Page 651 - untitled

622 Notes to Chapter 20

60. “Triennial and Regular OTC Derivatives Market Statistics,” Bank of International Settlements
press release, November 16, 2010, p. 7.
61. Moody’s, “Moody’s downgrades WaMu Ratings; outlook negative,” September 11, 2008.
62. “OTS Fact Sheet on Washington Mutual Bank,” OTS 08–046A, September 25, 2008, p. 3.
63. Jamie Dimon, interview by FCIC, October 20, 2010.
64. Sheila Bair, testimony before the FCIC, Hearing on Too Big to Fail: Expectations and Impact of
Extraordinary Government Intervention and the Role of Systemic Risk in the Financial Crisis, day 2: ses-
sion 2: Federal Deposit Insurance Corporation, September 2, 2010, exchange between Bair and Commis-
sioner Douglas Holtz-Eakin, pp. 134, 149.
65. Scott Alvarez, testimony before the FCIC, Hearing on Too Big to Fail: Expectations and Impact of
Extraordinary Government Intervention and the Role of Systemic Risk in the Financial Crisis, day 1, Ses-
sion 1: Wachovia Corporation, September 1, 2010, transcript, p. 84.
66. Kashkari, interview.
67. Greg Feldberg, “Wachovia Case Study,” presentation at LBO Supervision Conference, November
12–13, 2008, Atlanta, Georgia, p. 15. These rules, embodied in section 23A of the Federal Reserve Act,
limit the support that a depository institution can provide to related companies in the same corporate
structure; they are aimed at protecting FDIC-insured depositors from activities that occur outside of the
bank itself. Exemptions have the effect of funding affiliate, nonbank assets within the federal safety net of
insured deposits; they create liquidity for the parent company and/or key affiliates (and reduce bank liq-
uidity) during times of market stress.
68. Robert Steel, interview by FCIC, August 18, 2010.
69. Scott Alvarez, written testimony for the FDIC, September 1, 2010, p. 4.
70. Robert Steel, written testimony before the FCIC, Hearing on Too Big to Fail: Expectations and Im-
pact of Extraordinary Government Intervention and the Role of Systemic Risk in the Financial Crisis,
day 1, session 1: Wachovia Corporation, September 1, 2010, p. 2.
71. David Wilson, interview by FCIC, August 4, 2010.
72. Sheila Bair, interview by FCIC, August 18, 2010.
73. Richard Westerkamp, Federal Reserve Bank of Richmond, interview by FCIC, August 13, 2010.
74. Wachovia was unable to roll $1.1 billion of asset-backed commercial paper that Friday; James
Wigand and Herbert Held, memo to the FDIC Board of Directors, September 29, 2008, p. 2. On brokered
certificates of deposit, see Westerkamp, interview.
75. John Corston, acting deputy director, Division of Supervision and Consumer Protection, FDIC,
written testimony before the FCIC, Hearing on Too Big to Fail: Expectations and Impact of Extraordi-
nary Government Intervention and the Role of Systemic Risk in the Financial Crisis, day 1, Session 1:
Wachovia Corporation, September 1, 2010, p. 4.
76. Wilson, interview.
77. Rich Westerkamp, email to FCIC, November 2, 2010. Westerkamp said that the estimate of early
redemption requests was based on a phone conversation with officials in Wachovia’s treasury depart-
ment, describing their conversations with investors; the figures were never verified.
78. Bair, interview.
79. Robert Steel, interview by FCIC, August 18, 2010.
80. Bair, interview; Steel, interview; FDIC staff, interview by FCIC re Wachovia, July 16, 2010.
81. Alvarez, written testimony for the FCIC, September 1, 2010, p. 5.
82. Steel, interview.
83. Ibid.
84. Wigand and Held, memo to the FDIC board, September 29, 2008, pp. 2, 4–5.
85. Federal Reserve staff, memo to the Board of Governors, subject: “Considerations Regarding In-
voking the Systemic Risk Exception for Wachovia Bank, NA,” September 28, 2008, p. 7.
86. John A. Beebe, Market Risk Team Leader, Federal Reserve Bank of Richmond, memo to Jennifer
Burns, VP-LCBO, “Wachovia Large Funds Providers,” September 27, 2008, pp. 1–2.
87. Federal Reserve staff, memo to the Board of Governors, subject: “Considerations Regarding In-
voking the Systemic Risk Exception for Wachovia Bank, NA,” September 28, 2008, p. 7.
88. Bair, interview; minutes of the telephonic meeting of Federal Deposit Insurance Corporation
Board of Directors, September 29, 2008, p. 8.