terview by FCIC, July 14, 2010.
134. Valukas, 1:43, 4; Antoncic, interview.
135. Valukas, 1:45–62, 79–80.
136. Jody Shenn, “Lehman Said to Return to Mortgage Market through Aurora Unit (Update 1),”
Bloomberg, October 21, 2009.
137. SEC, “Risk Management Reviews of Consolidated Supervised Entities,” memoranda, October 6,
2006; December 6, 2007; February 2, 2007; March 30, 2007; May 31, 2007; July 5, 2007; August 3, 2007;
September 5, 2007; October 5, 2007.
138. Erik Sirri, interview by FCIC, April 1, 2010.
139. Valukas, 1:7; 18 nn. 63, 64; 3: 742, 815–22.
140. Valukas, 1:8, 20–21.
141. The People of the State of New York v. Ernst & Young LLP (N.Y. Sup. Ct. filed Dec. 21, 2010).
142. Ronald Marcus, interview by FCIC, July 23, 2010.
143. See Ronald S. Marcus, OTS, “Report of Examination Lehman Brothers Holdings Inc.,” July 7,
2008, pp. 1–2.