MBIA vs. Countrywide: Why BAC Wants Records Sealed4

Can see why they wanted this –> Bank of America wanted the MBIA vs. Countrywide Transcript released yesterday to remain sealed – “Defendant Bank of America Corporation’s motion for a protective order is denied.”

From Manal Mehta of Sunesis Capital


“Defendant Bank of America Corporation’s motion for a protective order is denied.”



JUDGE BRANSTEN: No, this case has been doing on now, frankly, it seems to me, for years, and it’s coming to a conclusion because this is a ’08 case.  As far as I remember, 2012 was four years later, and it’s true, Bank of America sort of began its real involvement later in the case, but nevertheless, they were aware of everything that Countrywide was doing.  It’s not like it’s something new.  Countrywide got and received many delay times and, frankly, Bank of America can’t do the same amount of delaying.  I am going to get this case to trial if that’s the last thing I do in my tenure, which, you know, one day will end, and I want to it end before – I want MBIA to be basically done before my tenure ends, and that means we have to get going on it.  We can’t delay another four years before we get anywhere close to getting things done.  So that’s the reason why it’s beginning to be push time.


And we’re getting close to, hey, I am getting a little annoyed at the constant delay in this case.  Four years later?  No good.  Four years later we get it done.


MR. ROSENBERG (BAC ATTORNEY): As your honor knows, our position is that Bank of America provided approximately $50 billion in value for the assets it purchased from Countrywide, and those assets are not easily valued.  It requires testimony in order to value those assets.  We’re talking about loans and mortgage servicing rights and other assets that are difficult to value.  Your Honor will need expert testimony in order to assess the value of those assets, and under the Delaware test, which looks at whether the asset sales were designed to defraud creditors and whether a reasonably equivalent value or fair consideration was provided for the assets, your Honor is going to need that testimony.  If you look at the New York de facto merger test, the New York Courts look at the consideration provided because if consideration were provided, then there isn’t continuity of ownership.


JUDGE BRANSTEN: So no. 1 is really more MBIA’s motion to compel, and the issue is unredacted documents from Bank of America concerning loss reserves.  Bank of America has allegedly agreed to produce reserve-related documents without counterparty redaction.  I’m going to take Bank of America’s willingness to produce these documents but to say this: That it should be produced by July 13, 2012.


And here we’re getting into the first time, so I’m going to say this: Why is it so quick?  It’s so quick because this has been going on for a very long period of time.  If it’s on this particular issue, it’s the whole series of what needs to be produced, and while this time MBIA has not gotten up in the morning and asked for sanctions, as they did last time we were here, or they’ve asked for sanctions in the sense they suggested sanctions, nevertheless, I know that they want me to put sanctions on.  And the Court is going to say this about it: Came very close to sanctions.  You practically reached the precipice over which you take one more step and sanctions is going to be happening. 


Mr. Burton’s comment is that, frankly, I don’t think Bank of America ran new search terms out of the goodness of their heart.  I think that really what happened was that they knew that discovery was not complete.  They also know that the Court is getting very thin-edged about it not being complete, and so, therefore, I’m glad you’re doing it, but guess what?  By the July 13 date is the date that you’re going to – I don’t care if you have to work around the clock.  I don’t care how you get it done.  You get it done no later than that date.  Better before, all right?


I don’t care how many documents have been produced.  It appears to me that there are documents that Countrywide has decided in its own inimicable way not to produce: Oh, that meeting had to do with something else.  The issues is not that.  The order that I gave before, and the order that I’m repeating now, is that everything, everything concerning these meetings is to be produced.  It is not up to Countrywide to make that decision. It is up to the production to be made, and then if it is irrelevant to MBIA, then MBIA will definitively not use it.


It was stated in conference with the Court it was clear the decision is every single document concerning the meetings, concerning the decisions that were made concerning the repurchase has to be produced.


THE COURT:  But my problem, Ms. Concannon, remains the same.  It should not have been a production last night.  It should not be last night.  It should have been two or three or four months ago.  And it bothers me that, indeed production was made last night.  It is to me a deliberate path of – it really is – in my book it’s beginning to be a deliberate path of stonewalling until the very last minute,and then  we’ll produce everything the night before, so we can say to the Court oh okay we produced.  Not good enough.  I’m making the date of July 13 the date, all right, for everything. I don’t care if there’s something left over and it should have been produced, and it was not produced.  When I come back on July 23, I’m going to be ready-ready, and I’m going to be very well rested, and I’m going to very, very annoyed and angry that anybody stonewalled until the last minute.  I want it produced tomorrow, so that it can be reviewed before July 13 so that, indeed, discovery is done.  This is it, folks.  The court is returning and becoming rather ticked.  Excuse me.  That’s not a nice word.  Rather annoyed. 


THE COURT: No, no, no, no, no, no.  Too late.  Too late.  Look, the reason why its’ too late is that this is not like it’s first come to light:  Gee, we need a privilege log.  No, sir, no.  No, it’s been too long.  Not by the middle of the month.  In the first place, whatever you have as of today, turn it over.  Whatever you need to supplement, supplement it by next week.  But that’s it.  Turn over your privilege log today. 


THE COURT: Okay, look.  Deadlines: The final production for the privilege log will be July 13 of this year.  The final – the documents to be produced for the Court’s in-camera review will be on that same date.


THE COURT: Just thinking about it on a logical basis, this is a billions—billions-of-dollars transaction, correct?  Billions, not millions?  We’re talking about a super amount of money.  I cannot imagine, it’s beyond my comprehension to say that Bank of America relied on Countrywide’s statements of solvency before it entered into an asset purchase agreement with Countrywide and did not on its own do certain analyses.


THE COURT: Well, I think it’s a valid request, and I think in order for you to respond to it, you have to choose one of two things: Search more, find out if there are any such documents, and then turn them over, or do a Jackson affidavit stating you’ve conducted a thorough search, you’ve looked under your grandmother’s couch, you’ve done everything that you could possibly do in order to get the information requested.  That’s a Jackson affidavit.  Why is a Jackson affidavit important?  Because later on, miraculously, when finally one day this gets to trial and a solvency document arrives either for the jury or the judge to consider, then MBIA will jump and say, oh, we had a Jackson affidavit.  We did this question.  We asked for the information, and we were told it didn’t exist.


It’s not like I’m asking you to commit hara-kiri.   I’m just asking you for a Jackson affidavit. 


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