Moynihan: I can’t recall … anythingin Daily Scrounge
Taibbi over on Rolling Stone, took a well deserved swipe at Brian Moynihan is a post earlier this week. Seems the bank CEO is completely oblivious about what went on in his bank for a few years. And while there’s no evidence that he was stoned, Moynihan apparently doesn’t remember much of anything when it comes to Countrywide.
From the article:
When companies like Countrywide issued their giant piles of crappy subprime mortgages and then chopped them up and turned them into AAA-rated securities to sell to suckers around the world, they often had these mortgage-backed securities insured by companies like MBIA or Ambac, to make their customers feel doubly safe about investing in their product.
The pitch firms like Countrywide made went like this: not only are these mortgages triple-A rated by reputable ratings agencies like Moody's, they're fully insured by similarly reputable insurance companies like MBIA. You can't lose!
With protection like that, why shouldn't your state pension fund or foreign trade union buy billions' worth of these mortgage-backed products? It's not like it would ever turn out that Countrywide made those products by trolling the cities of America stuffing mortgages in the pockets of anything with a pulse.
Sure, it’s a pretty big place at BofA and you can’t expect a CEO to know when every employee goes to the bathroom, but when you’re buying up billions of dollars in loans, one would think that the CEO of the bank buying those “shitty loans” would take an active role in the transaction.
Moynihan was deposed last May, but the deposition was only made public this week. You can read the transcript here. In the deposition, attorney Peter Calamari of Quinn Emmanuel, representing MBIA, attempts to ask Moynihan a series of questions about what exactly Bank of America knew about Countrywide's operations at various points in time. Here’s Taibbi’s take on part of the hearing:
Early on, [Calamari] asks Moynihan if he remembers the B of A audit committee discussing Countrywide. Moynihan says he "doesn't recall any specific discussion of it."
He's asked again: In the broadest conceivable sense, do you recall ever attending an audit committee meeting where the word Countrywide or any aspect of the Countrywide transaction was ever discussed? Moynihan: I don't recall.
Calamari counters: It's a multi-billion dollar acquisition, was it not?
Moynihan: Yes, it was. Well, isn't that the kind of thing you would talk about?
Moynihan: not necessarily . . .
This goes on and on for a while, with the Bank of America CEO continually insisting he doesn't remember ever talking about Countrywide at these meetings, that you'd have to "get the minutes." Incredulous, Calamari, a little sarcastically, finally asks Moynihan if he would say he has a good memory.
"I would – I could remember things, yes," Moynihan deadpans. "I have a good memory."
Calamari presses on, eventually asking him about the state of Countrywide when Moynihan became the CEO, leading to the following remarkable exchange, in which the CEO of one of the biggest companies in the world claims not to know anything about the most significant acquisition in the bank's history (emphasis mine):
Q: By January 1st, 2010, when you became the CEO of Bank Of America, CFC – and I'm using the initials CFC, Countrywide Financial Corporation – itself was no longer engaged in any revenue-producing activities; is that right?
Moynihan: I wouldn't be the best person to ask about that because I don't know.
There are no sound effects in the transcript, but you can almost hear an audible gasp at this response. Calamari presses Moynihan on his answer.
"Sir," he says, "you were CEO of Bank Of America in January, 2010, but you don't know what Countrywide Financial Corporation was doing at that time?"
In an impressive display of balls, Moynihan essentially replies that Bank of America is a big company, and it's unrealistic to ask the CEO to know about all of its parts, even the ones that are multi-billion-dollar suckholes about which the firm has been engaged in nearly constant litigation from the moment it acquired the company.
"We have several thousand legal entities," is how Moynihan puts it. "Exactly what subsidiary took place [sic] is not what you do as the CEO. That is [sic] other people's jobs to make sure."
The exasperated MBIA lawyer tries again: If it's true that Moynihan somehow managed to not know anything about the bank's most important and most problematic subsidiary when he became CEO, well, did he ever make an effort to correct that ignorance? "Do you ever come to learn what CFC was doing?" is how the question is posed.
"I'm not sure that I recall exactly what CFC was doing versus other parts," Moynihan sagely concludes.
And in case you missed in the copy above, here’s the link to the transcript of the hearing for all you court doc junkies.