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Notes to Chapter 20 619

49. Fed Chairman Ben Bernanke, letter to FCIC Chairman Phil Angelides, December 21, 2010.
50. Federal Reserve Board of Governors, press release, September 16, 2008.
51. Congressional Oversight Panel, “The AIG Rescue, Its Impact on Markets, and the Government’s
Exit Strategy,” June 10, 2010, p. 98.
52. Ibid., executive summary, pp. 1, 8.
53. Treasury spokesman Andrew Williams, quoted in Hugh Son, “AIG’s Rescue Had ‘Poisonous’ Ef-
fect, U.S. Panel Says (Update1),” Bloomberg, June 10, 2010.
54. Scott M. Polakoff, “American International Group’s Impact on the Global Economy: Before, dur-
ing, and after Federal Intervention,” testimony before the. House Committee on Financial Services, Sub-
committee on Capital Markets, Insurance, and Government Sponsored Enterprises, 111th Cong., 1st
sess., March 18, 2009.
55. John Reich, interview by FCIC, May 4, 2010.
56. Michael E. Finn, prepared testimony before the Congressional Oversight Panel, May 26, 2010.
57. C. K. Lee, interview by FCIC, April 28, 2010. See also Memorandum of Understanding between
Scott M. Albinson, managing director, OTS, and Danièle Nouy, secrétaire général de la Commission
Bancaire, April 11, 2005.
58. OTS, Memo to Commission Bancaire regarding its supervisory role, January 2005.
59. Reich, interview.
60. Joseph Gonzalez, interview by FCIC, May 7, 2010.
61. Ibid.
62. OTS, Targeted Review of AIG Financial Products Corp., July 13, 2007.
63. AIG/Goldman Sachs collateral call timeline, p. 50.
64. Brad Waring, interview by FCIC, May 7, 2010.
65. Reich, interview.
66. Ibid.
Chapter 20
1. John J. Mack, written testimony for the FCIC, First Public Hearing of the FCIC, day 1, panel 1: Fi-
nancial Institution Representatives, January 13, 2010, p. 6.
2. Jamie Dimon, interview by FCIC, October 20, 2010.
3. Timothy Geithner, interview by FCIC, November 17, 2009.
4. Timothy Geithner, quoted by Robert Schmidt, “Geithner Slams Bonuses, Says Banks Would Have
Failed (Update2),” Bloomberg, December 4, 2009.
5. Ben Bernanke, closed-door session with FCIC, November 17, 2009.
6. Specifically, the Fed broadened the PDCF to match the types of collateral that the two major clear-
ing banks accepted in the tri-party repo system, including non-investment-grade securities and equities;
previously, PDCF collateral had been limited to investment-grade debt securities. The Fed similarly
broadened the TSLF to include all investment-grade debt securities; previously, TSLF collateral had been
limited to Treasury securities, agency securities, and AAA-rated mortgage-backed and asset-backed se-
curities. The Fed also increased both the frequency of TSLF auctions, to weekly instead of every two
weeks, and their size. Federal Reserve Board press release, September 14, 2008.
7. On September 30, Goldman Sachs had a $15 billion balance in TSLF, and a $16.5 billion balance in
PDCF. Federal Reserve Board, “Regulatory Reform: Usage of Federal Reserve Credit and Liquidity Facil-
ities,” PDCF.
8. Lehman initially asserted that there were around 930,000 derivative transactions at the time of
bankruptcy. See Debtors’ Motion for an Order pursuant to Sections 105 and 365 of the Bankruptcy Code
to Establish Procedures for the Settlement or Assumption and Assignment of Prepetition Derivatives
Contracts, Lehman Brothers Holdings Inc., et al, No. 08-13555 (Bankr. S.D.N.Y. Nov. 13, 2008), p. 4. See
also 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, 2:573. By November 13, 2008, a special facility to
unwind derivatives trades with Lehman had successfully terminated most of the 930,000 derivative con-
tracts. Nevertheless, in January 2009, Lehman’s counsel reported that 18,000 derivatives contracts had
not been terminated. Moreover, there are massive unresolved claims relating to over-the-counter deriva-
tives in the bankruptcy proceeding: as of May 2010, banks had filed more than $50 billion in claims for
losses related to derivatives contracts with Lehman. See Debtors’ Motion for an Order pursuant to