Rosner, Joshua 5-6-08

Joshua Rosner - Confidential
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I
UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLUMBIA
IN RE:
FEDERAL NATIONAL MORTGAGE
ASSOCIATION SECURITIES
DERIVATIVE, and "ERISAn
LITIGATION
...............................
IN RE:
FANNIE MAE SECURITIES
LITIGATION
...............................
***
CONFIDENTIAL
PURSUANT TO ORDER
Videotaped Deposition of JOSHUA ROSNER

Tuesday, May 6, 2008
New York, New York
Job No.: 186576

Pages 1 through 342
Reported by:
Patricia Mulligan Carruthers, CSR
Esquire Deposition Services

D.C. 1-800-441-3376
MD - 1-800-539-6398
VA - 1-800-752-8979

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Page 2
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Tuesday, May 6, 2008

10:30 a.m.
Videotaped Deposition of JOSHUA ROSNER, held at
the offices of:
O'Melveny & Myers
7 Times Square
New York, New York
10036
ON BEHALF OF KPMG
CLAUDIA OSORIO, ESQUIRE
GIBSON, DUNN & CRUTCHER LLP
1050 Connecticut Avenue, N.S.
8
9
L0
Ll
L2
Washington, D.C. 20036-5306

(202) 955-8500
cosorio@gibsondunn.com
ON BEHALF OF LEANNE SPENCER:

LAUREN R. RANDELL, ESQUIRE
L5
L6
L7
18
MAYER, BROWN, ROWE & MAW, LLP

1909 K Street, N.W.
(202) 263-3000
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1randellmayerbrown.com
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Pursuant to notice, before Patricia Mulligan

Carruthers, Certified Shorthand Reporter and
Notary Public of the State of New Jersey and
Notary Public of the State of New York.
A P P E A R A N C E S
'
ON BEHALF OF LEAD PLAINTIFFS
IN DERIVATIVE CASE
ON BEHALF OF J. TIMOTHY HOWARD:
LAURA E. NEISH, ESQUIRE
ZUCKERMAN SPAEDER, LLP
1540 Broadway
Suite 1540
New York, New York 10036-4039
(212) 704-9600
ON BBHALF OF PLAINTIFF:
FRANCIS P. KARAM, ESQUIRE
EMILY KERN, ESQUIRE
BERNSTEIN LIEBHARD & LIFSHITZ, LLP
10 East 40th Street
22nd Floor
New York, New York 10016
(212) 779-1414
kern@bernlieb.com
karam@bernlieb.com
C O N T I N U E D
ON BEHALF OF FRANKLIN RAINES:

JOSEPH M. TERRY, ESQUIRE
JOHN E. CLABBY, ESQUIRE
WILLIAMS & CONNOLLY, LLP
725 Twelfth Street, N.W.
Washington, D.C. 20005
(202) 434-5000
j terry@wc com
j clabbyawc .com
ON BEHALF OF FANNIE MAE:

MICHAEL WALSH, ESQUIRE
ROBERT STERN, ESQUIRE
O'MELVENY & MYERS, LLP
1625 Eye Street, N.W.
(202) 383-5300
mwalsh@omm.com
rstern@omm.com
2 (Pages 2 to 5 )

D.C. - 1-800-441-3376

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C O N T I N U E D
ON BEHALF OF THE WITNESS:
&
E X H I B I T S
ROSNER DEPOSITION EXHIBIT
Two International Place
Boston, Massachusetts
02110
10
120
E Mail dated 2-27-04 from R. Seiler
121
OFHEO-LAW-00021348
10 White Paper, Fannie Mae's Abusive
123
Accounting
18
FMCIV 04 05026960
989
11 Contact Call Report 1-15-04
20
125
S. Blumenthal
MGA 02656 - 57
21
22
E Mail datedll-18-03 from S.
To P. Lawler
17
19
111
OFHEO-BLU-00058770
9
15
16
19
Blumenthal to J. Rosner
14
Terry Carruthers, Videographer
Contact Call Report 11-9-03

MGA 02494 - 496
12
ALSO PRESENT:
76
S. Blumenthal
11
13
'PAGE
Contact Call Report, 9-8-03

MGA 02417
(617) 248-5000
mcahillchoate.com
S. Blumenthal
STEWART, LLP
C O N T I N U E D
4
5
MARK D. CAHILL, ESQUIRE

CHOATE HALL
12 Equity Brief dated 1-29-04
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MGA 09059
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61
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E X H I B I T S
C O N T E N T S
EXAMINATION OF JOSHUA ROSNER
PAGE
BY Mr. Terry
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By Ms. Randell
267
By Ms. Neish
269
By Mr. Walsh
273
By Ms. Osorio
317
C O N T I N U E D
PAGE

13
141
S. Blumenthal
MGA 02768
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143

S. Blumenthal
MGA 0276
15
E X H I B I T S
1
Medley Global Advisors Background
Medley Global Advisors GSEs Update
16
52
59
18 E Mail dated 5-14-04 from J. Reston
MGA 02071 -75

62
Contact Call Report, 8-27-03
163
To S. Blumenthal
OFHEO-BLU-00036921
Dated 8-1-03
19 Equity Brief dated 5-17-04
MGA 02317 -18

5
S. Blumenthal
MGA 03033
Dated 6-12-03
4
161
17 Contact Call Report 4-19-04
MGA 02036 -37

155
S. Blumenthal
MGA 02866
Dated 6-9-03
3
MGA 02784
44
MGA 01937
150

P. Brereton
PAGE
63
171
MGA 09100 - 101
P. Brereton
MGA 02420
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Lquire Deposition Services

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E X H I B f T S
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C O N T I N U E D
ROSNER DEPOSITI0N;EXHIBIT
E X H I B I T S
PAGE
C O N T I N U E D
PAGE
E Mail dated 3-11-05 from A. Canfield
179
S. Blumenthal
245
TO J. Rosner
MGA 03108
MGA 04202
E Mail dated 5-19-04 from J. Rosner
- 204
186
To S. Blumenthal
To A. Heiskell
MGA 03109
MGA 05462 - 65
261
E Mail dated 12-22-04 from R. Medley
188
B. Imperatore
265
TO J. Rosner
MGA 03735 - 4 1
MGA 03174
192
B. Imperatore
292
To K. Medley
MGA 04091
MGA 02578
E Mail dated 9-30-04 from K. Muehring
E Mail dated 12-12-03 from Medley
192
TO J. Rosner
MGA 09767
MGA 09054
- 68
Medley Global Advisors GSE Update
- 57
E Mail dated 2-2-04 from Medley
205
307
TO TT
Dated 12-2-04
MGA 03647
303
TO TT
MGA 09062
- 48
contact call Report 9-17-04
- 64
213
Fin Man
MGA 03131
309
- 32
MGA 03414 - 15
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215
41
MGA 03409
C O N T I N U E D
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Bob H
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E X H I B I T S
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PAGE
E Mail and Contact Call Report
Dated 7-27-05
MGA 04420 - 21
327
Dated 9-17-04
MGA 03410
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Medley Global Advisors Special Report
225
Dated 9-28-04
MGA 03587 - 589
30
229
Dated 9-28-04
MGX 03608
31
- 609
233
Dated 1-19-05
MGA03776
32
77
239
Dated 1-19-05
MGA 03779 - 80
33
248
Dated 8-17-04
MGA 03308
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J. ROSNER - CONFIDENTIAL
P R O C E E D I N G S
THE VIDEOGRAPHER:
We're going on the record.
follows :
Good morning.
EXAMINATION BY COUNSEL FOR DEFENDANT RAINES
Here begins Videotape
BY MR. TERRY:
Number 1 in the deposition of Mr. Joshua Rosner
Q.
Hi, Mr. Rosner.
in the matter of In Re Federal National Mortgage
Terry.
Association Securities Derivatives and ERISA
defendant in this litigation.
Litigation, and In Re the F a ~ i eMae Securities
The deposition is being both
Litigation, Case Number MDL 1668.
transcribed and it's being videotaped.
Today is May the 6th. 2008.

time is 10:03 a.m.
The
This deposition is being held
the jury, we'll have a videotape to show them.

Because it's being transcribed,
It was made at the request of
Kimberly Newman of the law offices of O'Melveny
In the
event that your deposition will be played before
at the offices of OIMelveny& Myers, Seven Times

Square, New York.
My name is Joe
I represent Frank Raines, who's a
however, I want to ask you questions.
It's
important that you answer them verbally rather
&
Myers.
than with a nod or a shake of the head so the

I am the videographer.
My name is
court reporter can transcribe it.
It's also
Terry Carruthers, here on behalf of Esquire
important that we don't talk over each other, so
Deposition Services, located at 1020 19th Street,
that the court reporter will be able to
Washington, D.C.
transcribe what we're both saying.
Will all counsel and all present
Do you understand that?
please state their appearances for the record,
A.
Uh-huh.
after which the court reporter, Patricia
Q.
Okay.
If you need a break at any
Mulligan, will swear in the witness and we can
time, just let me know and I'll be happy to
proceed.
accommodate you.
MR. TERRY:
Joe Terry with Williams
Mr. Rosner, have you ever been
Page 15
&
Connolly for defendant Frank Raines.

MR. CLABBY:
Williams
&
John Clabby with
C o ~ o l l yfor defendant Frank Raines.

MR. WALSH:
&
Michael Walsh, OtMelveny
MS. RANDELL:
Laura Randell; Mayer,
Brown for Leanne Spencer.

MS. NEISH:
Laura Neish, Zuckerman
MS. OSORIO:
&
Claudia Osorio; Gibson,
Crutcher for KPMG.

MS. KERN:
Liebhard
&
Emily Kern, Bernstein
Lifshitz for the plaintiff.

MR. K A W :
Francis Karam, of the
same firm for the plaintiffs.

MR. CAHILL:
Hall
&
A.
NO.
Q.
Is your primary residence the New
Mark Cahill, Choate
Stewart for Mr. Rosner.
York, New York, residence?

A.
Uh-huh.
MR. CAHILL: YOU need to answer yes
or no instead of uh-huh.
A.
yes.
10
Q.
Thank you.
11
12
Spaeder for Tim Howard.

Dunn
deposed before?
Myers for Fannie Mae.
1
2
Myers for Fannie Mae.

MR. STERN: Robert Stern, O'Melveny
&
Page 17
13
Can you briefly describe your

educational background, starting with college.
A.
Sure. Undergrad mass.
Actually
14
comp. lit., and beyond that professional Series
15
7, 63 license.
16
17
Q.
And Series 7 and 63 are both
securities professional?
18
A.
correct.
19
Q.
Do you have any formal training in
20
accounting?
JOSHUA ROSNER
21
A.
Formal training, no.
4 Stuyvesant Oval, 4E
22
Q.
Do you have any formal training in
New York, New York, 10009,
23
economics?
A witness called for examination, having been
24
A.
NO.
first duly sworn, was examined and testifies as
25
Q.
Okay.
And your undergraduate course
5 (Pages 14 to 17)

DOCo
- 1-800-441-3376
MD - 1-800-539-6398
VA - 1-800-752-8979

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J. ROSNER
CONFIDENTIAL
J. ROSNER
of study was comparative literature?

A.
Right.
political economy.
Q.
Page 20
-
CONFIDENTIAL
an expert in event studies?
And social thought, and
I'm not even sure - - Again, the term
A.
Correct.
"event studiesn is sort of a term of art, so 1'm
Okay. Aside from your Series 7 and
going to say no, but I
You know, if you want
--
your Series 6 3 , do you have any other
to get more specific in that question we could
professional certifications?
answer it, but have I held myself out as an
A.
NO.
Q.
Are you a CPA?
A.
NO.
anyone that you understood to be a representative

of the plaintiffs in this lawsuit?
expert, no.
Q.
Are you a CFA?
A.
NO.
Q.
Have you ever - - Have you ever
Q.
A.
plaintiffs.
testified as an expert witness in any proceeding?
Q.
Have you ever met before today with
As a representative of the
Yes.
And who was that?
A.
NO.
A.
Jim Cummings
Q.
Have you ever published any papers
Q.
When did you first meet with
in peer-reviewed journals?
Mr. Cummings?
A.
Peer-reviewed, no.
Q.
Do you consider yourself to be an
A.
expert interpreting accounting standards?

A.
That's-- That's a subjective.
Q.
Do I
consider myself to? No.
Q.
I'm not sure I remember the date.

And did you first communicate with
Mr. Cummings in person, or via a phone call or

E mail?
expert in evaluating corporate internal control

environments for accounting purposes?
A.
I don't remember.
Q.
Okay. What was the subject matter
of your first meeting with Mr. Cummings?
Page 19
Page 21
A.
NO.
Q.
MR. KARAM:
expert in the bank examination process?
the basis of privilege.
I'm going to object on

And without a waiver of
any assertion of privilege I'll allow you - - that
A.
NO.
question to go forward as long as it doesn't
Q.
Are you familiar with the term
address the subject matter of the conversation.
A.
Yes.
your first conversation with Mr. Cummings?
Q.
"CAMELS" ?
Q.
A.
expert in the CAMELS process?

A.
Could you actually clarify expert
for all of these because, frankly, that's a term

answering yes or no.
Okay.
Well, how would you define
the term "expert"?

A.
I'm not sure. You're the one asking
the question.
Q.
Have you ever held yourself out to
anyone as an expert in the CAMELS process?
Okay. What was the substance of

That-MR. KARAM:
Once again, my objection
is to any - - anything substantive. You can

generally describe the subject matter.
of art that I'm not sure I'm comfortable with
Q.
would guess it was sometime midyear 2006.
THE WITNESS:
A.
Absolutely.
That - - as I remember it, it was
essentially that they were anticipating or

already had taken action in this matter and were
interested in talking to me about it.
Q.
Okay. And at the time of this
conversation had you been formally retained by

the plaintiffs in any capacity?
A.
NO.
A.
At the time of that? No.
Q.
Okay. Do you have any formal
Q.
Okay. What else did you discuss in
training in what's known as event studies?

A.
NO.
Q.
Have you ever held yourself out as
that first meeting?

MR. KARAM:
I object on the grounds
of privilege.
6 (Pages 18 to 21)

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J. ROSNER
Q.
- CONFIDENTIAL
remember.
Again, I believe so, but I don't

I certainly didn't make the phone
call.
Q.
Okay.
So it was Mr. Cummings or
someone acting on his behalf.

A.
Correct.
Q.
Did you agree at some point to
J. ROSNER
Who first contacted who; did
Mr. Cummings reach out to you?

A.
Page 24
- CONFIDENTIAL
Mr. Cummings about consulting on other matters?
A.
I'm not sure I understand how that's
relevant.
Not on any matter outside of - - Not on
any matter that would be related to Fannie or
Freddie, or any of the individuals named.
Q.
Okay.
My question is, have you
provided consulting services to Mr. Cummings and
his firm for other matters?

MR. CAHILL:
10
You can answer that yes
provide consulting advice to the plaintiffs in
11
this litigation?
12
A.
yes.
A.
On a limited basis.
13
Q.
And I won't ask you about the
Q.
Okay.
And what was - - What was the
limited basis?
14
orno.
subject matter of this.

You mentioned you entered into a
15
MR. KARAM:
I object, but I will
16
written agreement, correct, with the plaintiffs?
allow the witness to describe the broad terms of
17
A.
Correct.
his consulting agreement as long as he doesn't go
18
Q.
What were the terms of that
into the substance of any communications.
19
A.
guess.
It was as a consulting expert, I
I don't even know if that's the term that
21
was used, nontestifying in this matter, to help
22
them understand background and parties.
23
Q.
Was there a general subject area of
your consulting advice, general topic?
agreement?
20
A.
I don't recall off the top of my
Q.
Did it establish a rate by which you
head.
would be paid for your services?
24
A.
It did.
25
Q.
And what was that rate?
Page 2:
Page 25
A.
NO.
Q.
Did you enter into a written
agreement at any point with the plaintiffs?

A.
Yes.
Q.
And when did you enter into a

Again, sometime in I believe
Okay.
I believe that it was 500
Q.
Okay. Did you create any written

MR. KARAM:
I'm going to object, and
Q.
Did Mr. Cummings explain to you why
he wanted to retain you?

How many times did you meet
with Mr. Cummings or someone else you understood

to be a representative of the plaintiffs?
A.
--
I'm going to assert privilege on that.
midyear, '06.
Q.
Again
an hour.
work product through your consulting work?
written agreement?
A.
A.
In regard to this matter?
Q.
In regard to this matter.
A.
Less than - - Less than a handful.
Q.
And did you have E-mail
communications with anyone you understood to be a

representative of the plaintiffs?
A.
Not to my - - Not to my recollection.
Q.
Okay.
You said that you only had a
handful of communications with individuals you
MR. KARAM:
I object to any
communications, a direct - - the substance of any

communications between Mr. Rosner and
Mr. Cumrnings.
Q.
Are you still providing consulting
services to plaintiffs?
A.
Have I spoken to them about the
matter or provided them with any information

regarding the matter at any time over the past
nine months to a year? No.
Q.
Did your relationship formally
terminate or did you - -
understood to represent the plaintiffs with
A.
Itdidn't.
respect to this matter.
Q.
Okay.
So as far as you know, as of
A.
Uh-huh.
today you still have a consulting relationship
Q.
Have you had conversations with
with the plaintiffs?
7 (Pages 22 to 25)

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J. ROSNER
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- CONFIDENTIAL
AS far as I understand.
Q.
Are the plaintiffs compensating you
Medley Advisors.
for your appearance today?

A.
NO.
Q.
Did they compensate you for the time
point.
you spent preparing for this deposition?
Q.
Okay.
A.
Non - - Well, nonexistent at this
And what is Oppenheimer?
Oppenheimer was an investment bank.

Q.
And what did you do at Oppenheimer?
A.
I was in institutional research
A.
NO.
sales. I was on their stock selection committee,
Q.
How much time did you spend
and I founded a specialty practice in financial
preparing for this deposition?

A.
service research sales and analysis for them.
I met with Mr. Cahill on I guess one
occasion and had a handful of conversations
Q.
A.
In preparing for this deposition did
Q.
you meet with anybody that you understood to be

No.
cover them?
Q.
I've had no contact with them
in several months.
I can't remember the last
Do you recall how much in total
MR. KARAM:
Right.
Q.
And Fannie Mae fell - -
A.
Oh, no.
Q.
I'm wondering
-Let me caution you to
Let him finish his question before
you start your answer.
I don't know, so I can't help him.

THE WITNESS:
Correct.
MR. CAHILL:
slow down.
Mr. Rosner is looking at
Is that because you were responsible
A.
compensation you received for the work that you

performed for the plaintiffs?
Did you, yourself, perform any work
while you were at Oppenheimer relating to Fannie
Page 27
Page 29
if that's
J. ROSNER
--
- CONFIDENTIAL
Mae?
MR. KARAM:
Look.
I will assert my
objection, but 1'11 allow him to answer it as

long as it's not considered a waiver.
Our idea
A.
Could you be more specific?
Q.
Sure. Did you, yourself, write any
research reports concerning Fannie Mae?
here is to be as forthcoming as possible so that
A.
NO.
there's no inferences to be drawn of any
Q.
Okay. Did you oversee the
preparation of any research reports - -
impropriety.
MR. STERN:
For the same time, for
the record, the amount he's received is obviously
A.
Q.
not privileged.
A.
I mean, I can give you a range,

I would guess it's between 5,000 and
$7500.
Do they still owe you anything, or
are you all square at this point?
work with the plaintiffs, how much time total

advice to the plaintiffs?
No, they don't.
Q.
Setting aside the - - Setting aside
reimbursement rate of between 5,000 7500, and I
Q.
the consulting work you performed for the

--
where else have you worked
Okay.
I can probably do that math.
SO maybe ten to 12 hours - A.

Q.
during the past ten years?

A.
Oh, I think I answered that with the
gave you a billing.
A.
plaintiffs, what
- - concerning Fannie Mae?
would you estimate you spent providing consulting

A.
Q.
NO.
Just going back to your consulting
because I honestly don't remember off the top of

my head.
Did I
Yes.
for all financial services - -
time I did.
Q.
I didn't. Well, did I cover them.
Was I the publishing analyst on it? No.
representing the plaintiffs?

A.
During your time at Oppenheimer did
you cover Fannie Mae at all?
beyond that.
me.
- CONFIDENTIAL
J. ROSNER
A.
Probably.
--
somewhere in that range.
You mentioned you also worked at a
During the past ten years I've
firm named Graham Fisher?
worked at Oppenheimer.
It's the firm that - - it
A.
Correct.
was purchased by CIBC.
Graham Fisher
Q.
What is Graham Fisher?
&
Company,
8 (Pages 26 to 29)

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Page 30
J. ROSNER
A.
- CONFIDENTIAL
J. ROSNER
It's an independent financial
A.
service consulting and advisory firm.

Q.
Page 32
From
--
- CONFIDENTIAL
I can't give you the precise
date, but it was March of 2003 until May of 2006.
m d when did you work at Graham
Q.
Fisher?
And what line of business is Medley
Global Advisors in?
A.
Two different periods.
2001 to
A.
Advisory to institutional investors
early 2000 - - well, late 2002, and then again
on regulatory, legislative, and policy issues
from May of 2006 to the present.
domestically and abroad.
And what is your current position at
Q.
Graham Fisher?
A.
Q.
And what type of services does - -
does Medley provide to its clients?
Managing director and sole
A.
proprietor.
What type of services. Reports and
advisory on likely policy outcomes, central bank
Q.
So you own Graham Fisher.
activities, legislative movement on proposed
A.
Correct.
bills, regulatory issues, and that's really the
Q.
What was your position from 2001 to
essence of it.
A.
TO late 2002.
to its clients?
Q.
I'm sorry. During your first stint
late 2002?
Q.
at Graham Fisher.
A.
Did Medley sell its - - sell reports

Didn't sell - - I wasn't on that side
of the business, on the administrative side, so
A.
Managing director.
I'm not sure that I'm the best person to actually
Q.
And what did you do as managing
give you the clear answer as to how the services
director?
were sold.
A.
I actually
--
I was a partner,
It's my understanding that the
reports were not sold on a report-by-reportbasis
actually.
So the work title was managing
director.
I was also a partner of the firm.
but it was client subscriptions to Medley.

Q.
And would the clients subscribe to a
Page 31
Page 33
I actually did research and analysis

on housing and financial-service-related issues.
Q.
- CONFIDENTIAL
to Medley services and Medley would provide them
Did your work relate at all to
with - -
Relate?
understanding. I can't give you an authoritative
Fannie Mae?
A.
J. ROSNER
particular report, or would they just subscribe
A.
Yes.
Again, I can only give you my
Q.
Did you cover Fannie Mae?
answer. My understanding is that they had
A.
My partners and I actually covered
different subscription areas; central banks, as
it from a joint perspective.

Q.
Okay. And did Graham Fisher publish
research reports?
A.
example, regulatory, legislative and policy,

et cetera.
Q.
We actually published one large
Is it fair to say that Medley
provided its clients with advice regarding the
research report on Fannie Mae and Freddie Mac,
political and regulatory risks that faced various
which was - - which was someone else's work
sectors of the economy or various companies?
product.
MR. CAHILL:
Q.
Another individual at Graham Fisher?
A.
Correct.
Q.
You said that you published a single
publication on Fannie Mae on Freddie Mac.
piece.
Object to the form.
YOU can answer.
A.
Could you repeat it?
Q.
Sure.
Is it fair to say that Medley
provided its clients with advice regarding the
A.
Correct.
political or regulatory risks facing different
Q.
Is that a single one per year or - -
companies or sectors of the economy?
A.
No.
It was one large published
Correct.
Q.
During what period of time did you
work at Medley Global Advisors?
A.
I wouldn't - - I wouldn't acknowledge
or say that it's fair to say that it was advice

as opposed to information. Advice would suggest
a particular actionable event or approach, and it
9 (Pages 30 to 33)

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Page 34
J. ROSNER
Page 36
- CONFIDENTIAL
J. ROSNER
was very clearly not the intent of the firm to

advise as much as inform.
Q.
Understood.
- CONFIDENTIAL
sales.
Did Medley employ any financial
Q.
And did you provide - -
analysts?
Did Medley provide information regarding
A.
No.
You know, again, to my - - Well,
To my understanding, no, but I also - - I
particular companies, or just sectors of the
no.
economy?
wasn't running the firm and I didn't really know
A.
For the most part it was - - Well, it
the backgrounds of everyone there, so I can't
was sectors, and often times where regulatory,
actually answer that question authoritatively.
legislative, or policy issues came down to
THE VIDEOGRAPHER:
Excuse me for
specific companies it was at times mentioning of
interrupting, counsel. Someone's BlackBerry is
specific companies.
still on, and it's actually drowning out.
Q.
And was one of the specific
you just check again?
Q.
companies that you provided information to your

investors about Famie Mae?
there?
Yes.
Q.
Did you develop any understanding as
A.
Some of them, yes.
Q.
What would be the - - sort of the
to why Medley's clients were interested in

information about political and regulatory risks?
nature of your interaction?

A.
That was the substance of the entire
firm's business.
Q.
Did you have any interaction with
Medley's clients during the period you worked
A.
A.
Can
Again, it depends on the particular
day, the particular client. Different clients
Okay.
And did you develop an
find different things of differing importance and
understanding as to why that was something that
interest, so I'm not sure that there's a standard
your clients were interested in?
answer.
A.
Well, of course.
You know, I think
What types of clients did Medley
Q.
Page 35
J. ROSNER
- CONFIDENTIAL
Page 37
1
have during the period you worked there that you
rely on traditional sell-side research for
were aware of?
specific financial analysis, but for the most
A.
Institutional investors.
part sell-side research coming out of the
Q.
What do you mean by "institutional
investment banks does a - - This is an
that for the most part institutional investors
opinion.
- - a fair at best job on understanding
regulatory legislative and policy issues.

Q.
Did you develop an understanding as
to why your clients felt that political and

regulatory issues were important to them?
MR. CAHILL:
A.
Q:-
Objection.
Large pension plans, fund complexes,
Q.
Do you know if the Ohio State
Teachers Pension Fund was one of the clients?
11
12
A.
I don't know.
I don't believe so,
though.
Did you ever during your time at
YOU can answer.
13
Did I develop an understanding?
14
Medley ever interact with any of the plaintiffs
15
in this litigation?
- Did you ever - - - Did.you ever talk to
16
clients?
17
A.
I never sold Medley services.
18
Q.
Who would be the person at Medley
19
who was responsible for bringing in clients?

MR. CAHILL:
During what time frame?
During the time period you worked
there?
A.
A.
hedge funds.
9
10
clients trying to sell Medley services to those
Q.
investors"?
There were - - There were a whole
host of people.
You know, there was a head of
20
21
22
Q.
A.
To be honest, I don't know who the
plaintiffs are per se specifically.

Q.
We've got OPERS, which is the
A.
I'm fairly certain the answer is no
Ohio - on that.
Q.
Okay. And do you know whether the
23
Ohio State Teachers Fund - - Ohio State Teachers
24
Retirement System was a client of Medley?
25
A.
I don't believe so.
10 (Pages 34 to 37)

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Page 38
J. ROSNER
Q.
Page 40
- CONFIDENTIAL
J. ROSNER
Who - - During the period you were at
Medley, who owned Medley?

A.
That's a bureau.
A.
Again, in terms of the - - In terms
Q.
I don't know the
Okay. What was your position at
Medley?
A.
partnership structure in terms of other ownership

interests, but functionally Richard Medley
That's not an
institutional investor, to my knowledge. No.
of the structure, I know that Richard Medley was

the - - the managing partner.
- CONFIDENTIAL
Worker's Compensation?
Managing director of financial
service practice.
--
Q.
Okay.
Q.
What were your job duties?
A.
- - during the time I was there.
A.
Advise - - Well, research, remain
informed on significant regulatory legislative
Richard sold the firm somewhere, I

want to say probably second or third quarter of
policy issues domestically and globally as they
2005.
were impacting the financial sector.
Q.
And going back to Medley's clients,
do you know whether an individual name Alan

Warner was a client or a client contact?
A.
I don't know.
I don't recognize the
And did your sector include Fannie
A.
My sector included housing and
mortgage finance which, obviously, includes
name, and I don't believe that I've ever had
Fannie Mae.
Q.
contact with him.
Q.
Q.
Mae?
How about John Emboden (phonetic)?
How long did you cover the financial
services sector while you were at Medley?
A.
Same.
Q.
Kathy Dodd?
quite correct.
A.
What firm?
they called the - - the regulatory legislative
Q.
She was with STRS, I believe.
side of it, from probably mid-2003
A.
I don't believe so.
were other people who had been involved with it
A.
The entire time.
Well, that's not
I was really responsible for what
--
Now, there
Page 39
Page 41
1
J. ROSNER
- CONFIDENTIAL
Q.
Steve Huber?
prior to my time there.
A.
Not to my knowledge.
functionally it was my area from mid-2003.
Q.
Steve Mitchell?
A.
Could you give me the names of the
Q.
I believe all of these individuals
firms?
were individuals who worked with STRS.
A.
I don't believe so.
Q.
Bill Katrell (phonetic)?
A.
As I said, I don't believe I had any
Q.
And who was your predecessor in that
A.
I think it was a number of people.
area?
6
7
So, you know,
I don't think it was one specific person.
Q.
Can you give me their names, please?
A.
I would
- - Again, I believe that
10
involved in it were Kevin Muehring and Richard
11
Medley.
I'm not sure if anyone else.
interaction to my knowledge, to my recollection,
12
Q.
Is Kevin Muehring still at Medley?
with that firm. And instead of the acronym could
13
A.
To my knowledge.
Q.
Is Mr. Medley still involved with
14
you give me the name?
Q.
Yes.
I believe it is the State
Teachers Retirement System?

A.
All right. So as I said before, I
15
Medley?
16
A.
No to my knowledge.
17
Q.
How many people worked at Medley
don't believe that they were a client, and I
18
don't believe I had any interaction with them
19
whatsoever.
20
guess.
21
around 60.
MR. KARAM:
Of Ohio.
Because many
states refer to their state teacher's retirement
22
system.
23
MR. TERRY:
Q.
Appreciate it.
How about the Ohio Bureau of
during the time you were there?

A.
Again, I can only give you a - - a
I would guess that it was somewhere

Q.
Was there an individual who was
specifically assigned to Fannie Mae?
24
A.
NO.
25
Q.
How many individuals at Medley while
11 (Pages 38 to 41)

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Page 42
J. ROSNER
Page 44
- CONFIDENTIAL
Q.
you were there worked on getting information

about Fannie Mae?
The way the firm works is - - I don't
A.
Do you know if a firm name Sonic
Capital was a client of Medley?
think that it's specifically tasked with working

on a particular name, a particular issue.
So in
A.
Idonttknow.
Q.
I'm going to show you a document
which will be Rosner Exhibit 1, which is dated
the course of gathering information, frankly,
March 11, 2003, and it has the Bates stamp at the
there were a lot of people who were able to feed
bottom MGA 01937.

(Whereupon, Exhibit Rosner-1 is
information in, but for the most part I was the

primary.
Did occasionally other people provide
information to me?
document?
if you recall?
I gave you - - I gave you Kevin, and
A.
Mr. Rosner, do you recognize this
Q.
Yes.
And who are the other individuals,
Q.
marked for identification by the reporter.)
beyond that it was, you know - - I can't give you
A.
I actually don't.
Q.
Okay.
me what it is?
A.
a specific recollection, but there were probably
It looks like it's a note titled
Background.
others.
Did you prepare research reports for
Q.
external.
Research reports. In the - - On the
regulatory, legislative, and policy issues I did.
the Washington regulatory legislative issues

surrounding Fannie Mae and its regulator.
Did Medley have a number of
Q.
Q.
publications that it would offer to its clients
Okay.
Looking at the line at the
top that has Mr. Ghahramani's name on it?
somewhat?
A.
I don't know whether it's internal,
It has Sassan Ghahramani's name at the
top of it, and it seems to be some background on
your clients on Fannie Mae?

A.
Looking at it, can you tell
A.
Yes.
Q.
What does that line there indicate?
Page 45
Page 43
J. ROSNER
- CONFIDENTIAL
Sure. Did Medley provide some sort
Q.
A.
Probably - MR. CAHILL:
of research product to its clients?

A.
Several, as I said before.
to speculate.
Q.
Did those different publications
give it.
have names?
A.
remember.
Yeah.
Remember, it's
--
or not
It's not per se in the publications.
Okay.
I can't really recall what

We'll go through some
Do you know if that indicates
A.
Idon'tknow.
Q.
You see the date at the top says
March 11, 2003. Was that before or after you
specific examples later, which will make it
joined Medley?
A.
easier.
Yeah, I don't know.
Q,
whether Mr. Ghahramani was the author of this
they were.
Q.
A.
document?
They had different tags, different titles that

were put on them.
Do you know how - - how wide your
Let me caution you not
If you know the answer, you should
"
Again, it was probably within a week
or two weeks one-side-or the other of my joining.
readership was for the documents that you sent to
And I don't know - - I don't remember the exact
clients?
date.
Q.
A.
Idonlt.
Q.
Do you have any sense of how large
your client base was?

A.
Medley s
would be carrying out there?
I don't.
MR. CAHILL:
By "your" you mean
A.
What did I do to familiarize myself.
Q.
Did you go through old Medley
research reports?
MR. TERRY:
A.
When you joined Medley, what did you
do to familiarize yourself with the tasks you
Medley's, yes.
I don't.
A.
Actually, I did not:
Q.
Have you had a chance to read this
12 (Pages 42 to 45)

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Page 46
Page 48
J. ROSNER
document?
A.
I have - - just now?
Q.
Yes.
A.
No.
Q.
If you could just take a look at it,
- CONFIDENTIAL
Q.
Did you, personally, have a concern?
A.
Have a concern? No.
I didn't have
a concern.
I skimmed it.
Q.
Was it your view that Fannie Mae
posed systemic risk?
and when you're done let me know whether you
A.
It was not my view that they posed
think this is something that you would have
systemic risk.
received as your background when you started at
housing market was rapidly becoming at risk, and
It was my view that the entire
it was my view that the company - - the company - -
Medley.
A.
Okay.
I've read it.
both Fannie and Freddie and many of the mortgage
Q.
Okay.
Having read it, do you
market players had become increasingly willing to
believe that this is something that would have
take risks that - - that historically they might
been provided to you for your background when you
not have.
started at Medley?
Q.
During your time at Medley Advisors
A.
I have no recollection.
was there ever a point that you believed that
Q.
Okay. And do you know whether this
Fannie Mae was a good investment?
was something that would have been provided to
A.
Medley's clients?
A.
That actually was never part of my
job function to have such a view one way or the
Again, Idon'tknow.
other, a good or bad investment.
Substantively - - Again, I don't know.

Q.
Okay.
And who is Mr. Ghahramani?
A.
At the time he was a - - one of the
Q.
Okay.
A.
To advise institutional investors on
What was your job function?
regulatory, legislative, and policy issues that
managing directors.
Today he is - - holds an
were confronting the financial service sector and
executive position.
I'm not actually sure what
participants.
Page 47
1
2
his current title is.
Page 49
J. ROSNER
Q.
Okay.
- CONFIDENTIAL
Did your view of the
Q.
But he's still with Medley.
political and regulatory risks facing Fannie Mae
A.
He is.
change during the period you were covering the
Q.
If you could take a look at the
firm?
first line, it says, "In the post LTCM days of
the NASDAQ bubble, MGA got involved in a web of
powerful forces in Washington jockeying to reign
in the GSEs out of concern that they were growing
10
far too fast for comfort, and could pose systemic
10
11
risk."
11
Do you see that line refers to a
12
13
"web of powerful forces in Washington"?
14
12
A.
Did my view of the political,
regulatory - MR. KARAM:
I'm going to object.
It's a compound question.

A.
Yeah.
Could you actually rephrase
Q.
Sure. Did your view of the
it?
13
political risks facing Fannie Mae change over
Do you see that?
14
time while you were at Medley?
15
A.
yes.
15
A.
I don't believe they really did.
16
Q.
Do you know what that's referring
16
Q.
Okay.
17
to?
A.
18
20
I don't.
MR. CAHILL:
19
Objection. Form and
foundation.
Q.
21
that the political risks facing Fannie Mae in
18
your view were constant between the March, 2003,
19
through 2006 period?

MR. KARAM:
20
Did you have a concern when you
Does that mean in your view
17
21
Objection. No
foundation.
22
joined Medley that Freddie Mac and Fannie Mae
MR. CAHILL:
23
were growing too fast?
You can answer if you
MR. CAHILL:
24
25
Did he, personally,
have a concern?
24
25
Objection.
--
Do you
understand the question?

THE WITNESS:
NO.
Actually, I would
13 (Pages 46 to 49)

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Page 50
J. ROSNER
1
2
Page 52
CONFIDENTIAL
love it rephrased.
Q.
Okay.
A.
I believe you testified that
view?
No.
Did I - - Did I have a particular

Did I believe that once we saw the
you did not believe that the political risks
output from the Freddie investigation in the form
facing Fannie Mae changed over the time when you
of a report, that it might actually create a
were at Medley.
believe that the intensity of the political risks
be considering or looking at or concerned with or
facing Fannie Mae - -
interested in with regard to Fannie Mae.
Let me ask first, did you
A.
of course.
10
Q.
- - changed?
change?
A.
13
14
Q.
16
A.
also be investigated?
A.
The investigation - - Again, the
investigation report became the basis for that
MR. CAHILL:
view; but more specifically, they're one of two
Just
SO
we're clear,
For his view.
entities regulated by the same regulator.

Yeah.
regulatory and policy issues presented in the

Freddie Mac accounting scandal were likely to
22
result in increased risk to Fannie Mae.
23
Q.
Increased risk how?
24
A.
From a policy perspective, that
Q.
which is dated June 9, 2003.
It seemed rather clear that the
21
25
Why did you believe that the Freddie
And how did it change?
MR. TERRY:
19
20
Significantly at about the time of
you're asking Mr. Rosner for his - -
18
I'm going to show you another
Mac investigation meant that Fannie Mae would
Freddie Mac's accounting scandal.
15
17
Q.
document.
Okay. And when did that begin to
11
12
context and a sense of what the regulator might
MGA 02036.
It's Bates-stamped
And this will be Rosner Exhibit 2.


Q.
Mr. Rosner, do you recognize this
document?
Fannie is one of two housing - - private housing
MR. CAHILL:
Do you want him to read
Page 5 1
J. ROSNER
- CONFIDENTIAL
GSEs and, therefore, what was a negative for one

of them was likely to become a negative event for
the other from a policy perspective.
Q.
Page 53
the document or just want - Q.
And by that do you mean that it
It increased the chances of negative

I
would say that it increased the risk of movement

of legislation that might be negative for them.
And was it your view that the
Freddie Mac report also increased the risk of

adverse regulatory action against Fannie Mae?
A.
- It increased my view that there was
likely to be a similar investigation of Fannie

Mae.
Q.
Okay.
And was it your view that that
investigation would pose substantial risks to
A.
Honestly, I don't recall.
I don't
Q.
Looking at the format, do you know
whether this is something that would have been

provided to investors?
A.
but I don't
Q.
In my view it very well might have,

--
I can't say for certain.
Okay.
Who in your view is the
person at Medley most likely to know that?

A.
Currently at Medley, I don't know.
Q.
Taking a look at the top line, it
says, "Richard Medley, Medley Investment Group."

Does that indicate to you whether
MR. CAHILL:
Objection.
I'm not sure I understand the
question.
Q.
Mr. Rosner, do you recognize
believe that it's mine.
Fannie Mae?
A.
I'll ask you
this document?
legislative outcomes, I wouldn't say that.
Q.
Take as much time as you need
about specific parts.
increased the likelihood of negative legislative

outcomes for Fannie Mae?
A.
Yes.
to familiarize yourself with it.
Well, did you have a view as to what
the result of that investigation would be?
Mr. Medley was the author of this report?

A.
It doesn't.
Q.
Was this report authored after you
had begun at Medley?

A.
Itwas.
14 (Pages 50 to 53)

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Page 56
Page 54
J. ROSNER
Q.
CONFIDENTIAL
Take a look at the top.
1
There's a
restatement?
title that says, "Medley Global Advisors GSEs
A.
Off the top of my head I don't.
Update. "
Q.
Okay. Looking at this document,
Is the GSEs update a regular
this document is dated June 9, 2003.
publication that Medley would provide to its
refresh your recollection that Freddie Mac's
customers?
restatement was around that day?
A.
Could you define "regular"?
Q.
Sure.
It says "update." I assume
that's updating something. Did Medley provide
10
GSEs updates on some periodic basis to its
11
clients?
12
A.
Does that
It doesn't refresh my recollection.
Does it intuitively make sense that that is what

it's referring to? Yes.
Q.
Can you take a look, there are a
bunch of points on the first page, 1, 2, 3,
4?
A.
Not with any specific periodicity.
13
A.
Uh-huh.
Q.
Okay.
14
Q.
Take a look at Point 3, it says
Do you have a sense of how
often GSE updates would be provided to Medley's
15
''OFHE0 has one last chance to prove itself before
clients?
16
being dismantled and replaced by a super
17
regulator.
18
come at a better time for Treasury officials, who
19
have been directing an internal working group
A.
It depended on the regulatory,
legislative, and policy issues at hand.

Q.
It would be driven by what was going
The Freddie blow-up could not have
on in the world.
20
that will recommend folding the regulatory
A.
correct.
21
jurisdiction of OFHEO and FHFB together into one
Q.
If you could take a look at the top
22
significantly empowered regulator housed directly
23
in the Treasury Department."
line.
It says, "From a wide range of calls
today, we are now certain that Freddie Mac's
24
stunning announcement took the White House,
25
Looking at that, do you recall if

you wrote that?
Page 55
Page 57
Treasury, and OFHEO by surprise."
Does that mean that this report was
A.
I did not write that.
Q.
Do you know who did?
issued after the announcement by Freddie Mac of
A.
Idon't.
its earnings restatement?
Q.
Do you know what it's referring to?
A.
Again, I could speculate.
Q.
Well, did you ever talk to anyone at
MR. CAHILL:
If you know
Objection.
Foundation.
--
A.
Idon'tknow.
the time about what effect the Freddie
Q.
Okay.
announcement would have on OFHEO?
Taking a look at that first
line, does that provide you with any context for

when this document was written?
A.
Well, "would have on OFHEO' is a
certain statement.
I would actually never have
A.
Other than speculation, no.
had a certain view of what was going to happen as
Q.
Okay.
opposed to possible, probable, or potentially
It's referring to Freddie
Mac's "stunning announcement." Do you know what

it means by that?
could happen.
Q.
Okay.
Was it your view that Freddie
A.
Again, it would be speculation.
Mac's announcement of the earnings restatement
Q.
At some point did Freddie Mac
provided OFHEO with one last chance to prove
announce an earnings restatement?

A.
itself before being dismantled?
At some point they announced a
MR. CAHILL:
earning restatement. At some point they
Q.
announced an accounting pxoblem was uncovered.
A.
It was not.
There were a number of announcements this could
Q.
Okay.
You see Point
4?
It says,
"OFHEO will become proctologically inclined"?
refer to.
Q.
Objection.
YOU can answer.
Okay. Do you know the time of
Freddie Mac's announcement of an earnings
A.
I do.
Q.
It's fair to say that you would
15 (Pages 54 to 57)

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Page 58
1
2
3
4
Page 60
recall if you had authored that line?

A.
I think I believe - - I believe I
would recall.
I don't believe I did.
A.
I don't specifically recognize it.
Q.
Going back for one second to that
Have you ever heard that expression
last document, specifically back to the phrase
A.
Ido.
been used a number of times throughout Medley.
Q.
Who did you hear it from?
Have you ever used it in connection with a
A.
Oh, I mean, it became sort of a
regulator other than OFHEO?
5
6
7
Q.
sure.
Q.
before?
"proctologically inclined,' you mentioned it had

Ihave.
10
catch phrase that was not only within Medley but
A.
Absolutely.
11
used outside of Medley.
Q.
And which regulator?
A.
Many.
12
Q.
As a result of this report?
13
A.
Which report?
even used it in relation to recent events with
I would say I've probably
14
Q.
That we're looking at now.
the Financial Service Authority in the Northern
15
A.
No.
Rock situation.
No.
As a result of a regulator
I think it's typically a term
16
who has an increased need to actually look at
that would be used when a regulator has not
17
companies that perhaps it hadn't had.
actually been as aggressive in its execution of
18
Q.
Okay. What does that sentence mean?
19
I'm not asking for the literal definition, but as
20
used in context? Do you - MR. CAHILL:
21
22
23
24
Okay. Looking at the document which
Q.
What does it mean in
this document?
Q.
its authority as it probably or regulatorily is

expected to.
I just provided you, which is Rosner Exhibit 3,
looking at the format, it says, "Medley global
In the context of this document, do
advisors background."
you have an understanding of what it means?

MR. CAHILL:
25
Does that indicate to you what this
Objection. Foundation.
document is?
Page 59
1
2
3
4
Page 61
He didn't write it, Joe.

Q.
Well, you said you've used the
A.
phrase "proctologically inclinedn - -
A.
Absolutely.
Q.
--
in your time at Medley.
Q.
Proctologically inclined?
A.
Yes.
I'm sorry.
--
Could you repeat
the question?
And what does that mean?
Where does it say "backgroundn? I'm
sorry. I pulled the - - I was still on the
Q.
Sure. Taking a look at the title of
A.
To me?
this document, does that indicate to you what
Q.
yes.
this document is?
10
A.
It means that you have an increased
11
interest in doing detailed regulatory and
12
examination work.
13
Q.
Was it your view that as a result of
A.
To my recollection, background was
internal only.
Q.
Okay.
Do you know whether you were
the author of this?
14
the Freddie Mac announcement of earnings
A.
I am fairly certain that I was not.
15
restatement-'OFHEO would become proctologically
Q.
You see Mr. Muehring's name at the
16
inclined?
17
A.
A.
Uh-huh.
Q.
Does that indicate he was the
18
19
top?
Based on my understanding or my use
of that term, yes.

Q.
20
document, which is dated June 12, 2003.
21
~ates-stampedMGA 02017.
22
23
author?
A.
It indicates he might have been the
author, but - - but I don't know.

Q.
You don't have any recollection of
whether he was the author?
24
Q.
Do you recognize this document?
A.
Idonlt.
25
A.
Let me review it.
Q.
Let me show you another document,
16 (Pages 58 to 61)

D.C. - 1-800-441-3376

Page 62
Page 64
which is dated August lst, 2003, to be marked as

Rosner Exhibit 4. Bates stamp is MGA 02317.
A.
Q.

Q.
Can you identify this document?

DO you want me to
Q.
You can take whatever time you need
--
A.
Okay.
Q.
Can you identify this
document?
I believe that it's a call report.
Q.
What's a call report?
A.
In other words, it's an internal

It's not a specific call
correct myself.
Do you see at the bottom it says,
A.
Then it probably was.
Q.
What is a call report?
A.
The firm had a policy that - - which
conversations you filed call reports.
Q.
I should
--
Did you regularly prepare these in
connection with your job at Medley?
I don't believe it's a call
A.
Regularly.
Q.
Okay.
Did I often?
report; I believe that it's an internal
A.
Firm policy.
Q.
Okay.
IS this a document that you
authoring.
Q.
Did you use them at all in
drafting reports for clients?
authored?
A.
Yes.
Why did you prepare them?
background note.
Q.
It's a document that I don't recall

It may well have been.
A.
The call reports specifically? No.
Q.
Okay. Did you distribute the call
reports to others at Medley?
And the fact that your name appears
A.
The
--
I did not specifically
Page 63
J. ROSNER
Page 65
- CONFIDENTIAL
at the top, does that give you any indication as
distribute them.
to whether you were the author?

A.
It may
was loosely followed, that when you had
A.
background.
I don't specifically recall.
"Author Josh Rosner"?
it is.
Q.
Is it a call report authored
well be.
to make yourself comfortable that you know what

Uh-huh.
Okay.
by you?
A.
A.
Yeah. Well, I can tell you that it
appears to be a call report.
Q.
Again, the way their internal
Was there some system that
distributed them?
systems worked, you could actually put something
A.
in background and others could edit it, which
Q.
How did that system work?
would just switch the name at the top.
A.
My understanding is at the time most
So it
doesn't give any clear indication.
Q.
Okay.
of the content and client-facing folks had access
If you could take a look at
to them.
the second paragraph?
Q.
A.
Uh-huh.
Q.
Well, first let me ask:
Yes.
And what was the purpose of these
call reports?
You said
this not a call report but this a background.

A.
Uh-huh.
Q.
Were these - - Let's take a look at a
A.
I can't answer.
was not my system.
call report first.
I mean, it's - -
That was not my - - It was not my decision. It

Q.
Okay.
It was not my
...
In terms of the timing of
when you prepared them, would you prepare them

which is Bates-stamped MGA 02420, marked as
contemporaneously while you were on the call,

after the call?
Rosner Exhibit 5, and why don't we keep these two
A.
Depends.
documents both together.
Q.
Typically would you do it shortly
Hopefully it will help
out in context.
after the call?

Q.
Okay.
Mr. Rosner, can you identify
this document?
A.
I don't know if there was a typical.
Q.
On average when would you prepare
them?
MR. CAHILL:
Objection.
17 (Pages 62 to 65)

D.C. - 1-800-441-3376
MD - 1-800-539-6398
VA - 1-800-752-8979

Page 66
1
2
3
4
J. ROSNER
Q.
Well, did you ever prepare them a

yes.
Q.
Okay.
A.
indicate when it was filed, not necessarily when
11
Q.
Okay.
A.
NO.
Q.
And did you know that others at
Medley would be looking at these call reports?
There's a time stamp that would
it was prepared.
12
Is there any time stamp on
- CONFIDENTIAL
Did you ever put anything in a call
report that you believed to be false?
this that would indicate when it was prepared?
10
13
J. ROSNER
Q.
week after a call?

A.
- CONFIDENTIAL
mean--
A.
Page 68
A.
Yes.
Q.
And they might be relying on these
call reports in some aspect.

MR. CAHILL:
You see the box that says,
Date, 8-27-03?
Objection.
I can't answer whether they would be
A.
relying on them.
It was a small enough
A.
correct.
14
Q.
What date is that referring to?
iterative discussions with people, and I think we
15
A.
That merely means the last time it
all had the same view of call reports or
16
organization that for the most part there were
was edited in the system.

Okay.
generally the same view of call reports.
So that's not necessarily the
Did you take notes during your
17
Q.
18
date of meeting.
19
A.
correct.
A.
I don't believe I did, actually.
20
Q.
Okay. When you drafted these, did
Q.
Did you tape-record them or
21
22
you try and make sure these were accurate?
anything?
That's - - The system was one that
A.
Q.
calls?
23
many of us at the firm didn't agree with, and
24
different - - people at the firm used them
25
differently.
A.
NO.
Q.
At the top it says, "Outbound call
to Peter Brereton of OFHEO."

A.
Uh-huh.
Page 67
J. ROSNER
Page 69
- CONFIDENTIAL
J. ROSNER
They were in some sense used

initially, at about this time I would guess, as a
benchmark of a number of calls out that
--
that a
salesperson made or an analyst made, and so the

context of them were by and large correct.
- CONFIDENTIAL
Q.
What does that mean?
A.
That would mean that that was who
the call was to.

And you made the call to
Q.
Mr. Brereton.
Different people actually used different - -
A.
Yes.
different approaches to, you know, specific
Q.
Who was Mr. Brereton?
quoting and, you know, specific context.
A.
He was - - I don't know his specific
Q.
Well, what was your approach?
A.
It depended on the
--
on the report.
Again, did I rely on the reports to write - - the

call reports to write my reports? No.
So quite
often they were really just, from my perspective,

more done because of a requirement that they be
done rather than a focus on the content.
Q.
Okay. Was there a requirement that
they be done accurately?

MR. CAHILL:
Q.
title. He was an information officer at OFHEO.

Q.
During your time at Medley how
frequently did you talk to Mr. Brereton?

A.
Itdepends.
Q.
Dozens of times?
A.
I don't know if I would say dozens,
plural.
Probably - - probably somewhere - - I
can't even guess because of, you know, I mean,

you're talking about three years ago.
Objection.
Well, did you view that you had any
responsibility to accurately reflect your - -
was it
--
Was it as information came out of OFHEO that made

sense to verify or dig in deeper on or - - Yes.
Q.
Did you have a preexisting
A.
Generally yes.
relationship with Mr. Brereton from your previous
Q.
And did you do your best to make
employment?
sure the call reports were accurate?

A.
Most of the time.
A.
NO.
Q.
Do you recall when you first
18 (Pages 66 to 69)

DOCo
- 1-800-441-3376

Page 70
J. ROSNER
1
2
- CONFIDENTIAL
J. ROSNER
contacted Mr. Brereton?
A.
Idon't.
Q.
How did you - - When you had
Elections Commission is doing an investigation of

Freddie's and perhaps Fannie's fundraising based
discussions with Mr. Brereton, were they always
by phone?
A.
NO.
Q.
Did you ever meet with him for
- CONFIDENTIAL
the info is right, telling me the Federal
Page 72
on lobbyists restaurant deal and anything that

comes up in the search.
The FEC is not
particularly strong, but if they turn up

something they can hand it over to the U.S.
drinks or anything like that?
Attorney.
Do you recall having a discussion
10
A.
yes.
11
Q.
HOW
12
A.
Occasionally.
13
Q.
Did you ever meet with Mr. Brereton
conversation with Mr. Brereton about that.
A.
I don't believe so.
having a conversation about that subject matter?
Q.
14
with Mr. Brereton about that?
frequently?
A.
for dinner?
15
16
I recall not specifically having a
Okay.
Q.
A.
Does that mean you recall
I recall there being numerous
17
summary, what is the summary section of the
conversations with people outside of OFHEO about
18
contact call report in general terms? Not this
that subject matter.
19
specific summary, but what role does that play in
20
the document?
A.
21
22
people
Q.
Who else did you have conversations
A.
I can't recall with specificity.
with?
Again, for my purposes or for other
This is a - - This was a rumor that was actually
--
23
Q.
For your - - Under your practices.
circulating fairly broadly around the Washington
24
A.
~t was a general recapping of some
community at the time.
25
of the points of a discussion or inferences drawn
Was it accurate?
Q.
Page 7 1
J. ROSNER
- CONFIDENTIAL
from a discussion.
Q.
Page 7!
Do you see on the first line it
J. ROSNER
CONFIDENTIAL
A.
I have no idea.
Q.
Do you have any idea why
says, "he saidu and then there's quotes, which I
Mr. Brereton was providing you with this
guess goes on to the end of the document?
information?
A.
Uh-huh.
A.
I don't.
Q.
What does your use of quotes in your
Q.
Is election law part of OFHEO1s
practice mean?
A.
regulatory duties, as far as you know?
Again, in call reports it's not a
literal verbatim.
It is a general and
NO.
Q.
Do you have any understanding as to
why Mr. Brereton would ever agree to provide you
substantive recap.
Q.
A.
Is it an attempt by you to reflect
the substance of the conversation?

A.
To reflect the substance.
Q.
m d is your attempt to reflect the
with information?
A.
Q.
substance of that conversation accurately?

A.
In this specific case I have no
Q.
Do you recall any instance where you
tried to inaccurately capture what someone said?

A.
No, but, you know, we all know that
at times the accent is on different syllables.

Q.
Okay.
If you take a look at the
Yes.
MR. CAHILL:
Objection. Calls for
speculation.
Q.
recollection.
Would ever agree to provide me with
information?
Did you ever talk to Mr. Brereton
about why he was providing you with information?

A.
Mr. Brereton was an information
officer.
Q.
Okay.
Do you know if he met for
drinks with all the analysts covering Fannie - -
second clause in the section that appears in
A.
Idon'tknow.
quotes, it says, "I got a call, I cannot confirm
Q.
The information that you provided in
19 (Pages 70 to 73)

D.C. - 1-800-441-3376

Page 74
J. ROSNER
Page 76
- CONFIDENTIAL
J. ROSNER
your Medley reports, was that exclusive

information that was already in the public realm?
MR. CAHILL: That's a very broad
Yeah.
That wasn't "yes," yeah.
Calls for
Q.
YOU can answer.
A.
I always assumed that they were
whether it was specifically on things of OFHEO's
That was yes, it was a broad question. So could
purview.
you make it more specific?

Q.
Objection.
speculation.
question. Objection.
A.
- CONFIDENTIAL
MR. CAHILL:
Okay.
Q.
Do you have any sense of how much a
subscription to Medley services costs clients?
You can put away Exhibit 5.
Keep out Exhibit 4 for a minute.
I'm going to
show you another exhibit which we'll mark as
A.
Idon't.
Exhibit 6, which is a document dated September
Q.
Do you have any sense of whether it
8th. 2003, Bates-stamped MGA 02417.
was in the six figures or seven figures?
A.
Subscription annually, weekly?
Q.
Annually.
A.
Depends on which services they took,
Q.
Can you take a look at the very last
page of this document.
but I don't know the specific pricing on any, and
Okay. This document appears to have
my understanding is there was - - there were
two Bates numbers. At the top it says MGA 09704
different prices for different services or
on the first page.
clients or - - and I don't know how that was
02417.
defined.
Q.
At the bottom it says MGA
Mr. Rosner, can you take a look at

Okay.
Do you know whether the
the last page of this document?
information that Mr. Brereton was providing you
A.
about the federal elections commission was public
Q.
Uh-huh.
Do you see where it says "author"?
MR. KARAM:
at that time?
Which page?
Page 75
Page 77
J. ROSNER
A.
I don't know.
information was information that I hadn't heard

elsewhere.
Q.
Did you ever have any discussions
- CONFIDENTIAL
MR. TERRY:
I doubt that that
The last page.
I'm
sorry.
A.
Yes.
Q.
And is that your name?
with Mr. Brereton about why he ought to provide
A.
That is my name.
you with information?
Q.
Does that indicate to you that you
A.
No.
Q.
Okay.
Not to my recollection.
No.
Did you find that
were the author of this call report?

A.
Again, it may - - if it - - It's
Mr. Brereton was open in his communications with
possible that it doesn't indicate that, based on
you from the beginning, or did you have to
the way their systems worked.
persuade him to provide you with information?
the last one to go into the document and edit any
A.
I don't recall. What I will tell
Because if I was
of it, it would have made me the author of all of
you, just to clarify, is quite often - - And it
it in the system, whether that was, in fact, the
probably was the case in this situation, but I
case or not.
can't recall specifically.
--
he would
distinguish between his official views and his

personal views, and he would explicitly do so in
Would you
--
Did you ever edit other
A.
For - - For factual issues of record,
at times other people did.
the call.
Q.
Q.
people's call reports?
Did you ever get a sense of what
made that distinction?

MR. CAHILL: Objection.
A.
Did I ever get a sense - -
Q.
Of how he distinguished what was
official OFHEO views and what were his views?
Do I think
remember specifically doing so myself?

Q.
Okay.
--
Do I
I don't.
Do you have any reason to
doubt that you were the author of this document?

A.
I don't have any specific reason,
because I don't specifically recollect this

document.
20 (Pages 74 to 77)

DOCo
- 1-800-441-3376

Page 78
Q.
Page 80
- CONFIDENTIAL
J. ROSNER
J. ROSNER
You see the top says, "Outbound call
to Steven Blumenthal of OFHEO1'?
- CONFIDENTIAL
haven't read it in its entirety. As I said, I

don't have reason to doubt that I wrote much of
A.
Yes.
it.
Q.
Who is Mr. Blumenthal?
at any point.
A.
Mr. Blumenthal was the deputy
I don't know whether anyone else edited it

Okay.
Q.
Did you have a number of
director and then the acting director at OFHEO,
conversations with Mr. Blumenthal while you were
and prior to that I think was counsel to the then
at Medley?
director.
Q.
And do you know what he did before
A.
Well, it states it here in the - - in
that?
A.
I did.
Q.
Do you recall if you had
conversations with him in September of 2003?
the background.
Okay. And looking at the
Q.
Q.
Okay. And he was, himself, a
with Steve, a major source."
as to what Mr. Blumenthal did prior to that?

It does.
Q.
first line on that, it says, "Great conversation
background, does that refresh your recollection

A.
A.
A.
Uh-huh.
The word "major" is in all caps.
Q,
Did you have a practice of using all
political analyst for Schwab Capital Markets?
caps to emphasize something?
A.
correct.
Q.
Did you know Mr. Blumenthal when he
A.
was an analysts - -
Did I have a practice of it? No.
Did it - - Did I occasionally do it?
I guess at
times.
You see the - - At the end of the
A.
I didn't.
Q.
- - for Schwab?
first paragraph it says, "All of this is
And I guess prior to that he served
currently off the record"?
Q.
Page 79
J. ROSNER
Page 81
- CONFIDENTIAL
as finance counsel for the House Commerce
A.
Uh-huh.
Committee, and was vice president and director of
Q.
Underlined?
regulatory relations at the Securities Industry

Association.
A.
Did you know Mr. Blumenthal when he
I didn't.
Q.
Do you know which - - which party he
were not to be discussed and were - - my

understanding were largely his views.
Q.
was serving when he was with the finance
report on them at all, or just without

If my recollection is correct, I
attribution?
believe he was a republican.
Q.
What - - What was your understanding
of matters that were off the record? Could you
committee?
A.
That is to say that I did not want
anyone discussing any of this, and that his views
was with the House Commerce Committee?

A.
What does that mean,
"All of this is currently off the record"?
A.
I don't believe that I could report
on them at all, but I don't think there was a

It was - - It was not a
summary line at the top, it says, "Great call,
specific practice.
great sourceu?
specific term that was used with any regularity.
A.
Uh-huh.
Q.
Did you write that?
Q.
If you take a look at the first
line, it says, "The FRA investigation."
A.
I don't recollect.
A.
Uh-huh.
Q.
Did you view Mr. Blumenthal as being
Q.
"People are going to be shocked by
a great source?
what is in the report. We took a lot of flak
A.
Yes, but not on all matters.
about the Parsegian thing. But as the person
Q.
Okay.
heading up the investigations, I can tell you
doubt that you wrote this document?

A.
Do I have any reason to doubt it?
that the things that we were told under oath by

I
Parsegian and others made it very clear that we
21 (Pages 78 to 81)

D.C. - 1-800-441-3376

Page 82
Page 84
needed to clean house. The board was asleep at

the switch.
A.
I don't specifically.
It
wouldn't - - It wouldn't surprise me, but neither
If we were the SEC, based on what we
found we would have forced the company into
would it surprise me to have had him make
bankruptcy.
comments to the contrary of that at other times.
I don't think the stocks will get
crushed because the investigation will be looked
Q.
Okay.
Do you recall Mr. Blumenthal
at, memorialized in the past, but it is
ever describing Fannie Mae in September of 2003
important."
as a rat's nest?
Do you recall Mr. Blumenthal making
comments along those lines to you?

A.
A.
Idon't.
Q.
Do you recall Mr. Blumenthal in
September of 2003 telling you that he would
Not specifically. Is it possible?
personally never own a single share of either
Yes.
Q.
Fannie Mae of Freddie Mac stock?
And the fact that quotes are used
there, under your practice does that mean you
A.
I don't specifically recall that.
were trying to reflect
Q.
Okay.
--
A.
Correct.
Q.
- - the substance of what
Is that consistent with what
he was telling in September of 2003?

A.
My recollection of September, 2003,
specifically is obviously not terrific, so I - - I
Mr. Blumenthal - A.
Correct.
Q.
If you take a look at Point 3, it
really can't answer that.

MR. CAHILL:
says, "Legislation and the treasury." And there
to speculate.
appear to be quotes at the beginning of that
THE WITNESS:
point and then at the end?
MR. CAHILL:
A.
Uh-huh.
Q.
Again, does that purport to capture
I think that - Let me caution you not

Right.
If you know the answer,
give the answer.

A.
SO no.
Page 85
Page 83
A.
Again, not with specificity, but I
3
4
personal, not necessarily professional, opinions
in our conversation.
If you take a look, sir, in the
after OFHEO had issued its report on Fannie Mae?

Q.
Okay.
A.
I think it - - I think it was.
Q.
Okay.
F&M is working with Treasury to draft the
There will be a five-year
- CONFIDENTIAL
September, 2003, was that before or
A.
middle of that paragraph, it says, "As we speak,

administration's bill.
Q.
would not be surprised if those were his
Q.
J. ROSNER
the substance of what Mr. Blumenthal said?
head.
Is that in September of 2004?
Do you know when OFHEO began
its special investigation of Fannie Mae?

A.
10
I don't recall.
I recall that it
moratorium preventing Treasury from increasing
11
was sometime after the Freddie investigation was
capital requirements of the agencies as part of
12
completed.
the trade with F&M.
13
Thatpslike a
get-out-of-jail-freecard.
I will tell you,
14
especially having seen what I have seen during

the investigation, that this is a rat's nest.
Q.
Do you know if it was before or
after September, 2003?
15
A.
I don't recall.
16
Q.
Can you take a look at Point 5 on
can't tell you when or how, but I, Steve
17
Blumenthal, personally would never own a single
18
"These companies" - - all caps - - "will fail at
share of either stock. At some point these
19
some point, and no one is acting responsibly
companies will get crushed under their own
20
now."
weight."
21
this document. Middle of that paragraph it says,
DO you see that?
22
A.
I do see that.
23
A.
I don't.
Q.
And do you recall Mr. Blumenthal
24
Q.
Okay. Do you see that paragraph
making comments along those lines?
25
comments along those lines to you?
appears in quotation marks?
22 (Pages 82 to 85)

D.C. - 1-800-441-3376

Page 86
J. ROSNER
Page 88
- CONFIDENTIAL
A.
Yes.
caused more color to be put into reports than
Q.
Does that mean you're attempting to
actually reflected my view.
reflect Mr. Blumenthal's comments?

In all likelihood.
A.
But, again, not
published reports.
Q.
verbatim, so it may have been in tone.
Q.
And as I said, I
didn't use the reports as the basis of my
By "in tone" you mean the substance
of the comments?
So what you wrote down in this
report might not actually be true.

A.
Correct.
A.
The sentiment, or what I inferred.
Q.
Can you take a look at Point 6?
short break.
A.
Yes.
take time to refresh ourselves.
Q.
It says, "1 tell Steve that I've
MR. TERRY:
Why don't we take a
They need to change the tape, but

THE VIDEOGRAPHER:
The time is
been concerned about these issues and that I
11:21. We're going off the record. This is the
would be interested in knowing anything that may
end of Tape 1.
help embarrass officials into doing the right
(Whereupon, a recess is taken.)
thing or give me pressure to exert through
THE VIDEOGRAPHER:
We are now back
investors on the agencies. Steve tells me that I
on the record.
should expect him to help me in that way."
marks the beginning of Tape 2 in the deposition
to Mr.
The time is 11:33 a.m.
This
A.
Uh-huh.
of Mr. Joshua Rosner, which is being taken at
Q.
Do you recall making those comments
OtMelveny& Myers.
Blumenthal?
The videographer is Terry
Carruthers, here on behalf of Esquire Deposition
A.
I don't.
Services, located at 1020 19th Street, Northwest,
Q.
Okay.
Washington, D.C.
That paragraph doesn't
appear - - That sentence doesn't appear in quotes,

does it?
Counsel may proceed.

Q.
Mr. Rosner, you understand you're
Page 87
J. ROSNER
- CONFIDENTIAL
J. ROSNER
A.
Itdoesnot.
Q.
Does that indicate to you that these
- CONFIDENTIAL
still under oath?
are comments that you are making rather than

Mr. Blumenthal?
A.
Page 89
A.
Uh-huh. I d o .
Q.
Did you tell Mr. Blumenthal that you
would be interested in knowing anything that
It doesn't.
You know, again, the
value of the call reports was more a functionary
might help embarrass the officials into doing the

right thing regarding Fannie Mae?
requirement, a functional requirement at Medley
A.
I don't recall.
than necessarily reflective of the specific
Q.
Did you write that in this memo?
substance. Most of us hated doing them.
A.
I don't recall.
Q.
Did you ever tell Mr. Blumenthal
us did do them.
Some of
Some of us didn't do them, you
know, so it doesn't necessarily mean anything.
Q.
Well, you didn't make these things
up, did you?
that you would be interested in knowing anything

that might give you pressure to exert through
investors on the agencies?
A.
NO.
A.
Through - - Absolutely not.
Q.
If you wrote in your report, "1 tell
Q.
Did you write that?
Steve that I've been concerned about these issues
A.
Through investors?
and that I would be interested in knowing
Q.
If you could take a look at Point 6.
I don't recall.
anything that may help embarrass officials into
Do you see the first line?
doing the right thing or give me pressure to
Steve that I have been concerned about these
It says, "I tell
exert through investors on the agencies," would
issues and that I would be interested in knowing
that be something that you, in fact, said?
anything that may help embarrass officials into
A.
Perhaps if you go back to the date,
this is at a point where there were internal

issues within Medley which may actually have
doing the right thing or give me pressure to

exert through investors on the agencies."
A.
I don't recall saying that.
23 (Pages 86 to 89)

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Page 90
1
J. ROSNER
2
3
I don't recall.
Q.
I already said that
Do you have any reason to think that
- CONFIDENTIAL
Q.
Did you ever write anything in your
call reports that was false?

A.
Did I - - I wrote things in my call
reports only that I believed to be correct.

doesn't mean that they were fact.
Do I have any reason to believe?
Q.
Who was the primary contact, during
your time at Medley, with Mr. Blumenthal?
J. ROSNER
public domain.
A.
NO.
9
10
A.
1
2
anyone else wrote that?
7
8
Did you write that?
I don't recall writing this.
5
6
- CONFIDENTIAL
Q.
Page 92
10
11
A.
I believe I was.
11
12
Q.
Do you recall Mr. Blumenthal ever
12
Q.
That
Okay. Did you ever claim in your
call reports that somebody had said something

which they had not said?
A.
Again, in the call reports, as we
say and we discussed earlier, the - - It's the
13
telling you that, quote, "I should expect him to
13
interpretation.
14
help me in that way?
14
my inference. It was often the tone and the

accent as opposed to a specific statement.
15
A.
Idon't.
15
16
Q.
16
17
telling you he would provide you with
Q.
It was my understanding.
It was
Did you ever intentionally
17
mischaracterize the substance of anyone's

comments, or the tone?
18
embarrassing information regarding Fannie Mae so
18
19
you could put pressure on their investors?
19
A.
Intentionally, no.
20
Q.
Did you ever make up things in these
20
21
A.
Absolutely not.
Q.
You mentioned earlier that there
21
22
were some internal issues at Medley that may have
22
23
colored what you wrote in these call reports?
23
24
A.
Correct.
24
25
Q.
What are those issues?
25
call reports that you said to other people?

A.
Not to my
recollection I should say.

Q.
If you wrote in the call report that
you told Mr. Blumenthal something, did that, in
Page 91
J. ROSNER
A.
Page 93
- CONFIDENTIAL
The issues were that the firm
fact, happen?
historically had a view that everything had to be
A.
It may, it may not have.
viewed as exclusive information whether it was or
Q.
Okay.
Are there any instances where
it wasn't and, therefore, had to be supported by
you claimed in your call reports that you said
sources which quite often could have been public
something that you had not said?

MR. CAHILL:
documents, but that wouldn't have satisfied the

internal pressure.
Q.
So sometimes you relied on public
documents but claimed in your call reports that

you had spoken to individuals?
A.
.Q.
NO.
Q.
Do you recall ever making up in your
call reports something that you had said?

A.
I don't recall.
Q.
Sitting here today, can you deny
that you wrote in your call report that you told
Okay.
Mr. Blumenthal that you wo.uld be interested .in
Can you explain a little .more
That the pressure was to have
everything sourced to a person.

Q.
I don't recall.

what you mean by that?
A.
Did that pressure cause you to alter
your call reports?

A.
NO.
Q.
Did that pressure cause you to
knowing anything that might give you pressure to

exert through investors on the agencies?
false?
A.
Typically it caused me to seek
to confirm information that was already in the
No, but I can't affirm writing it
either, as I said before.

Okay.
So sitting here today, can
you deny that you, in fact, told that to

Mr. Blumenthal?
A.
No.
Can you
deny writing that?
Q.
include information in your call reports that was

A.
Objection.
A.
I can't deny it, but neither can I
affirm it.
Q.
Sitting here today, can you deny
24 (Pages 90 to 93)

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Page 94
J. ROSNER
Page 96
- CONFIDENTIAL
J. ROSNER
Mr. Blumenthal told you that, quote, "I should

expect him to help me in that way"?
A.
I don't recall, but I actually would
Okay.
So you think that's something
that you just made up.
Nor was it wrath.
Q.
Okay.
Objection.
continue to point out that by moving them to
The call
treasury there will be a larger implicit
reports, you have to understand the internal use
guaranty."
utility of them, which for most people was
Now, do you see that?
insignificant.
Did these internal pressures affect
how you wrote your call reports?

A.
It says,
"He also urges me to continue down the road on

and the seller contribution issue, and to
I don't recall. Again, tone,
substance and internal pressures.
Q.
the loan modification issue, delinquency skewing,
MR. CAHILL:
A.
Objection.
A.
the next sentence on this Section 6.
doubt that he said that.

Q.
- CONFIDENTIAL
MR. CAHILL:
yes.
Q.
Why?
Because that was a functional
I do see that.
Q.
to?
I think I said at times they did,
A.
A.
A.
Id0.
Q.
What is that?
A.
It's actually sort of incongruous,
because it's referring to different issues, I
requirement put in place by the firm and had
would believe.
outlived its practice.
the loan modification issue, long before I knew
Q.
Did you think anyone was going to
read this?
I have long had concerns about
Steve Blumenthal or anyone else in the regulatory

or policy world impacting the GSEs regarding the
A.
ldonltknow.
manner in which they modified and reported
Q.
Well, why would you alter your call
modification of loans.
Page 95
J. ROSNER
- CONFIDENTIAL
J. ROSNER
reports if you didn't think that anyone was going
to read them?
Q.
Objection to form.
would assume that it's regarding that concern
Why would you feel pressured to
having been expressed to the regulator, that they
write your call reports in a certain way if you
didn't think that anyone would read them?
8
9
10
On the treasury side, I would assume
Anyone other than management.
that that actually is referring not to
Q.
Okay.
modification or delinquency skewing, but I would
So you thought that
management was reading the call reports.

A.
I -- I probably believed that.
12
Q.
And by "management" you mean
assume that that is the moving them to treasury

Yes.
Mr. Medley.
A.
Probably, yes.
15
Q.
DO you recall any instances where
16
you invented something on a call report that
17
didn't happen in order to make Mr. Medley happy?

MR. CAHILL:
18
20
A.
in the legislative process.
Q.
Okay.
And the "he" in that
sentence, is that referring to Mr. Blumenthal?
14
19
look into it.
A.
11
13
- CONFIDENTIAL
And so I don't specifically

recollect it in regard to this report, but I
MR. CAHILL:
Page 97
Objection.
A, I don't recall; and, B, it was
never to make Mr. Medley happy in writing any of
A.
Again, I don't specifically recall.
I would assume so.
Q.
Okay.
ever urging you to look into certain research

issues?
A.
NO. And I think that actually
that's not the context of that comment.
21
the call reports. There's nothing about it that
Q.
What is the content of the comment?
22
was to make Mr. Medley happy.
A.
I think the context of that comment
23
Q.
Okay.
Did you ever write a call
is that I had actually raised the issue with the
24
report in a way designed to avoid incurring
regulator. I had raised the issue separately
25
Mr. Medley's wrath?
with many others in the policy world and
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Page 98
J. ROSNER
Page 100
- CONFIDENTIAL
J. ROSNER
otherwise, and I think that he was encouraging me
- CONFIDENTIAL
larger implicit guaranty was good or bad?
on a personal level to actually, if I felt it was
A.
A personal view?
an issue, raise it and continue to raise it as an
Q.
Uh-huh.
issue.
A.
Did I? Yes.
Q.
What was your view?
A.
That a larger implicit guaranty of a
I don't think it was a directive or
encouragement of
...
Do you recall whether Mr. Blumenthal
Q.
urged you to continue to point out that by moving

OFHEO to treasury there would be a larger
private corporation is not a good thing.

Q.
implicit guaranty?
Okay. And did you ever make that
known to Mr. Blumenthal?
A.
I don't remember that specifically.
Q.
What does that mean by moving them
to treasury there will be a larger implicit
A.
I don't know if I did specifically.
I have no reason to believe I did not.
Q.
Do you know if subsequent to this
conversation you did point out in your - - any of
guaranty?
A.
Well, again, there were
your published work that moving OFHEO to treasury
conversations, just as with Mr. Brereton and just

as with other sources.
There were conversations
that were explicitly stated or understood to be
would increase the implicit guaranty?

A.
I don't recall.
I probably would
have said that not based on a single source if I
personal opinion as opposed to professional
did but based on the views of multiple sources
judgement or opinion by the source. And part of
and based on, more specifically, my own analysis.
the value that I had was - - with them was on
Q.
their legislative understanding.
Could you go back to Exhibit 4,
which I previously provided you with?
We had discussed the legislative
A.
Uh-huh.
process, and I would expect that that was his
Q.
Why don't you take a look at the
personal view on - - on what would happen if he
first line. It says, "Fredo Macs concession.
Page 99
1
2
Page 101
J. ROSNER
moved the regulator.
Q.
- CONFIDENTIAL
The early 1970s were an interesting time in the
Was it your understanding that it
American culture. They gave us both The
was Mr. Blumenthal's personal understanding that
Godfather, a story about small-time cheats
moving the regulator to the Treasury Department
growing into a sophisticated group of bullies and
would mean there was a larger implicit guaranty?

A.
Again, I don't specifically recall.
crooks, and they gave us Freddie Mac, whose older

brother, Fannie, was born during prohibition."
But that's what it says, and that's probably
A.
Uh-huh.
correct.
Q.
Taking a look at that line, does
10
Q.
Okay.
What does that mean, "a
11
larger implicit guaranty"? What does that phrase
12
mean?
13
14
A.
Implicit - - well, guaranty or larger
implicit guaranty?
15
Q.
Larger implicit guaranty.
16
A.
That it would enhance the market
that refresh your recollection of whether or not

you were the author of that?
A.
I don't believe I was.
Q.
Do you know who was?
A.
Idon'tknow.
Q.
Take a look at the second paragraph.

Well, first, do you know whether
17
perception that if Fannie or Freddie ended up
this is a - - this document was created by a
18
with a financial problem they would become a
single author, or was it a conglomeration of
19
bigger risk to the government.
Q.
20
A.
And in Mr. Blumenthal's opinion,
21
based on what you knew, was that a good thing or
22
a bad thing?
23
24
25
A.
I couldn't speak to that.
I don't
Q.
Did you have a view as to whether a
know.
I don't recall.
--
I don't know.
Q.
Take a look at the second paragraph?
A.
Uh-huh.
Q.
It says, "I have had conversations
with FM Watch, OFHEOts counsel, Famie Mae, Brian

Gardner, Brant Imperatore."
During the Fall, 2003, time frame
26 (Pages 98 to 101)

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Page 102
1
Page 104
were you having conversations with those
authorship, I would doubt that it would have
individuals?
actually referred back to Mr. Blumenthal.
A.
I would expect I was.
I'm not sure
that I was the only one.
Q.
If you take a look at towards the
middle there's a sentence with a lot of
capitalization.
caps - - "source that OFHEO is turning their
10
microscopes on Fannie and KNOWS" - - all caps
11
"they will find something."
"I heard from a GREATn
Q.
Why is that?
A.
Because I think I probably would
have actually included Mr. Blumenthal in that

prior paragraph if he was the source.
--
all
the
--
Q.
Who were your other great sources on
A.
Anynumberofthings.
a.
Who?
A.
F a ~ i eand Freddie shareholders who
--
12
A.
Uh-huh.
13
Q.
DO you know whether you wrote that?
seemed to have better information coming out of
14
A.
I might have.
the company than - - than the broader markets.
But, you know, again,
15
I don't specifically recall the document, so I
Q.
Okay.
16
very well could have.
A.
Lobbyists on both sides who felt
17
Q.
Who were your sources at OFHEO?
they were going to try to spin us.
18
A.
Well, that doesn't say a source from
trade associations. I mean, it was a myriad.
19
20
21
22
Policy folks,
It
OFHEO, and I would suspect that I never would
was pretty much anyone that anyone would talk to
have gotten that from OFHEO.
who seemed to have a degree of knowledge or basis
Q.
'
Who else was providing you with
information on the OFHEO investigation?

A.
23
for knowledge.
Q.
And you viewed all those sources as,
all caps, a - - great sources about the OFHEO
It Wasn't on the OFHEO
24
investigation.
25
goings-on with the housing market, legislation,
It was the regarding the
investigation?
MR. CAHILL:
Objection.
Page 103
Page 105
regulatory, policy issues surrounding any number
A.
Actually, no.
of issues, including the GSEs.
Q.
Which of those did you consider to
included everything from large shareholders of
the enterprises who were trying to give me their
views and their information, lobbyists from both
And my sources
J. ROSNER
- CONFIDENTIAL
I didn't.
be great, all caps, sources of - A.
Again, I think
--
On the OFHEO
investigation?
sides. You know, None of - - No one particular
Q.
Yes.
view was viewed as sacrosanct.
A.
I don't know if I really had a
Q.
10
next paragraph.
11
the chief counsel of OFHEO who was leading the
not have been within OFHEO.
12
investigation, he was a repub chief counsel, and
of that.
Why don't you take a look at the

It says, "I had a good call with
13
prior to that an analyst for Schwab Washington
14
Group.
15
completed by mid- September."
He told me the investigation would be
16
specific view of one as being a great source. I

would guess that the - - the better sources would
Q.
I'm fairly certain
Why don't we take another look at
Paragraph 3. Towards the bottom it says

look in the middle.
--
Let's
It says, "I offered him
Is that referring to Mr.
details of the conversation I had with an
A.
I would assume so.
below, in which the employee admitted to earnings
19
Q.
Do you know whether you wrote that?
manipulation, questionable derivatives
20
A.
I don't recall.
transactions, and bad internal accounting
21
Q.
Taking a look at that, does that
practices, and he' - - all caps - - "loved me and
17
18
Blumenthal?
internal audit employee at FRE on 3-20-02, see
22
refresh your recollection, the second paragraph
offered me a meeting, even though he said I can't
23
that refers to a great source about the OFHE08s
talk now.
24
investigation was, in fact, Mr. Blumenthal?
25
A.
I would actually, if this was my
A.
Uh-huh.
Q.
Did you ever provide Mr. Blumenthal
27 (Pages 102 to 105)

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Page 106
J. ROSNER
- CONFIDENTIAL
J. ROSNER
with information about a conversation you had
with a Freddie Mac employee?

I don't know if I specifically did.
Q.
Do you know whether you wrote that
sentence?
- CONFIDENTIAL
the sentence. It says, "I'm going to be one

shocked boy if we go into Fannie with the same
A.
Page 108
set of microscopes that we were using on Freddie

and don't find significant things.
They will not
be the same things that we have done at Freddie,

I believe that I did.
A.
But you know,
I don't specifically recall, but I believe that I
probably did.
Q.
but I'm confident that Raines is not the angel he

purports to be."
Do you recall Mr. Blumenthal telling
The next sentence says, "He said (we
you that?
11
can't use it in this form or with any attribution
A.
12
as to where it same from.)"
Q.
Do you recall him making comments
10
What does that mean, We can't use it
13
14
15
says, that we can't use it with any attribution,
17
and we can't use it specifically.

there a difference in saying you can't use it or
20
saying you can't use it with attribution?
21
many people's view at that point.
Q.
19
Andthat'sbackinAugustof2003?
A.
Correct.
Q.
And that would be more than a year
before OFHEO had issued the results of its
Is there a difference between saying
A.
I would say that that
wouldn't surprise me, because I think that was
Does that mean - - What does - - IS
Q.
I don't.
A.
I assume that it means just what it
A.
16
18
along those lines?
with any attribution as to where it came from?
special examination?
22
you can't use it and saying you can't use it as
A.
Correct.
23
attribution. Not necessarily.
Q.
Do you know if Mr. Blumenthal was
24
25
What does - - In your practice do
Q.
telling that to other analysts as well?
people ever provide you with information and tell
A.
Idon'tknow.
Page 107
1
2
J.
ROSNER - CONFIDENTIAL
Page 109
J. ROSNER
you, You can use this, but not with attribution?
- CONFIDENTIAL
Did you have any sense as to whether
Q.
A.
NO.
or not you had a closer relationship with
Q.
So whenever anyone's provided with
Mr. Blumenthal than did other analysts?
information, they've told you that it's okay to
A.
use their name?
Q.
What other analysts did you believe
MR. CAHILL:
7
8
9
10
11
A.
Objection.
If you notice, we actually
--
As by
practice Medley never sources or never details

sources in any of its reports.
Q.
Okay.
So it's implicit, whenever
that Mr. Blumenthal was regularly communicating
with?
A.
I believed that there were a number
10
of firms
11
that actually had better access to him than I
--
And I can't recall specifically.
--
12
anyone is talking to you, that you can't use
12
did, and that he hosted or OFHEO hosted meetings
13
attribution.
13
with clients and with the analysts for.
14
A.
COTEC~.
14
15
Q.
And it's fair to say it doesn't say
Q.
Setting aside formal meetings, do
15
you believe there were any analysts that had
16
in this sentence that you can't use this
16
greater informal contact with Mr. Blumenthal that
17
information.
17
you did?
MR. CAHILL:
18
19
20
Q.
MR. CAHILL:
Same objection.
The
document speaks for itself.
23
A.
24
question.
25
Well, does it say anywhere that you
can't use that information?
21
22
Objection.
Q.
I'm not sure I understand the
18
A.
I would assume there were.
19
Q.
DO you know who?
20
A.
24
Okay.
Take a look at the rest of
MR. KARAM:
22
23
25
Idon'tknow.
So - - andby - -
21
Wait for the next
question.
Q.
Why don't we take a look at the very
bottom of the document.
28 (Pages 106 to 109)

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Page 110
J. ROSNER
Page 112
CONFIDENTIAL
A.
Uh-huh.
Q.
It's in a different text?
A.
Again, I keep repeating this, but
the way the systems work, that fact that it says
A.
Correct.
"author Josh Rosneru merely means that I was the
Q.
You see, if you refer back to the
last person in it before it was filed. There may
last paragraph on the first page, it says, "I
have been others who actually accessed it prior
offered him details of the conversation I had
to that point.
with an internal audit employee at FRE on
Q.
3-20-02, see below"?
A.
Uh-huh.
Q.
Is this
A.
--
Is that what it's
I don't - - Specifically I don't have
reason to doubt that it was.
referencing on the top, see below?

A.
Do you know if this is a report of a
Call you had with Mr. Blumenthal?
Q.
Again, I don't specifically recall
Okay. And you see the date is
October 9th, 2003?
this document, so all I can do is infer, as you
A.
Uh-huh.
are.
Q.
Did you prepare your own contact
Q.
Okay.
And see the very bottom it
call reports, or did you have a support person do
says, "Will not be disclosed to any third parties
it for you?
without my express written consent, as

technically belongs to Graham Fisher
&
Company"?
A.
correct.
Q.
Does that refresh you recollection

I believe that I'm the person who
wrote that bottom piece.
Q.
Okay.
Typically I did.
Q.
Okay.
A.
Uh-huh.
Q.
Sort of in - - There's a long
Would you take a look at Page
2.
that you were the person who wrote this?

A.
A.
paragraph at the top?
Correct.
And does that also mean that
A.
Uh-huh.
Q.
And
--
let's see.
It says, "He goes
Page 111
Page 113
1
you are the person who wrote the last paragraph
on to say that after OFHEO is done with their FRE
on the first page of this document?
investigation, wants me to sit down with a senior
So you
member of his research and analysis group, Forest
could infer that, but I can't - - I can't recall
Pfaffenburg, to explain this to him and help
that.
OFHEO draft a demand for information from the
GSEs. "
A.
7
8
9
10
11
Q.
A.
I don't have reason to doubt that.
Q.
Okay.
2003, and its Bates number is MGA 02494.
Oh.
18
19
And at the top it's
Bates-stamped MGA 09241.

Q.
A.
NO.
10
Q.
Okay.
Mr. Rosner, can you take a look at
the last page of this document?
13
Q.
Did you write that?
14
A.
I don't recall, but I probably did.
15
Q.
I see that.
16
asking you to sit down with Forest Pfaffenburg
17
with his research and analysis group?
18
19
A.
yes.
20
Q.
It says "author, Josh Rosner. "
21
A.
It
wouldn't surprise me.

Q.
Did you ever meet with OFHEOrs
research and analysis group?
Do you see that?
22
A.
Ididn't.
A.
Uh-huh.
23
Q.
Q.
Do you have any reason to doubt you
24
asking you to help draft a demand for information
25
from the GSEs?
22
25
It starts there.
Okay.
21
24
It's a little hard to find.
MR. CAHILL:
A.
12
20
23
DO you see that?
11
This document is dated October 9,
16
17
Let's look take a look at
another document.
14
15
Okay. And you don't have any reason
to doubt that you were that person?
12
13
As I said, I don't recall.
were the author of this document?
29 (Pages 1 10 to 113)

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Page 114
J. ROSNER
A.
- CONFIDENTIAL
Page 116
- CONFIDENTIAL
J. ROSNER
I don't, but - - I don't, but this is
walks me to the elevator he quitely whispers, I1

know I shouldn't utter this, and I will deny ever
actually referring to not something that OFHEO
was bringing to my attention but something that I
saying it, but the guys running these GSEs are
was concerned about.
really evil. ' "
Q.
Okay.
For the part of the sentence
First, does your use of quotes here
where it says "help draft a demand for
purport to sum up the substance of what
information from the GSEs," is that referring to
Mr. Blumenthal had said?
something that Mr. Blumenthal was asking you to
do?
10
A.
Again, I don't recall.
That's what
this implies or states.

Q.
Did you ever draft a demand for
information from the GSEs
--
A.
Ididn't.
Q.
- - on behalf of
Did you ever draft any documents on
Q.
11
Again, I would assume so.
I don't
Okay.
Looking at this, do you
12
recall Mr. Blumenthal having made a comment that
13
the guys running the GSEs are really evil?
14
A.
I don't recall that.
15
Q.
Okay.
16
--
A.
have a specific recollection.
doubt that he made that comment?
17
A.
Idon't.
behalf of OFHEO?
18
Q.
Is that something you would have
A.
Ididn't.
19
Q.
made up in your report?
Did you ever provide OFHEO with any
20
A.
Made - - Made up?
assistance in connection with its investigations
21
Q.
If you wrote it in your report, it
of either Fannie Mae Freddie Mac?
22
was true.
A.
23
A.
Q.
Sure. Did you ever tell OFHEO what
24
they should be looking for in their
No.
Right?
Not necessarily.
It was - - it was
my perception.
Q.
25
It was your perception - -
Page 115
J. ROSNER
CONFIDENTIAL
investigations of Fannie Mae and Freddie Mac?

A.
I told actually in written reports
Page 117
J. ROSNER
1
2
3
- CONFIDENTIAL
It was - -
A.
Right.
Q.
- - that as Mr. Blumenthal walked to
everyone who read the reports things that should
the elevator he quietly whispered, I know I
be looked at.
shouldn't utter this, and I will deny ever saying
it, but the guys running these GSEs are really
other instances where you provided OFHEO with
evil?
advice as to what they should be looking for in
their investigations?
Q.
A.
So in that sense, yes.
Aside from that sense, are there any
Not other than issues that I had
actually brought up in written reports.
A.
Correct.
In tone, in substance, in
inference, that is actually the - - the overall
10
feeling I got. As I said to you before, the
11
quotes doesn't necessarily mean that it was a

direct, exact quote.
And did your written reports bring
12
up certain accounting issues at Famie Mae from
13
time to time?
14
quotations, "I know I shouldn't utter this and I
Q.
Q.
So your testimony is where it says,
A.
They did.
15
will deny ever saying it, but the guys running
Q.
And those reports were written well
16
these GSEs are really evil' is something you just
before OFHEO's special investigation was
17
inferred?
completed?
18
A.
On Fannie Mae.
19
MR. CAHILL:
Objection.
You
mischaracterized his testimony.
Q.
On Fannie Mae?
20
Q.
You can answer.
A.
At times.
21
A.
As I said, I don't specifically
Q.
If you take a look at the last
22
sentence of Page 2 of this document?
23
recall this, so I can't even answer the question.

Q.
Sitting here today, do you think
A.
Uh-huh.
24
it's likely that you are just describing an
Q.
It says quote - - It says, "As he
25
inference you got from a conversation with
30 (Pages 1 14 to 1 17)

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Page 118
J. ROSNER
CONFIDENTIAL
J. ROSNER
Mr. Blumenthal?
A.
Page 120
-
CONFIDENTIAL
by FM Watch?
I think that it would not be tied to
a specific or isolated view.
I do think that
there was a sense at times that the companies
A.
To my knowledge, never have and are
Q.
not.
were effectively trying to assassinate
document, which is Bates-stamped
characters.
OFHEO-DLU-00058770.
Q.
Okay.
I'm just going to ask you to
identify that document for me.
ever saying that he thought Mr. Brenzel
(phonetic) was evil?
A.
Idonlt.
A.
Uh-huh.
Q.
DO you recall Mr. Blumenthal ever
Q.
What is it?
saying that he thought Mr. Raines was evil?

A.
I don't recall so.
Q.
Okay.
You mentioned that you
A.
It appears to be an E mail.
Q.
Okay. An E mail from who?
A.
It appears to be an E mail from Josh
thought there was a sense at times that companies
Rosner to Steve Blumenthal and a response from
were effectively trying to assassinate
Steve Blumenthal.
characters?
Q.
A.
Correct.
Q.
Where did you get that sense?
A.
From personal experience and from
A.
other information, from various sources.
Q.
And it says jrosner@2way.net?

It isn't, actually.
I was just
looking at that, trying to remember if it ever

was, but I have no reason to believe that it
Did Mr. Blumenthal ever tell you he
thought the companies were trying to assassinate
wasn't .
Q.
Okay.
Sitting here today, you have
no reason to think this is not, in fact, an - -
his character?
Page 119
Page 121
Is
that your e-mail address?
A.
NO.
A.
Correct.
Q.
Did you ever hear that it was
Q.
- - E mail exchange between you and
Mr. Blumenthaltsview that companies were trying
to assassinate his character?
6
7
8
because the court reporter is giving me a look,
Q.
Whose
deservedly.
A.
character.
11
it.
14
--
Whose characters are you
THE WITNESS:
I am including Mr. Blumenthalls

I don't believe I ever heard him say
MR. CAHILL:
I'm sorry.
Let him finish.
Q.
Who else?
document, which is Bates-stamped
A.
I had - - Really, anyone who was of a
OFHEO-LAW-00021348.
different view than the company's.
Q.
16
your character?
17
A.
I believe possibly more recently.
18
Q.
Okay.
19
A.
I was recently told by a
Company ever try and assassinate

Q.
In what way?
congressional staffer that the company had told
21
them they should ignore my views because I'm
22
being paid by FM Watch.
She
can't take two people talking at the same time.
Q.
15
20
Let me just interrupt,
I don't believe so.
10
13
MR. CAHILL:
A.
referring to?
12
Mr. Blumenthal?
You see the bottom E mail is from
someone named Anne Canfield?

A.
Yes.
Q.
Who is Anne Canfield?
A.
Anne Canfield is, my understanding,
with FM Watch and has a private consultancy.

Q.
Does she work for FM Watch?
A.
I don't know if she officially works
23
Q.
Are you being paid by FM Watch?
24
A.
Never have and am not.
for FM Watch.
25
Q.
Do you know if Medley is being paid
are members of FM Watch.
I know that many of her clients
31 (Pages 118 to 121)

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Page 122
Page 124
it.
Q.
What is FM Watch?
A.
FM Watch, I don't know how to define
Does this E mail refresh your
It's a group of mortgage market institutions
who have viewed it as their role as to take a
recollection that there was a white paper

critical of Fannie Mae's accounting policies
being circled
A.
stance on the GSE's policies.

What is - - Is their stance pro GSE's
Q.
policies?
circulated around this time?
circulated, but that there was a white paper that

was critical, yes.
A.
I don't know if it's particularly
pro or anti.
I think that it views itself as a
Q.
Did you receive that white paper?
A.
I don't - - I don't recall receiving
that white paper.
watchdog group.
Q.
--
I don't know whether it was being
Is it fair to say that the members
Q.
Do you know who authored it?
of FM Watch are largely competitors of Fannie Mae
A.
Idon't.
and Freddie Mac?
Q.
Do you recall ever discussing that
A.
It is.
Q.
Okay.
white paper with anyone?

Did you ever refer to Miss
Canfield in your call reports or other documents

as Annie Fannie?
I don't recall.
Q.
Do you recall ever referencing that
white paper in your reports?

I believe I probably did.
A.
Q.
Okay.
--
A.
A.
Q.
the text of her E mail?

A.
Uh-huh.
Q.
It says, "Rob, awhile ago I
In my published reports? I don't
recall.
document, which is dated January 15th, 2004,

Bates-stamped on the top MGA 09715 and on the
forwarded to you a copy of a white paper that had
bottom MGA 02656.
been written reviewing Fannie Mae's financial
Page 123
picture.
people at OFHEO thought that Burt Ely had written
the paper.
paper.
Street, sophisticated analysts and accountants."
A.
Idon't.
Q.
Let me show you another document

Q.
17
A.
Q.
A.
There is no reason to believe that I
Q.
Okay. And looking at this document,
do you believe that you were, in fact, one of the
Q.
Do you recall that a white paper was
Fannie Mae's accounting?

Other than - - Not specifically,
22
other than recollecting as a result of this
23
E mail that there was a white paper, yes.
24
don't know if I ever saw the white paper.

Q.
Any reason to think you were not, in
A.
published in 2003 that was highly critical of
25
Uh-huh.
Q.
wasn't .
I can
19
A.
A.
20
21
Do you see on the last page it says,
authors of this document?
say that I've never read it.
18
Q.
"Author, J O S ~Rosner"?
Have you ever seen this document
before?
16
And it's Rosner Exhibit
wasn't at least one of the authors.
14
15
MR. TERRY:
fact, the author of this document?
that's Bates-stamped FM SIF 0405026960.
12

11.
Do you know what white paper that's
10
13
Burt had nothing to do with the
referring to?
11
I heard through the grapevine that
The paper was written by a group on Wall
7
8
Page 125
Okay.
There's no reason to believe that I

Okay.
And does this document appear
to be a contact call report that you drafted, at

least a part of - A.
~t appears
Q.
- - outbound call with Steven
--
Blumenthal of OFHEO?
A.
It appears to be.
Q.
Any reason to think it is not, in
fact, that?
32 (Pages 122 to 125)

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Page 126
2
3
Page 128
1
A.
J. ROSNER
While I don't recall, there is no
reason not to believe that that's the case.
Q.
Okay.
If you could take a look
- CONFIDENTIAL
Q.
What did you mean by that?
A.
DO you know what the term
"regulatory capture' is?
under the Call Notes section, it says, "Well, we
Q.
Well, why don't you explain it.
have reorganized the infamous office of
A.
Regulatory capture is when an
examinations, created an office of compliance,
examiner works so close with an institution that
and an office of the chief accountant. You can
they actually form a relationship that is not - -
guess which senior person who was in the GSE's
is more comfortable than necessarily a regulator
10
pocket will be leaving soon (Scott Calhoun).
11
have changed the incentive structure for
anything tawdry but, rather, a result of
12
advancement here.
comfort as opposed to the traditional strict
13
being an aggressive regulator."
14
We
Now you make your bones by
15
you that OFHEO had changed its incentive
16
structure for its regulators?

the general period, and I do believe that that
19
actually is - - is what happened.

Q.
21
Okay.
23
incentive structure?
I don't specifically remember that.
A.
I do remember the general view that it had not
And you see that section I
just read you is in quotations?
22
Did Mr. Blumenthal ever comment to
Q.
18
20
institution.
you that OFHEO needed to change its regulatory
I don't specifically. I do recall
A.
been as distanced a regulator from the

institutions that it regulated as a strong
A.
Uh-huh.
Q.
Does that mean you're trying to
regulator should be.
24
reflect the substance of Mr. Blumenthal's
25
comments?
And Mr. Blumenthal was trying to
Q.
change that?
A.
That's my understanding.
Page 127
2
A.
Correct.
Q.
Did Mr. Blumenthal ever make any
Page 129
A.
If you could take a look at the next
Q.
comments about Scott Calhoun?
of
--
regulatory relationship with an overseeing
17
should have, and it's not necessarily a result of
paragraph, at the very bottom last sentence, it

says, "Steve says that he wishes the conversation
You know, again, that's in
would turn to the P word (privatization) as that
parenthesis, so I don't know whether that was a
would ultimately eliminate the need for
specific - - hidden referencing Scott Calhoun or
regulatoru - -
my understanding that that's who he was referring
A.
to.
Q.
Could - - Okay.
- - (other than the SEC) and would
Hold on.
10
Q.
That could be an inference?
reduce the government's risk.
11
A.
Correct.
I will tell you I have zero doubt that these
Q.
Did he ever suggest to you that
things will ultimately blow up.
12
13
Mr. Calhoun was in the GSEtspocket?
14
A.
15
was.
16
Calhoun.
A.
Did he suggest they were being paid

I don't believe that anyone ever
20
suggested - - it was ever being suggested they
21
were paid by the GSEs.
Q.
22
that you can guess which person who was in the
24
GSE's pocket will be leaving soon.

A.

Fa~ie
Mae and Freddie Mac should be privatized?
A.
Q.
Okay.
Right?
Right.
Seeing it there in writing,
can you deny that Mr. Blumenthal said that?

A.
Well, you wrote the phrase in here
23
25
government.) ''
expressing sentiment to you that he believed that
by the GSEs?
19
I can't tell you
when, but we need to get them out of the
It was my understanding that that was Scott
Q.
17
18
Again, he suggested that someone
(Steve again says,
I can tell you that the inference
that I received was certainly of that.

Q.
So your testimony is you received
the inference from Mr. Blumenthal that he was in

favor of privatization of Fannie Mae?
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--
Page 13C
A.
Page 132
1
That - - that - - again, on a
J. ROSNER
CONFIDENTIAL
personal, not necessarily professional basis,
it's my understanding that that was his view.
Q.
A.
It appears to be an equity brief.
Q.
What's an equity brief?
A.
It was a note put out by Medley to
Q.
Do you ever recall Mr. Blumenthal
ever telling you something along the lines, I

have zero doubt these thing will ultimately blow
up, I can't tell you when, but we need to get
them out of the government?
A.
Q.
Is that in line with comments that
he made about Freddie Mac and Fannie Mae?

MR. CAHILL:
A.
Objection.
Yeah, I don't recall - - I don't
recall that being specifically
Q.
...
10
11
in your document here?
What is this document?
its clients.
Do you know whether you were the
Q.
author for this?

I believe that I was the author not
A.
12
of the final edited version but certainly of
13
the - - of the - - the general report.
14
15
You see that part is the quotations
Q.
'
Can you take a look at the middle
section.
Middle section - -
16
A.
Okay.
17
Q.
Of the first page, I'm sorry, with
A.
Uh-huh.
18
the subheading "White House to play Texas hard
Q.
And again, that's your attempt to
19
ball with GSE"? Do you know if that's a section
reflect what the substance of Mr. Blumenthalls
20
that you drafted?
comments were?
21
A.
I'm sure that it probably was.
22
Q.
OKAY.
A.
Correct.
But the piece that's
missing which - - and I posit this as a
Take a look at the first full
23
paragraph under that section. It says, "Besides
possibility is, that may have been a response to
24
the announcements, we have met with several key
my comment of, you know, I think these will
25
sources who have suggested that both Fannie and
Page 131
J. ROSNER
Page 133
CONFIDENTIAL
ultimately blow up, and he may have actually just
Freddie are now playing against a different kind
responded in the affirmative whether that was his
of White House, a Texas team with pro hard-ball
view or not or he was responding to my view.
experience.
Q.
Either way, is it fair to say that
Furthermore, sources suggest that
White House ace Andrew Card, chief of staff, is
the view, whether he was merely agreeing with
pitching for the home team.
your view or expressing his own, was that he
player of Card's stature to be pitching against
thought Fannie Mae and Freddie Mac would
the GSEs is highly unusual, and highlights how
ultimately blow up?
important this game is to the White House team."
A.
That certainly is what's inferred
there.
For a White House
First, what did you mean by Andrew

card is pitching for the home team?
Q.
Okay. And do you have any reason to
doubt that that's, in fact, what he said?

A.
NO, but I guess I'm not sure what
"ultimately blow up" means his view as opposed to
A.
report, changed the actual metaphor, but the

overall substance of it is probably my writing.
my view.
Q.
Andrew Card was chief of staff, and

Sure. And would you have written
that in quotations if Mr. Blumenthal had not said

something along those lines?
A.
Again, I would have written if that
was what I walked away with as a perception of

his intent or his view.
Q.
Well, again, I don't believe - - I
believe that someone actually, in editing my
Okay.
The next exhibit is
Bates-stamped MGA 09059. It's dated January

29th, 2004.
for the chief of staff in the White House to

become so deeply involved in an issue affecting a
specific company or industry was - - seemed
unusual.
Q.
"The home team" meaning the government.

Okay.
What do you mean that
Mr. Card became involved in - - issue? What

issue, first of all, is this discussing?
A.
Administration's official
perspective and policy on the need for a stronger
34 (Pages 130 to 133)

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Page 134
Page 136
regulator.
Q.
A.
And what do you mean by Mr. Card
became involved in that effort?

A.
Broadly.
I mean, we saw any number
of discussions of that in policy circles, in

think tanks, in the press, in statements from the
It was my understanding that the
administration.
White House actually had formed an internal
Q.
Was it your view that the White
working group to discuss and come up with a plan
House was going to try and increase the public
for approaching the overall GSE issue.
discussion about Fannie Mae's mission and ties to
Q.
And what was the overall GSE issue?
A.
Questions ranging from what the
the government if it was not willing to give on

issues related to where it would be housed and
legislation should look like to the systemic risk

posed by the enterprises to whether they should
become privatized companies or otherwise.
its regulation?
A.
Well, it was my view that, in
connection with the investigations of the two
Q.
Take a look at the last sentence?
A.
Uh-huh.
Q.
The last paragraph on this page.
companies, those issues were going to become more

and more important issues, and that the
It
says, "One person close to the situation
administration would not shy away from making

sure that people understood that there were
commented, the White House is clearly willing to
significant policy considerations regarding the
play hard.
enterprise's risk to the government.
If Famie and Freddie don't give on
these three issues next year, it promises to

become even more difficult for them, as a larger
Q.
And the administration would
continue to give those issues visibility until
issue of subsidiaries tied to government and
F a ~ i eMae and Freddie Mac gave up on the issues
mission will become increasingly discussed
the government - -
issues."
A.
A.
Uh-huh.
Right.
But the administration,
remember, is not a specific monolith.
Even as we
Page 135
J. ROSNER
Page 137
- CONFIDENTIAL
J. ROSNER
- CONFIDENTIAL
Q.
Did you write that paragraph?
see in various housing issues today, treasury
A.
Again, I probably did.
will have a different view than HUD.
I don't
specifically recall, but I probably did.

Q.
Do you know who you're referring to
when you say "one person close to the situation"?
administration I really am specifically speaking

to my understanding of the White House's view.
A.
Idon't.
Q.
The Bush administration?
Q.
What do you mean by the "White House
A.
The White House's view.
Q.
The White House's.
is clearly willing to play hard"?

A.
The White House had actually made
its views known that it had a very strong view on
And I
think, therefore, when I spoke to the
YOU mentioned there was a White

House working group.
the GSEs and the risks that they posed and that
A.
That's my understanding.
they were actually not willing to just accept
Q.
What do you mean by a working group?
A.
White House staff, legislative
legislation that they felt would create a

regulator that was weaker than one they viewed as
necessary.
staff, policy staff, economic staff who were

assessing the GSE's situation, financial
Q.
What were they going to do?
A.
I'mnotsure.
that they posed, as well as the administration's
Q.
If you take a look at the end of
view that the regulator was a - - was a weak
this sentence I just read, it says, "tied to the

government and mission will become increasingly
discussed issues.'I
situation, and the risks or view of the risks
regulator and an underpowered regulator.

Q.
Who is a member of the White House
working group?
A.
Andrew Card.
A.
Just what it says.
I believe Kevin Warsh.
Q.
Well, discussed by who?
Beyond that I don't know.
I'm not sure who else.
Current Governor Warsh.
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Page 138
Page 140
Q.
J. ROSNER
Have you ever heard the phrase,
CONFIDENTIAL
that highlighted the manner in which OFHEO was
"Project Noriega"?
looking at the issues, including portfolio growth
A.
Ihaventt.
relative to G&A expenditures, relating to
Q.
Can you take a look at the last page
treatment of other than temporary impairments,
of this document.
It says, "While the bulk of
relating to the various internal control issues.
the Freddie specific problems are behind them,
I don't remember the specific
accepting more board turnover, the result of SEC
substance of it, but there was actually a passage
and DOJ investigations and other small issues" - -
in which I believe board members of Freddie
end parenthesis - - "we expect that Fannie is just
specifically highlighted their view of their
now entering the spotlight."
conservatism relative to Fannie's.
Did you write that?

A.
I probably did.
Q.
A.
--
Q.
And what do you mean by that last
A.
There was excerpts in the report of
part?
I probably am among the only
a conversation that was
--
that existed within
two, three, maybe four people on Wall Street who
Famie, board members or between Fannie
actually read the entirety of the Baker Botts
Freddie board members, on their view that they
report and the OFHEO report.
were conservative and especially relative to
And it became clear
in reading it that there were significant issues
Fannie
raised in the Freddie reports that had relation

and suggested that
--
these things would turn up at Fannie May than
And the Baker Botts report at that
time was publicly available?

A.
And so reading that, was it your
view that it was even more likely that some of
an investigation of Fannie Mae.

Q.
.
Q.
that there was likely to be
--
I believe it was.
Absolutely.
Q.
And did one of those issues include
accounting for derivatives?
Page 139
J. ROSNER
Q.
--
A.
- CONFIDENTIAL
And just by reading the Baker Botts
Page 141
1
report you were able to come to the conclusion
that Fannie Mae would be subjected to a similar
investigation?
J. ROSNER
CONFIDENTIAL
A.
As I recollect, yes.
Q.
That would be accounting for
derivatives under FAS 133?
A.
Correct.
A.
Absolutely.
Q.
Q.
And were you able to form the
document, which is Bates-stamped MGA 02768, dated
conclusion as to whether or not Fannie Mae would
February 2nd, 2004.
be found to have committed some of the same types
of errors as - -
10
A.
Insomeofthe - -
11
Q.
- - as Freddie Mac?
12
areas, absolutely.
A.
--
Q.
And that was back in January, 2004?
A.
If I recollect the release of the
Baker Botts report correctly, yes.
Q.
13

Q.
Can you identify this document for
A.
It's a call report dated February
me?
14
2nd, 2004, outbound call to Steve Blumenthal,
15
appears to be written by me.
16
Q.
You see the top it says, "Monday
What specific accounting errors did
17
you believe that OFHEO would also find out about
18
A.
Uh-huh.
or rule on when they were reviewing Fannie Mae?
19
Q.
Did you regularly check in with
That was kind of awkwardly phrased.

What other accounting errors do you
20
morn, check in Steve"?
Mr. Blumenthal on Mondays?
21
A.
I did not.
think would be raised in OFHEO1s investigation of
22
Q.
How often did you speak to
Fannie Mae?
23
Mr. Blumenthal during the period you were at
24
Medley?
A.
There were - - You know, I don't
specifically recall. I recall a number of areas
25
A.
Typically every few weeks to a
36 (Pages 138 to 141)

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Page 142
1
2
J. ROSNER
month.
YOU?
Q.
Page 144
- CONFIDENTIAL
And let's take the 2004 time frame.
A.
It appears to be so.
Q.
Appears to have taken place around
This would be the time frame after the Baker
Botts report has been issued, up through I guess
the end of 2004, when the SEC made a
A.
Correct.
determination about some of F a ~ i eMae's
Q.
Is this a report of a call you had
accounting.
9
10
February 3rd. 2004?
with Mr. Blumenthal on February 2nd?

During that period did you talk to
A.
It appears to be.
Mr. Blumenthal more frequently?
11
12
A.
Less frequently.
Q.
Okay. And when was the period where
13
you would say you had the most frequent
14
communication with Mr. Blumenthal?
15
Oh.
A.
Q.
It appears to be so.
And that would be your second call
that day with Mr. Blumenthal about the OFHEO

regulations?
I don't recall specifically. I
A.
Correct.
Q.
Okay. Take a look at what looks
16
recall at that point him making it very clear
like the second paragraph.
17
that we - - we really couldn't talk, and where we
told me that Fannie is telling people that the
18
could talk it was really more on legislative
OFHEO investigation is just about accounting, but
19
issues, in his opinion, as opposed to OFHEO
he said that this is wrong, '1 will never say
20
business.
21
Q.
It says, "He also
this on the record, and you can never say it, but
Okay.
You see the second sentence,
we are going top to bottom.
I'm comfortable that
22
the first line, it says, "He told me that OFHEO
we have looked at every issue that could spark a
23
will propose and publish comments for new
surprise at Freddie and I will stake my
24
corporate governance regulations for Fannie Mae
reputation there are no new surprises there.
25
and Freddie this week!"?
cannot say that about Fannie, and our
Page 143
J. ROSNER
Page 145
- CONFIDENTIAL
A.
Uh-huh.
investigation's goal is to make sure we can
Q.
ultimately say that.
you that then?
We have specific
nonaccounting leads to go after."
A.
Q.
Do you see there's an exclamation
point at the end?
Do you see in the middle there

there's these quotations right before "I will
never say that on the record"?
A.
Uh-huh.
A.
Uh-huh.
Q.
Do you have any reason why you would
Q.
Does that mean you're attempting to
have used an exclamation point for that?

A.
Because I think that would have been
an important thing to try and follow up with

other sources.
Q.
Was that public at that time?

Idonrtknow.
The next document is

It's dated February
3rd, 2004.
A.
Yeah.
I mean, as I read it, it
regulator during that period.
Q.
So it's your testimony that the
quote that begins with "I will never say this on

the record and you can never say it,' is a
reflection of OFHEO's public commentary?

Q.
comments?
really is reflection of the public stance of the
A.
MR. TERRY:
capture the substance of Mr. Blumenthalls
A.
I believe that not that particular
line but, obviously, that - - I believe that the

director was not going to say it specifically,
but the - - My understanding of what seems to have
me?
A.
It similarly seems to be outbound
call report between Steve Blumenthal and myself.
Q.
And does it appear to be authored by
been said there was that they had finished and

were comfortable there were no new surprises at
Freddie and that they would not actually conclude
37 (Pages 142 to 145)

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Page 146
Page 148
the investigation of Freddie until they could say
evident to anyone reading the Baker Botts report?
the same. Of Fannie until they could say the
A.
Correct.
same.
MR. CAHILL:
Q.
Do you see where it say, "we have
specific nonaccounting leads to go after"?
Q.
A.
Uh-huh.
Q.
Is that referring to Fannie Mae or
Would you slow down.
Let him finish.

Including any shareholder who wanted
to read the Baker Botts report.
Freddie Mac?
A.
Idon'tknow.
Q.
Do you see the sentence before, it
A.
correct.
Q.
The next part it says, skipping down
a little ways, "By the way, Medley had been on my
says, "I cannot say that about Fannie, and our
shit list for a long time because of a report you

put on February 3rd, 2003.''
investigation's goal is to make sure we can
IS that before or after you were at
ultimately say that"?
Medley?
A.
Uh-huh.
Q.
Does that inform you that the next
Medley.
It does appear that there are
that we're sitting on the systematic risk report
sentence - A.
I believe that's before I was at
A.
Q.
It goes on to say, "You guys said
nonaccounting leads to go after, but again, in
for over a year.
reading the Baker Botts report, that information
that we were sitting on was a freelance tirade by
was already out there.
one of our former research staff. It was poorly
There's no particular
value to me of that comment.
Q.
That is bullshit!
The report
sourced, full of inaccuracies, and he chose to
Did the Baker Botts report say that
leak without approval.
It nothing to do with our
Fannie Mae had engaged in nonaccounting
risk report.
wrongdoing?
disciplined under the Civil Services Act."
By the way, that employee has been
Page 147
1
J. ROSNER
A.
No.
Page 149
CONFIDENTIAL
The Baker Botts report made it
clear that OFHEO was interested in things other
What is that referring to?

A.
My understanding is - - And, again,
than accounting issues, including internal risk
I'm recollecting. I don't have specific memory
issues and operational risk issues, and,
of this, but my understanding is
therefore, it, to anyone who read that, would
recollection is there was a report on the
--
or my
have been clear that they weren't limiting their
systemic risk that Fannie and Freddie posed to
investigation. And my understanding is that
the federal government that was put out as a
Fannie had specifically been telling its larger
white paper by an OFHEO employee and that that
10
shareholders that its investigation really only
report actually highlighted significant risks
11
related to financial accounting issues.
that the GSEs posed.
Q.
12
13
Okay.
You see it says, "We have
specific nonaccounting leads to go after"?
14
A.
Uh-huh.
15
Q.
Was it your understanding after
16
reading the Baker Botts report that OFHEO would
17
have nonaccounting leads - -
And Steve was actually disavowing

that as an official report that they were sitting
on; rather, he was suggesting that the report was
a reckless report by someone who had a personal
view on the GSEs.
Q.
And that personal view was negative?
18
A.
Yes.
A.
Correct.
19
Q.
- - regarding Fannie Mae?
Q.
And that was
20
A.
Absolutely.
Q.
And that was evident to you just
21
22
from reading the - -
--
That was leaked by
somebody at OFHEO?
A.
Idon'tknow.
Q.
That's what Mr. Blumenthal was
23
A.
Correct.
24
Q.
- - Baker Botts report.
A.
That's what it appears to be.
And you think that would have been
Q.
Okay.
25
telling you, anyway?
38 (Pages 146 to 149)

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Page 150
Page 152
MR. TERRY:
dated February 6, 2004.
J. ROSNER
- CONFIDENTIAL
conversation I have - - and it's not my duty to,
It's Bates-stamped MGA
but every conversation I ever have with an
07284, and on the top it's Bates-stamped MGA
official source, I start with or at some point
09726.
make it known that I do not want them to give me
It's Exhibit 15.

any information that I shouldn't have or can't

have.
And that's generally an understanding that
Q.
goes both ways.
A.
Let me look at it.
the information officer and asked him if that
It appears to be a call report that
actually was what was likely to be in the rules,
And so I could have actually called
me?
I am identified as writing.
Q.
the proposed rules and regs.
And it's a call report with Peter
Brereton of OFHEO?
I chose not to.
said, I can't talk about it or, you know, Give me

the - - the official position.
A.
Correct.
Q.
And the report is dated February 6,
So was it your view that it would
Q.
not have been good for Medley for the world to
2004?
know that you had a source inside of OFHEO?
A.
That's the date on it.
Q.
If you take a look towards the
MR. CAHILL:
A.
bottom it says, "1 explained to Peter that I had

put out a report and had, based on the hints
changes."
Q.
Would it have been bad for Medley if
the world found out that you had a source inside

OFHEO?

A.
Objection.
It's my view that Medley by practice
doesn't disclose its sources.
dropped, ascertained that these would be two big
Idonltknow.
A.
Where are you?
Page 151
1
J. ROSNER
Oh.
- CONFIDENTIAL
J. ROSNER
Counsel, would you
MR. TERRY:
lines from the bottom.
to Peter."
Q.
Thank you.
Is this referring to proposed
corporate governance rules from OFHEO?
11
12
CONFIDENTIAL
A.
I did write that.
Q.
Would it have been bad for OFHEO if
the world knew that you had a source inside of

OFHEO?
MR. CAWILL:
MR. KARAM:
Yeah, it's maybe six

It starts, "I explained
But you wrote that, didn't you?
Q.
direct me in the document.
10
Page 153
Okay.
MR. KARAM:
He
would have either typically in another matter
A.
Objection.
Again, depending on what the
information from the source is.

Do you believe that the information
Q.
A.
It appears to be.
that Mr. Brereton was suggesting he would have
Q.
If you take a look at the next line,
provided to you was information that it was
13
it says, "I told him that I had just assumed they
14
would follow from the 16 points in the Freddie
15
recommendations.
16
And it goes on to say, "Good
17
reasoning, but you could have just called me and
18
asked."
somehow inappropriate for you to have?

I don't believe that I ever received
A.
any information from any source within OFHEO that

was not public domain or was information that I
shouldn't have had.
So it's your view that all of the
Q.
19
"I explained that I would rather
information that you received from OFHEO that's
20
have been be slightly off than have the world
contained in these call reports we've been going
21
know that my source was obviously inside OFHEO,
through was accessible in the public domain?
22
because that wouldn't be good for either OFHEO or
23
Medley."
24
25
A.
Or affirmation or - - Or affirmation
A.
of information that was accessible in the public

Well, I meant by that that every
domain.
Correct.
Q.
Okay.
In your view it was
39 (Pages 150 to 153)

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Page 154
Page 156
J. ROSNER
information that was all accessible to investors
- CONFIDENTIAL
of that publicly available information.
somewhere.
Q.
Did you ever hope, in your
A.
Correct.
conversation with Mr. Blumenthal, to learn
Q.
And it wasn't anything secret that
information that was not publicly available?
OFHEO was just telling you.
A.
Actually, as I said before, I quite
A.
Correct.
expressly made it clear and continued to, in
Q.
If that's the case, why do your
other source relationships, that I don't want
clients pay Medley for your research reports if
information that's not publicly available.
it's just out there in the public domain?

A.
Q.
I think you, A, should ask clients
And it's your view that you were
not, in fact, receiving - -
rather than ask me that question; and, B, because
A.
Correct.
historically Wall Street investors don't
Q.
- - nonpublic information from
necessarily understand how to contextualize
Mr. Blumenthal?
information that's in the public domain and often

don't have the time to read 500-page documents
A.
that are released into the public domain.
Q.
Q.
But in your reports you condense
It's my understanding that I never
received nonpublic information.

Take a look at the first line.
It
says, "Called to check in and ask a few
that information and make it available to
questions.
investors?
paper that they are completing and reviewing,
A.
Absolutely.
MR. TERRY:
dated March 2nd, 2004.
Steve tells me that there's a working
that I would be interested in manufactured

housing and Fannie Mae."
It's Bates-stamped at top
MGA 09729 and at the bottom MGA 02866, and it's

Rosner Exhibit 16.

to?
A.
Idon'trecall.
Page 155
J. ROSNER
Page 157
- CONFIDENTIAL
J. ROSNER
Q.
- CONFIDENTIAL
Did OFHEO in Spring of 2004 release
findings about Fannie Mae's manufactured housing
Q.
A.
Again, it appears to be a call
me?
accounting?
A.
I don't recall.
Q.
Take a look at the last paragraph.
report from me detailing a conversation with
It says, "We have been working on a manufactured
Steve Blumenthal at OFHEO.
housing working paper that was based on an
Q.
And that was around March 2nd of
inquiry into these F W portfolios.
2004?
What our
initial findings are is that there are no major

A.
Uh-huh.
flaws in their modeling for these assets. There
Q.
Why would you call Mr. Blumenthal?
are - - They are too large in this area."
A.
For the most part, actually I
called Mr. Blumenthal.

various policy circles.
--
I called folks from

I called folks on the
hill on both sides to try and
Is that referring to a working paper

that -you were .working.onor OFHEO was working on?
A.
You know, I don't know.
Q.
Take a look at the last sentence on
actually triangulate information that I was
this paragraph.
hearing or had read in the public domain or was
senior accounting staff at FASB and SEC have told
hearing through sort of the Washington grapevine.
me the accounting for credit losses under
It says, "1 tell Steve that
He was one of the hundreds of people that I spoke
temporary impairments is improper accounting and
to.
asked if he would refer it. He responds, Perhaps

Q.
So is it your testimony that you
will you write on it, too."
called Mr. Blumenthal to confirm publicly

available information?
A.
Quite often.
Did you ask Mr. Blumenthal to refer

Fannie Mae's accounting to the SEC or FASB?
Or my interpretation
A.
No.
I had actually spoken to both
40 (Pages 154 to 157)

DOCo
- 1-800-441-3376

Page 158
Page 160
the SEC and FASB about concerns that I had found
A.
I don't believe so.
on differing language that they used for their
Q.
Did Mr. Blumenthal ever ask you to
write on certain topics?
analysis of other than temporary impairments
A.
relative to information that Freddie Mac got

nailed for in the OFHEO investigation of Freddie
Absolutely not.
MR. TERRY:
Mac.
Let me take a quick
survey. You think we should take a break for

And the treatments were so visibly
lunch pretty soon or
...
general sentiment.
different between the acceptable treatment that
think this is probably a good time, if this works
OFHEO and the SEC had found relative to the
for you or if you want - -
stated treatment that Fannie Mae actually told
THE WITNESS:
investors it used.
Q.
And that was evident to you from
MR. TERRY:
public documents?
A.
That was evident to me from public
MR. TERRY:
You laugh.
Is that because it was
Okay.
Let's go off the record.
THE VIDEOGRAPHER:
It was quite easily.
You know, I
The time is
12:47. We're going off the record, end of Tape
mean, frankly, that's a lot of what really exists
2.
here is investors - - just seemed many investors
(Whereupon, a luncheon recess is
seemed to want to turn a blind eye and not do the
taken.)
THE VIDEOGRAPHER:
work or read the public documents.

Q.
Probably - - Probably
have at least another hour and a half.
easily - A.
It's going to be awhile.
MR. CAHILL: AS in how much?
documents.
Q.
I would almost rather
keep going.
where it says "and asked if he would
on the record.
refer it," what does that mean?
We are going back
The time is 1:23 p.m.
This is the beginning of Tape Number
Page 159
1
- CONFIDENTIAL
I don't know, actually.
3 in the deposition of Mr. Joshua Resner - -
Rosner, excuse me, which is being taken at
J. ROSNER
A.
Page 161
Q.
Did you write that?
A.
well, I mean, it says it.
reason to believe I didn't.
intended by it.
Q.
I have no
I don't know what I
But your testimony is that you did
OIMelveny& Myers, New York.

Deposition Services, located at 1020 19th Street,
Northwest, Washington, D.C.
not ask Mr. Blumenthal to refer Fannie Mae's
accounting to the FASB or SEC?
AS I recall it, that was not - - That
The videographer is
A.
- CONFIDENTIAL
8
10
J. ROSNER
10
Q.
Good afternoon, Mr. Rosner.
You
understand you're still under oath?
11
was not something I asked him to or directed him
11
A.
I do.
12
to.
12
Q.
During the break did you have any
13
14
Q.
15
16
17
And it says, "He responds, Perhaps
will you write on it, too."

A.
13
conversations with anyone who represented the
14
plaintiffs in this matter?
What does that mean?
15
A.
NO.
I don't know. Again, I believe by
16
Q.
Did you have conversations with
this time I had already spoken to
--
Actually,
17
anyone about this matter other than your own

counsel?
18
I'm fairly certain that by this time I had
18
19
already spoken to both FASB and the SEC to see if
19
20
the accounting treatment that Fannie made public
20
21
in terms of its major remember accounting
21
Bates-stamped MGA 03033, and at the top it's
22
principles jived with the interpretation by the
22
Bates MGA 09736.
23
SEC and FASB.
23
dated April 19th, 2004.
24
25
Q.
was Mr. Blumenthal asking you to
write a research paper on that as well?
24
25
A.
NO.
MR. TERRY:
It is Rosner Exhibit 17, it's

41 (Pages 158 to 161)

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Page 162
J. ROSNER
Q.
Page 164
CONFIDENTIAL
A.
me?
A.
Appears to be a call report from
Q.
And the date is April 19th, 2004?
A.
correct. -
Q.
If you take a look at the last line,
Point 4.
Dated May 14th, 2004?
Q.
myself to Steve Blumenthal.
A.
Right.
Q.
Do you see the E mail references a
Piper Report?
It says, "He hints that the
manufactured housing resolution of the FNM
A.
correct.
Q.
Do you recall sending Mr. Blumenthal
a report from Piper?
investigation will come off in the next few

weeks.
Again, appears to be an E mail from
me to Steve Blumenthal.
A.
I do
somewhat recall the - - a conversation about a
He also says that the CFRA estimate of
research report.
the FNM problems is probably way off the mark.

'They show 1.2 billion here and 1.5 billion
Q.
What is Piper?
there.
A.
I assume that we're talking about
Piper Jaffray here.
DO you know what that section is

referring to?
Q.
That's another firm that offers
A.
A.
Correct.
Q.
DO you know what the manufactured
Q.
- - analyst reports to investors.
housing resolution is referring to?

A.
Do you recall the context of this
I assume that it related to
E mail?
questions about the accounting for their
A.
manufactured housing exposures.

Q.
To the best of my recollection, I
believe that Mr. Blumenthal had told me that

there was an analyst meeting where - - I think it
And was that an issue that OFHEO was
looking into in this time period?
was Piper it may not be the same instance. I
Page 163
A.
You know, I don't really remember
specifically.
I don't remember it as a major
issue, and I really don't recall the time frame.

Q.
--
Do you know what it's referring to
Page 165
--
where they had had analysts
think it was.
in - - well, a sell-side analyst with clients in
to OFHEO for an update meeting, and that the
report that Piper put out after was not only
when it says, "The CFRA estimate of the FNM
inaccurate but very strongly distorted things
problems is probably way off the mark"?
that Mr. Blumenthal had said, and he was
disturbed by that and concerned that the conflict
A.
Again, I don't specifically
recollect, but I would assume that it's the
Center for Financial Accounting, CFRA is an
10
analyst and the investment banking business might
analytic firm, and so I assume it relates to a
11
have actually had something to do with it.
report they put out.
12
Q.
They issue research reports for
investors as well?
to, did that involve Piper or was that Freeman,
14
Billings
Correct.
15
Q.
And do you think the Numbers 1.2
16
amount - A.
17
&
A.
Ramsay?
I don't - - I don't remember
specifically.
Q.
Okay.
If you take a look at this
18
E mail, it says, "They are disturbed that OFHEO
I have no idea.
19
would cause such a market disruption over a
MR. TERRY:
20
disputable and immaterial amount."
another document then.

OFHEO-BLU-00036921.
We will move on to
This one is Bates-stamped
It's Rosner Exhibit 18.

Q.
Is that incident you're referring
Q.
13
A.
billion and 1.5 billion are referring to the
of interest that may have arisen between the
Can you identify this for me?
21
A.
Uh-huh.
22
Q.
Is that referring to OFHEO's
23
published findings about Fannie Mae's
24
manufactured housing?
25
A.
I don't recall.
So I could
42 (Pages 162 to 165)

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Page 166
J. ROSNER
CONFIDENTIAL
Q.
speculate, but I don't recall specifically.

okay. And does the timing of this
E mail provide you with any context for - A.
Not off the top of my head.
Sorry.
Q.
Take a look at the last sentence.
conclusions?
A.
NO.
Q.
So it was the same public
inormation.
A.
Absolutely.
It says, "I'm doing my best to help investors
Q.
Why did you want Mr. Blumenthal to
gain correct perspective on the legislative,
know that you were doing your best to help
investors get a correct perspective of the risk
regulatory, and policy goings-on.''

Did you write that?
10
A.
I probably did.
11
Q.
And why did you write that to
12
that I took my role seriously as an independent
Mr. Blumenthal?
13
voice, unconflicted from any pressures.
A.
14
Because I had been given what I
facing Fannie Mae?

A.
Because I wanted him to understand
Q.
Why did you want him to know that?
A.
Because I think that given some of
believed ample reason to believe that the
15
sell-side research community was either, for lack
16
of understanding, lack of sophistication, or,
17
felt it important for there to be some
frankly, being spun by a very large investment
18
understanding of that.
banking client, not understanding the - - the
19
correct exposures and risks.
20
Q.
What do you mean by "not
understanding the correct exposures and risks"?

A.
There was a lot of cheerleading
the information that was being put out there, I
Q.
Are there any specific distortions
of perspective that you were discussing?
21
A.
That I was discussing
22
Q.
In your testimony.
...
We were talking
23
about part of the document that says, I'm doing
going on, quite frankly, from the sell-side
24
my best to help investors gain correct
community for Fannie, and by, frankly, its
25
perspective on the legislative, regulatory,
Page 169
Page 167
J. ROSNER
- CONFIDENTIAL
largest shareholders, several of whom were making
policy goings-on, and I believe you stated you
very aggressive statements that seemed to have
were trying to correct some distortions?
been fairly clear distortions given other
A.
Absolutely.
statements that were made in the public record.
Q.
What were the specific distortions
6
7
Q.
And it was your view that your
reports corrected that?
A.
It's my view that my responsibility
you were trying to correct?

A.
The distortions were, you know, many
and frequent, ranging from, the OFHEO
was to be independent, to be unconflicted and not
investigation is about nothing but financial
10
to rely on any particular source as the basis for
accounting issues, which is one of the
11
judgement but, rather, on information in its
distortions we talked about earlier, to, frankly,
12
entirety and public record.
what I believe was information that was provided
13
14
Q.
And do you think that the reports
you released provided a correct perspective on
to several of Fannie and Freddie's largest

shareholders but not publicly provided to
15
the legislative, regulatory, and policy risks
investors, on the HUD internal audit
16
that faced Fannie Mae?
investigation of OFHEO that was commenced at the
17
A.
By and large, I think that the
direction of Kip Bond.
And Dwayne Duncan has
18
history has demonstrated that they are and have
acknowledged that he had actually asked Kip Bond
19
been more accurate and - - and more insightful
to actually request that HUD do a audit of OFHEO.
20
than those of most of the sell side.
21
Q.
Was there information that you are
There was information, there were

market rumors flying around about how the
22
somehow privy to that sell-side analysts were
internal audit of OFHEO by HUD was going to
23
not
essentially shut down or slap down or disembowel
--
24
A.
NO.
the regulator. And I received phone calls from
25
Q.
- - that led you to those
some of the largest shareholders, sharing
43 (Pages 166 to 169)

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Page 170
information that apparently was in that report
Page 172
1
and wasn't available to other investors or in the

market.
though never made it into the public domain
because ultimately that report was released in a
redacted version.
the HUD IG report would contain allegations about
sexual harassment by Mr. Blumenthal?
And so it became very clear to me

that some of the largest shareholders were
working essentially to protect their positions by
advancing statements that the company was making.
Q.
A.
Did you ever report, yourself, that
I don't believe that I reported it,
to my recollection. I do remember, obviously, as

I said, getting a phone call, and actually I
Q.
Who were those shareholders?
10
can't put a date to it, but getting that phone
A.
The one that stands out most in my
11
call on a specific night from Taylor Hinshaw
mind is Taylor Hinshaw, who as I recall, and I
12
telling me that the report had just actually been
can't put a date to it, but I actually believe it
13
released and he had just gotten ahold of it.
was somewhere around this time, called me and
14
Q.
Why didn't you report that?
gave me information about specific items in that
15
A.
Because it was speculation, and my
HUD Inspector General report which have never
16
job was to actually triangulate information to
come out in the public light and implied that he
17
make sure it was based in some credible sourcing.
got that information directly from the company.
18
Q.
And you did not believe you had
Q.
What were the specific items?
19
credible sourcing to say that the report would
A.
Sexual harassment issues regarding
20
contain allegations of sexual harassment?
Steve Blumenthal, a myriad of personal
21
allegations against Steve Blumenthal that
22
felt that Taylor Hinshaw was exceptionally
Fannie - - or I should say that Taylor Hinshaw
23
biased, had been proven incorrect, and was
told me were in the report.
24
continually trying to feed information to me to
25
advance his cause.
Ultimately Barney Frank released a
A.
Right.
Considering the fact that I
I discounted the veracity of
Page 171
Page 173
J. ROSNER
CONFIDENTIAL
redacted version of the report and many of those
it. Historic, you know, information proves that
personal issues were pulled out of it, so it was
he was actually truthful on that issue.
apparent, given public record at the time, that
Q.
What historic information is that?
the only people who had access to that report
A.
That the only version that - - that
were Kip Bond's office and other members of the

house financial services committee.
Q.
Okay.
information having to be redacted for personal
Any other - - Any other
sources of - A.
there was a battle over the information and the

matters.
The fact that Barney Frank ultimately
agreed to release it with personal information

Many.
about officials involved in allegations was
MR. TERRY: The next document is
redacted, that none of those officials, according
dated May 17, 2004, and it's Bates-stamped MGA
to public record, agreed to sign waivers allowing
09100.
that part of the HUD IG report to be released.


Q.
Just to be clear, to go back to
something we just discussed, did you have any
Q.
Did-you ever.talk to Mr. Blumenthal
about the HUE IG report?

A.
I'm sure that I must have.
remember with any specificity.
I don't
I think that I
personal knowledge that Fannie Mae was providing
did after it came out and after I had gotten this
investors with information that was in the OFHEO
phone call from Taylor Hinshaw.
report, or was it all secondhand?

A.
It was from the investors.
Q.
So to
the degree that the investors said it, that was

the only information I had, but I found it
credible, given the fact that it, as in that
case, was information that apparently was correct
Did you ever talk to him about
specifically the allegations that you testified

were redacted from the report?
A.
Thatwhat?
Q.
The allegations of a personal nature
that were redacted from the report?
44 (Pages 170 to 173)

D.C. - 1-800-441-3376

Page 174
Page 176
J. ROSNER
A.
Q.
Did you ever speak to anyone other
Q.
than Mr. Hinshaw about these allegations?

Yes.
Q,
Who else did you speak with?
A.
There were a number of clients who
soundness regulator, nor should it?

A.
had called me with similar information a couple

--
accounting could be GAAP-compliant, but that

doesn't necessarily mean anything to a safety and
A.
of days later
- CONFIDENTIAL
What does that mean, Fannie's
I'm trying to remember who off
the top of my head.
- - and they had informed me
That the SEC has a different level
or burden than the regulator.
The regulator's
primary charge is safety and soundness. The

SEC's is the materiality and the accuracy of the
accounting treatment. And the safety and
that they were all seeming to get the same
soundness regulator in some sense has a higher
information from the same couple of institutional
burden to meet in terms of the safety and
investors, Fidelity and Taylor Hinshaw.
soundness of examined institutions.
Q.
Did you view information about
Q.
Take a look - - There's a subheading
whether the HUD IG report contained allegations
that says, "OFHEO likely to review additional
of sexual harassment to be material to investors
practices." And the third paragraph down says,
in Fannie Mae?
A.
"Contrary to the belief of most investors, the
No, I viewed it as immaterial, which
investigation is not merely a reaudit of Fannie's
is why I felt it was inappropriate and, frankly,
finances. The OFHEO investigation will certainly
uncomfortable to even bring that matter up with
include a forensic review of their accounting,
Mr. Blumenthal.
but it also includes a review of their systems,
Q.
operational risks, executive compensation, board
Let's take a look at Rosner Exhibit
19. Can you identify this document for me?

A.
~ t ' sa Medley report.
independence and oversights and market risks."
I'm not sure
of whether it went out, but given the format of
Was that something that

Mr. Blumenthal told you?
Page 175
1
2
J. ROSNER
- CONFIDENTIAL
J. ROSNER
it, I would assume it did go out to clients.
Q.
Did you draft this?
A.
I believe I probably did.
that doesn't mean that it wasn't edited and it
was my final product.
Q.
substantive
A.
something that was made fairly clear from the

Freddie examination report.
Q.
But it's your belief you provided

--
A.
Absolutely.
I believe I did.
10
Q.
Can you look at the second
That would have been clear in the
Fall of 2003.
Q.
Correct.
Okay.
Can we go back and take a
11
paragraph?
12
regulatory source points out to us, 'Fanniels
13
accounting can be GAAP compliant, but that
A.
14
doesn't necessarily mean anything to a safety and
Q.
Four.
15
soundness regulator, nor should it.'"
A.
Okay.
Q.
And if you take a look at the last
16
17
18
The last sentence says, "As one
And that would have been clear back
in the Fall of 2003?

A.
- CONFIDENTIAL
That was something that was - - Again
you're missing a report here, but that was

Again,
5
7
Page 177
Was the source for that comment

Mr. Blumenthal?
A.
look at Exhibit 4, which is the August lst, 2003,

Medley report.
What number?
paragraph, the last sentence on that page spills
I actually don't remember, but I
over to the next page, says, "He said we can't
19
actually think I had that conversation with
use it in this form or with any attribution as to
20
someone within the fed.
where it came from.
21
22
Q.
And who would that be?
A.
I don't remember.
I had so many
I'm going to be one shocked
boy if we go into Famie with the same set of

microscopes that we were using on Freddie and
23
sources within the fed. I believe that that
don't find significant things.
24
conversation happened as a result of me again
the same things that have been found out at
25
trying to triangulate information.
Freddie, but I am confident that Raines is not
They will not be
45 (Pages 174 to 177)

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Page 178
J. ROSNER
Page 180
- CONFIDENTIAL
the angel he purports to be."
the phone and I say, Hi, Steve.
And that was something that

Mr. Blumenthal told you back in August of 2003?
A.
correct.
Q.
Is it your view that was not
I just finished reading your report.
You are so
spun on the analysis it's scary:

First of all, do you know what
nonpublic information?
that's referring to when it says, "Hi, Steve, I
A.
Is it - - is it - -
Q.
Was it your view that that was
thought we were friends"?
public or nonpublic information?

A.
I thought we
were friends. Steve responds, Josh, how are you?
I think - - I think that the
A.
I don't recall.
Q.
Take a look at the next line.
It
says, "I continue, Steve, I just got a call from
accounting problems at Freddie were largely
a client, and he commented that, as usual, my
known, by Freddie's own admission, prior to the
view is so far out of sync with the other
creation of an examination report. And I think
sell-side folks and then told me that FBR is
that it was clearly known that they had issues,
taking him to see you."
that F a ~ i elikely had issues before even the
Were you explaining to Mr.
release of the OFHEO Freddie report. And, in
Blumenthal that you were unhappy that he was
fact, I had been highlighting and drawing concern
meeting with FBR and not you?
about many of those issues for the better part of
A.
Not that he was meeting with FBR and
three years, having not spoken to Steve
not me, but that I had actually made prior
Blumenthal prior to that, you know, Medley
requests to bring clients into OFHEO and was
experience.
rebuffed. And I assume that actually my "I
Q.
were
--
And you believe that those issues
Knowledge of those issues was available
in the public domain as far back as August of
thought we were friends'' was based on the fact

that I seemed to have not even the same level of
access as others.
Page 179
J. ROSNER
Page 181
- CONFIDENTIAL
2003 if - A.
Q.
I do.
MR. KARAM:
MR. TERRY:
is Bates MGA 03108.
Okay.
The next document
Q.
I'm sorry.
738.
Counsel, can
Who is FBR?
A.
Friedman, Billings
Q,
And what is Friedman, Billings
&
Ramsay.
&
Ramsay?

me?
I object.
we clarify who FBR is?
It's Rosner Exhibit 20. At
the top it's Bates-stamped MGA 09783.
Q.
And you were complaining about that.
A.
It's an investment bank.
Q.
In this E mail were you complaining
to Mr. Blumenthal that he was going to FBR and he

A.
Appears to be a call report outbound
hadn't done the same thing for you?
from me to Steve Blumenthal, May 18, 2004.
Q.
Is it a call report. you drafted?
A.
~t appears so.
Q.
Okay.
If you look at the first
A.
Not for me.
For Medley's clients,
Q.
And then it goes on to say, "Steve
yes.
says that if you want to set something up all you
line, it says, "I called SB immediately after
need to do is ask.
hanging up with Vincent"?
from this organization to come and would be happy
I can get anyone you want
A.
Uh-huh.
Q.
Who is Vincent?
A.
Vincent Daniel.
A.
Uh-huh.
Q.
who is Vincent Daniel?
Q.
A.
He was a client, and prior to that
he was a partner at Graham Fisher.
Q.
The next line says, "Steve answers
to do so."
Do you see that?
comments along those lines?

A.
I do.
Not this specific, but I do
remember that.
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Page 182
Page 184
Q.
J. ROSNER
If you take a look at the next line,
- CONFIDENTIAL
referring to - -
it says, "As for your client, why don't you tell
A.
NO.
him to ask me during that FBR meeting why
Q.
- - this report?
Medley's view is so far out of the mainstream.

ask why?
What will you say?
Steve says, 1'11
Going back to the conversation about

your client, at the end it says, "I ask if you
tell the truth, that I read a lot of what the
would really say that, and he said, Yes, if he
street says, not that I care, and that Medley is
asks, I would.
the only firm that gets it."
too many FBR functions."
Do you recall that conversation with
Mr. Blumenthal?
A.
A.
Not that specific, but that was a
theme that came up quite often.

Q.
The client won't be invited to
That many of the sell-side firms had
very, very, very large investment banking

relationships with Fannie Mae, and Fannie Mae
quite clearly exerted some influence over the
offering to tell one of your clients his view of
analysts and their views, and so to publicly
Medley's research?
stand out as a client at an FBR-sponsored event,
A.
Yeah.
I - - I - - Again, not
raising questions and concerns about either
specifically, but I don't think that - - I don't
Fannie or FBR coverage would not bode well for
think there's any reason for me to doubt that
the relationship or the ability of that client to
that was a comment.
get invited to other FBR events.
Q.
Did Mr. Blumenthal ever comment to
you that he regularly read research reports?
Q.
Was it Mr. Blumenthal's view that
Wall Street firms were excessively positive in
A.
Yes.
their analysis of F a ~ i eMae and the risks it
Q.
And he said that he did, in fact,
faced?
read them?
MR. KARAM:
Objection.
Page 183
Page 185
J. ROSNER
- CONFIDENTIAL
A.
I believe so.
A.
I don't know.
Q.
Did he ever tell you if he followed
Q.
Did he ever express that to you?
A.
Not that they were positive, but
Fannie Mae stock price?

A.
He - - He didn't.
that they seem not to be reading public
Q.
That's what he told you?
A.
No, he didn't
--
documents.
He didn't ever say
whether he followed.
Q.
Oh.
Q.
Mr. Blumenthal was, however, happy
with your coverage.
So you don't know one way or
another.
A.
Yeah.
was confused by it.
A.
Right.
Q.
Going back to the first line, he
Right?
He was - - I think at times he
At times he was concerned by
it.
Q.
But at least with respect to the May
says, "Josh, how are you, I just finished reading
17, 2004, report, his view was that it was so
your report.
spun on the analysis that it's scary.
You are so spun on the analysis it
is scary."
A.
A.
Uh-huh.
Q.
Is he referring to the May 17th
A.
I don't - - I don't remember
Q.
--
And this call was around May 18,
2004?
speaking to a specific issue or the report in its

entirety I can't say.
fair comment.
Q.
Right?
I mean,
there's a lot in that report. So whether he's
report we just looked at?

specifically. I think that might be a fair
That's what it says.
Do you recall any other
conversations where he made statements along the

lines of, Medley's the only firm that gets it?
A.
I remember him repeatedly making
comments about the fact that he was concerned

A.
Correct.
that my analysis was so good and making comments,
Q.
Any reason to doubt he wasn't
including comments that I believe I put in other
47 (Pages 182 to 185)

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Page 186
J. ROSNER
Page 188
CONFIDENTIAL
call reports, that he was concerned that if there

was
--
Q.
that there may have been a leak within
Nevertheless, you were telling
Mr. Blumenthal that you did expect one of your
OFHEO, giving me information, and if there was he
clients to ask him about the veracity of your
was going to have to shut it down, and he was
work.
correct?
fuming. But I think that he made it very clear
A.
correct.
to me that - - that my analysis and my
Q.
And that was in connection with the
triangulation of publicly available information
FBR meeting.
was - - was clearly differentiated from the rest

of the street.
Q,
Q.
And that's the same meeting in
said that if your client asks he would tell your
your research?
No.
I assume so.
which - - with respect to which Mr. Blumenthal
Do you recall if you, in fact, asked
Mr. Blumenthal to give your client his view of
A.
Right?
A.
client what he thought about your work, that

MR. TERRY:
you're the only one on the street that gets it.
~ates-stampedMGA 03109.
I assume that's correct.
A.
~ t ' sdated May 19,
MR. TERRY:
2004.
dated June 9, 2004.

bottom MGA 03174, and on the top it's Bates stamp

Q.
It's Bates stamped on the
MGA 09741.
me?

A.
Let me look at it, please.
Q.
sure.
A.
Uh-huh.
Q.
Q.
A.
It appears to be a call report of a
me?
conversation between myself and Brant Imperatore.
Page 187
1
2
3
A.
Page 189
It appears to be an E mail
Q.
Is it a call report written by you?
between - - from me to Steve Blumenthal.
A.
Appears to be.
Q.
And it's dated May 19th, 2004?
Q.
Who is Brant Imperatore?
A.
Uh-huh.
A.
Brant Imperatore is a Washington
Q.
~ n d
that's one day after the call
lobbyist.
7
8
report we just looked at?

Uh-huh.
Q.
If you take a look at the last line,
And he works for the firm of Barbour
Q.
A.
Griffith
&
Rogers Inc.?
A.
Correct.
10
it says, "In the mean time, I do expect the
10
Q.
What is Barbour Griffith
11
client to ask your view on the veracity of my
11
12
work during the FBR meeting"?
&
Rogers,
Inc.?
12
A.
A lobbying firm.
13
A.
Uh-huh.
13
Q.
Do you know who the Mr. Barbour in
14
Q.
Is that referring to
14
15
Mr. Blumenthal's offer on May 18th to tell your
15
A.
Hailey Barbour.
16
client what he thinks of your work?
16
Q.
What is Hailey Barbour's - - what did
17
A.
I don't know whether it's referring
17
the name is?
he do before he was a lobbyist?
18
to Mr. Blumenthal's offer or whether it's
18
A.
Idon'tknow.
19
referring to the fact that my client, who we
19
Q.
Was he the head of the RNC at some
20
spoke about as being Vincent Daniel, who was a
20
21
client of mine and a former partner of mine, was
21
A.
I believe he was.
22
frustrated because he felt that Friedman,
22
Q.
Is Barbour Griffith
23
Billings' work was not up to par.
23
24
know if it had anything to do with Steve offering
24
A.
I believe it is.
25
or Vincent just asking.
25
Q.
Were they close to the
So I don't
point?
&
Rogers a
partisan firm?
48 (Pages 186 to 189)

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Page 190
J. ROSNER
Page 19;
- CONFIDENTIAL
J. ROSNER
administration?
Q.
- CONFIDENTIAL
Did you ever describe him as someone
A.
I don8t know.
who is conservative and has never given me bad or
Q.
Did you view them as being close to
false info?
the Bush administration?

A.
I - - I didn't view them as being
close to the Bush administration. I viewed them

as having actually insights on the GSE issues
legislatively.
Q.
A.
I have no idea.
Q.
Would that statement be accurate?
A.
NO.
YOU know, as I'm sure you know
from your personal and professional business,

there are people who you talk to who may be
Have you ever described them to
spot-on in their insights, in their informed view
anyone as having close ties to the Bush
on certain issues, and completely off-base on
administration?
other issues.
I would view every one of my
A.
Idon'trecall.
sources as actually being great in some areas and
Q.
terrible in some, and none are infallible on any.
line, it says, "Brant and I speak about the

Fannie Freddie, quote, proposal stuffM?
(Whereupon, Exhibit Rosner-23 and

Rosner-24 are marked for identification by the
A.
Uh-huh.
Q.
reporter.)
to?
Q.
I'll give you two documents, Rosner
Exhibit 23, which is Bates-stamped at the bottom

A.
I don't specifically, but reading
this, I would assume that it refers to the
MGA 04091, and Rosner 24, which is Bates-stamped

at the top MGA 0967.
legislative proposals.
Q.
Can you identify Exhibit 23 for me?
Legislative proposals as to what to
do with F a ~ i eMay and Freddie?

A.
No.
A.
It appears to be a call report from
Brant Imperatore dated November 30th, 2004.
As what to do with the creation
Q.
And written by you?
Page 191
J. ROSNER
Page 19?
- CONFIDENTIAL
of a new regulator overseeing the Fannie and

Freddie.
J. ROSNER
- CONFIDENTIAL
A.
Appears so.
Q.
And what is Exhibit 24?
A.
What is Exhibit 24?
his admin sources say that, yes, Syron has been
Q.
Can you identify it for me?
having discussions with the Fed and Treas. He
A.
It appears to be compounded.
Q.
He goes on to say, "He tells me that
asked for the meetings, and he threw out ideas to
It's
an E mail from Kevin Muehring to me to - -
end the impasse but that the WH saw these as
actually to RJ, commenting on a call report from
ideas, not proposals, and did not and will not
me, dated September 30th, 2004, with Brant
agree to anything (informally or otherwise) until
Imperatore.
after the elections."
Q.
When you write "WH" in here, is that
And Exhibit 24 includes a call
report authored by you?
referring to White House?
A.
Correct.
A.
I assume so.
Q.
If you take a look at the bottom of
Q.
Do you know the identity of
Mr. Imperatore's administration sources?
That's what I just said.
24, it says, in all caps, "I understand these are

outrageously seriously allegations.
I also know
A.
Idonlt.
Brant as someone who is conservative and has
Q.
Did he appear to you to have pretty
never given me bad or false info.''
good inside sources within the administration?

A.
You know, it's spotty. Sometimes
yes, sometimes no.
Didn't rely on him as being
completely accurate.
Q.
Did you ever describe Mr. Imperatore
as being a reliable source?

A.
I may have.
I don't know.
Did you write that?

A.
Imaywellhave.
Q.
was it true?
A.
I don't know. As you see at the
top, as happened on several other occasions, in

the summary it says "radio silence, need to
confirm," so I don't think that I actually relied
49 (Pages 190 to 193)

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Page 194
Page 196
1
on it as true at the time.
J. ROSNER
I'm sorry. My question was whether
A.
- CONFIDENTIAL

I never really assumed that
It may have been.
or not your statement at the bottom that "Brant
Brant was working for the administration, so I'm

not sure how much faith I put in that statement.
Q.
is someone who is conservative and has never
given me bad or false info," was that true when
you wrote it?
A.
I can't recall whether that's true
when I wrote it.
I have - - You know, it probably
was substantively true.

Q.
Would you have written it in all
Could you take a look at Exhibit 23
Q.
real quickly.
8
9
Keep all three in front of you.
Under Call Notes it says, "The

administration has tasked me with a new
10
assignment which my firm has directed me to
11
pursue.
Does that quote reflect this is - -
caps at the bottom of your E mail if it was
12
false?
13
you're attempting to reflect the sum or substance

of Mr. Imperatore's comments to you?
A.
I dontt know.
14
Q.
Okay.
15
Take a look at Exhibit 23,
please?
16
A.
I would assume that that is what I
was trying to reflect. Yes.

And you were trying - - And
A.
Uh-huh.
17
Q.
Under Summary it says, "Ouch,
18
Mr. Imperatore was telling you that he was
background, Brantts shop is an unabashedly
19
getting an assignment from the administration?
partisan firm with close ties to the
20
administration.
21
'I
Q.
A.
Yeah.
I don't know what
"assignment" means, but yes.
Did you write that?
22
Probably.
23
Q.
Was that true when you wrote it?
24
A.
I don't know, but I would assume so.
A.
Again, I believe that it probably
25
Q.
Was your understanding that Barbour
A.
And the administration, does that
Q.
refer to the Bush administration?
Page 195
J. ROSNER
- CONFIDENTIAL
was true.
Q.
Page 197
J. ROSNER
Griffith
Going back to Exhibit 22, in the
- CONFIDENTIAL
Rogers had been retained by the Bush
administration?
call note section it says "They believe that six

months from now Freddie's stock price will not
&
A.
That's a silly question. I have no
knowledge of who their clients were.
have gone up and that shareholder pressure may
Q.
Well, is that - - Reading this, is
get FNM and FRE to be more willing to cut a
that what you read Mr. Imperatore to be telling
deal.'I
YOU?
Is that something that you wrote?
A.
Again, I don't specifically recall,
but it appears so.
Q.
MR. CAHILL:
Q.
And that's something you wrote based
on information that was given to you by Brant

Imperatore?
A.
In that instance, correct.
Q.
Is the "they" referring to the White
A.
I don't know.
Q.
In the context of this E mail?
A.
In the context of this E mail it
Objection.
Calls for
speculation.
Did Mr. Imperatore ever tell you
that he had been hired by the Bush

administration?
He hadn't. .
A.
No.
Q.
But it was your understanding that
his firm had been tasked by the Bush

administration to perform - -
House?
I would assume so.
would seem so.

Q.
Do you recall Mr. Imperatore telling
you that the White House believed that

shareholder pressure would get Fannie Mae and
Freddie Mac to be willing to cut a deal?
A.
No.
It was merely my understanding
that he actually suggested that they were asked

to, not whether they actually were asked to and
not what that actually meant.
Q.
Okay.
Let's go through 23 a little
bit more.
It says, "The administration has
tasked me with a new assignment which my firm has
50 (Pages 194 to 197)

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Page 200
directed me to pursue.
J. ROSNER
I am expected to get a
- CONFIDENTIAL
administration issues, meaning dealing with the
letter drafted by a member of congress in the
Bush administration, at the bottom of that you
next week requesting HUD to release the
write, "I also know Brant as someone who is
investigation/study of Fannie Mae's regional
conservative and has never given me bad or false
partnership offices."
info." Right?
Was it your understanding, based on

your conversation with Mr. Imperatore, that the
Bush administration had requested that Barbour
Griffith
&
Rogers get a member of congress to
A.
Uh-huh.
Q.
And that's in the context of
administrative issues.
A.
NO.
That's actually in a broader
request HUD to release a study on Fannie Mae's
context, and I think you're mischaracterizing the
partnership offices?
document, because if you see at the top, "We need
A.
It was my understanding that Brant
Imperatore stated that.
It isn't my
to confirm this before we can do anything."

Okay? And next he comments at the end, I write,
understanding that the administration had
"He's obviously relying on a source he says is a
actually tasked him or asked him to do so.
good source. Unless we can get confirmation from
Q.
On September 30th, 2004, did you
still consider Mr. Imperatore to be a person who
other sources we can't even begin to consider

doing anything with this."
has never given me bad or false info?

A.
Which, obviously, highlights my
Again, on specific matters and
specific subjects. I said that before.
There
isn't - - There isn't a single source who I could

rely on across the board.
On the areas where I
did rely on Brantls information, he had never

given me bad information.
skepticism about the nature of the information he

was providing or its credibility.
But up to that point your view was
Q.
that he was someone who had not yet given you any
bad or false info.
A.
Again--
Page 199
J. ROSNER
Q.
J. ROSNER
What areas did you rely on
Mr. Imperatore's information?

A.
Page 201
CONFIDENTIAL
MR. CAHILL:
A.
Primarily what was going to be
important on both sides in the legislative
Objection.
Again, as it related to legislative
matters.
Q.
wranglings and how far the dems would be willing

to bend and the republicans on the other side
- CONFIDENTIAL
But you didn't write that, did you?

MR. CAHILL:
Objection.
Argumentative, form.
would be willing to bend on what would be
A.
I didn't write that because
required to pass legislation.
Q.
Well, you were passing along
Q.
Okay.
Exhibit 22.
That's dealing
...
Mr. Imperatore's comments about what the
with Mr. Imperatore's views of what the
administration was doing, and in that E mail you
administration will do.
say that he has never given you bad or false
Correct?
A.
I'm sorry?
Q.
Exhibit 22, is that talking about
what congress wants to do or what the

administration is saying?
A.
Twenty-two is what - - Brant's
information.
Correct?
MR. CAHILL:
A.
Objection.
In the literal terms of what you're
seeing here, yes. As I've said to you repeatedly

during this process, a lot of information
understanding of what the administration is
actually was inference, had color that was either
saying.
added or not in the reports, and I said to you
Q.
And 23, is that also dealing with
the administration?
repeatedly during this line of questioning I

relied on Brant not solely or exclusively, but as
A.
Apparently.
a good source of information on legislative
Q.
What is 24 dealing with?
issues, not administrative issues, which is why
A.
Again, HUD administration issues.
if you notice in that call report, at the top I
Q.
And Exhibit 24, which deals with
say "radio silence." At the bottom I actually
5 1 (Pages 198 to 201)

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Page 202
J. ROSNER
J. ROSNER
raise questions as to his veracity and my
confidence in the quality of his information.
Q.
Okay.
Q.
Exhibit 22 you don't tell
anyone they should use radio silence for that
information, do you?
A.
No.
This is actually
--
There's
nothing particularly interesting in it.
There's
nothing particularly surprising in it, and this
10
is a perception of information that, frankly, was
11
circling around Wall Street and anyone would have
12
given you at that time.

Q.
- CONFIDENTIAL
On Exhibit 24, what is the - - What
is the general topic of the allegations that

Mr. Imperatore is discussing?
A.
That HUD had actually done
investigations on Fannie's conforming loan
13
Page 204
- CONFIDENTIAL
So it's your testimony it was
limit - - I'm sorry.
--
affordable housing
purchases and also on the partnership offices of

Fannie.
Q.
And if you take a look at Exhibit
23, is that also referring to the same issue?
A.
I would assume so.
Q.
At least according to this contact
14
well-known in May of 2004 that the White House's
call report, Mr. Imperatore describes the
15
view was that six months from then, meaning
allegations as "explosive"?
16
through December, 2004, Fannie Mae and Freddie
17
stock price will not have gone up?

MR. CAHILL:
18
19
A.
Objection.
First of all, it doesn't say
anything about Fannie's stock price in that
21
report, either inferred or otherwise.
22
Freddie stock price.
Q.
Okay.
Correct.
Q.
Was that report ever released by the
HUD Inspector General?
20
23
A.
It says
It says, "Shareholder
A.
I don't recall.
Q.
Do you know if there ever was such a
report by the HUD Inspector General?

A.
I believe there were.
Q.
And what were the findings?
24
pressure may get FNM and FRE to be more willing
A.
Idon'tknow.
25
to cut a deal."
Q.
Were they explosive?
Page 203
J. ROSNER
- CONFIDENTIAL
A.
Page 205
A.
I have no idea.
That's referring to the fact that
MR. TERRY:
Here's Exhibit 25.
for the past five years at that point, or four
years at that point, there had been a massive
legislative overhang on the GSEs concerns that
there was going to be legislative change for a
Q.
stronger new regulator, and that investors were
A.
Yes.
becoming very weary of it, and actually

It appears to be a F a ~ i eMae
report or a GSE update.
10
increasingly making it known that they were weary
Q.
Did you write this?
11
of it.
A.
I probably did.
Q.
12
And was it widely known that the
It's
Bates-Stamped MGA 03647.
I don't
specifically recall.
13
administration's view was that pressure on the
14
stock price of Fannie Mae would make Fannie Mae
15
more willing to cut a deal with the
A.
Uh-huh.
16
administration?
Q.
It says, "We are now hearing from
MR. CAHILL:
17
A.
18
Objection.
Again, I'm not sure that this is
Q.
Can you take a look at the top
paragraph?
Several sources that another non-OFHEO and

non-SEC report on Fannie Mae's practices may soon
19
Brant's view or this is the administration's
emerge.
20
view.
alleged reports as 'explosive.' These sources
21
administration's view, given the fact that, as I
22
said, I have reasons to repeatedly doubt the
office has recently completed an investigation,
23
accuracy or the credibility of Brant's
though they did not say whether it was a formal
I don't think that it was reliable as the
Our sources have characterized the
have claimed that the HUD Inspector General's
24
information on administrative issues,
or informal investigation of Fannie Mae's
25
administration issues.
partnership offices."
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Page 206
1
J. ROSNER
2
3
CONFIDENTIAL
J. ROSNER
Is that referring to the information

that Mr. Imperatore provided you?
- CONFIDENTIAL
that there was a - - an investigation ongoing that

was potentially explosive, is dated, as I said,
A.
I assumed that that's part of it.
Q.
And, in fact, your report uses the
Page 208
very word "explosive" that Mr. Imperatore used.
September 30th.
Q.
Well, actually, could you take a
look at Exhibit 23 again?
A.
Correct.
A.
Okay.
Q.
Now, despite your skepticism about
Q.
This is a document, is it not, that
9
10
Mr. Imperatore's source, you nevertheless
refers to the investigation as being, quote,
published his comments?
"explosive"?
11
MR. CAHILL:
12
13
A.
Well, let's - - Let's look at the
date of that.
14
15
Objection.
That's December 2nd, 2004.
A.
Okay.
Q.
And that's written just two days
before your December 2nd. 2004, report.
Q.
Uh-huh.
A.
The call report was dated September
A.
If you look at the end of that
Correct?
correct.
If you look at the ~eptember30th
16
30th, 2004.
17
September - - of Exhibit 24, it comments that
specifically the investigation of the partnership
18
unless we can get confirmation from other
offices, the fact that I don't think we can do
report, that's the one where they talk about
19
sources, we cannot even begin to consider doing
anything with any of this information until we
20
anything with this.
get other sourcing.
21
And I would assume, although I don't
Q.
Do you know if by November 30th,
22
specifically recollect, that during those three
23
months I probably got confirmation from other
not the information Mr. Imperatore was providing
24
sources.
you with was reliable?
Q.
25
And so for at least - - for this
2004, you had developed a view as to whether or
A.
I believe that I had gathered a view
Page 207
Page 209
report dealing with the administrative matters,
that there were parts of his information that
it turns out you viewed Mr. Brant as being a good
were reliable.
source?
with others; that which wasn't was discarded.
A.
No, it turned out that I viewed him,
his views in combination with triangulation of
Q.
That which was was triangulated
Can you take a look at the last line
of Exhibit 23?
information with other sources, as actually
A.
Uh-huh.
forming the basis to believe to some degree what
Q.
It says, "Why is it that I'm a
--
or to believe what I wrote, to believe to
some degree what he had stated.
Q.
Could you take a look back at
soldier, and everyone else gets the glory?
reply, No, Brant, you are the puppeteer's

puppeteer."
Exhibit 23.

NOW, that's the contact call report
A.
That's referring to the fact that - -
for your conversation with Mr. Imperatore.
Right?
referring to the fact that Brant was feeling as
I assume that it's
A.
Uh-huh.
though he was doing a lot of the education of
Q.
What's the date of that report?
various parties as to the GSEs, various parties
A.
That is dated 11-30.
in the administration, various parties in his
Q.
2004?
firm and elsewhere, and was feeling down about
A.
Yes.
the fact that he was essentially being treated as
Q.
And then the - - Exhibit 25 is dated
December 2nd, 2004.

A.
Right?
The - - Correct. And Exhibit 24,
which is the one in which this HUD partnership

office is specifically raised, which suggested
a foot soldier, and I assume that my "you're the

puppeteer's puppeteer" was merely an attempt to
actually make him feel okay.
Q.
That he was, in fact, being
effective in his assignment of pulling the
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Page 210
J. ROSNER
- CONFIDENTIAL
strings?
A.
feel okay.
Q.
Page 212
information and made sure that Mr. Blumenthal
No.
That I was trying to make him
You nurture sources.
actually understood that I did not want any

information that was nonpublic, and I don't
What did you do to nurture
believe he ever gave me any that was nonpublic.
Mr. Blumenthal?
A.
I'm not sure. Could you be more
specific?
Q.
Well, you just said, "you nurture
sources.'I
Q.
And the same goes for Mr. Brereton?
A.
Absolutely.
Q.
What about Mr. Imperatore?
A.
I don't think Mr. Imperatore had any
information that was privileged, confidential. I
A.
Absolutely.
Q.
Was Mr. Blumenthal one of your
don't think he was a government official, and so
sources?
I treated his information as suspect because, to

my understanding, he wasn't a direct party to any
A.
Yes.
Q.
What did you do to nurture him?
A.
Actually, I helped to - - I helped
information that was proprietary.
Q.
him to understand that I actually represented a

unconflicted, unbiased policy analysis that
the OFHEO process.
I assume he's still with Barbour
A.
Griffith.
didn't exist elsewhere on the street, that unlike

most of those who actually wrote on the GSEs or
Do you know where Mr. Imperatore
works today?
Q.
When was the last time you spoke
with him?
I had no investment banking.
A.
I had sort of a touch-base hello
I had absolutely zero financial investments in
conversation with him probably a month, two
any of these companies, and that I was free from
months ago.
most of the pressures that most of sell-side
specifically, just I haven't seen you in forever,
firms were burdened by.
you've got a baby now, how are you. And prior to
Not talking about anything
Page 211
J. ROSNER
Q.
Page 2 13
- CONFIDENTIAL
Did you feel pressures to maintain
J. ROSNER
your sources?
A.
NO.
Q.
Did you feel you would be able to
- CONFIDENTIAL
probably it had been almost a year.
Q.
Was he still at Hailey Barbour's
A.
At that point he was.
Q.
firm?
perform your duties just as effectively if

Mr. Blumenthal stopped talking to you?
document and move on.
It's Bates-stamped on the
bottom MGA - -
A.
Absolutely.
Q.
Do you feel you could have performed
A.
Actually, I should correct that,
your duties just as effectively if Mr. Brereton
because I think I spoke to him on his cell phone,
stopped talking to you?
SO
I assumed that he was.
A.
Absolutely.
Q.
YOU assume that he was what?
Q.
Was it your view that you didn't
A.
Still at Barbour Griffith when we
need to talk to Mr. Blumenthal or Mr. Brereton in
last spoke.
order to reach conclusions about the likely
Q.
But you didn't discuss it?
outcome of the OFHEO investigation?
A.
We didn't discuss it.
A.
Absolutely.
MR. KARAM:
Q.
MR. TERRY:
Objection, compound.
Mr. Blumenthal in order to know what the likely

result of the OFHEO investigation of Fannie Mae
would be?
NO.
AS I said, I actually got to my
conclusions through publicly available
This is Rosner Exhibit
It's Bates-stamped MGA 03414.
I'll break it up.

Did you feel you needed to talk to
A.
26.

Q.
Have you ever seen this document
before?
A.
I believe I have.
Q.
What is it?
A.
It's an inbound call report.
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1
2
Q.
Who's it from?
Page 216
2
- CONFIDENTIAL
J. ROSNER
Journalist.
Is that Bob Haggerty?
A.
Fin man.
A.
I would guess so.
Q.
Sounds like a mystery novel, but who
Q.
Does he write under the name James
is the Fin man?
Haggerty?
A.
I have no idea.
A.
yes.
Q.
It says at the bottom, "Author
Q.
If you could take a look under
Regina Schleiger"?
A.
Correct.
10
Q.
Who is Regina Schleiger?
10
January. He also tells me that OFHEO will make
A.
She at that time was in the contact
11
an FMN announcement in the next week or so, and
11
Comments it says, "Bob (James) tells me that he,

too, is hearing that Frank Raines is gone by
12
area at Medley, really focused on central bank,
12
one of his sources is saying that Fannie was
13
fed, and G-7 G-10 central bank issues.
13
using earnings management (manipulation,
14
15
Q.
Based on that, do you believe the
Fin man was somebody with the fed?
16
14
smoothing) to protect the executive compensation
15
pool.
Explosive if true, and puts together my
A.
You know, I honestly don't know.
16
assumptions from my last two reports on earnings
17
Q.
Is Regina still at Medley?
17
management from what Regina's source was saying
18
A.
I believe so.
18
on going after Raines on executive compensation."
19
Q.
Did you ever ask her who the Fin man
19
20
was?
21
20
A.
No.
To be honest, this was
--
21
Is that something that you wrote?

A.
Probably. I mean, it says it.
have no reason to believe no.
Q.
And your report, your call report,
22
didn't, and we tended to actually try and keep
22
23
our sources where we put a pseudonym on them
23
24
confidential.
24
what Regina was saying about her source going
25
after Mr. Raines?
25
Q.
Why?
ties what you were hearing from Bob Haggerty with
Page 215
Page 217
A.
She obviously didn't feel
comfortable sharing the source name.
Q.
If you take a look at the summary.
Uh-huh.
Q.
And is that what Regina was saying
in the inbound call report from Fin man?

MR. CAHILL:
Well, first of all, is this

something that you - - you read during the time
you were working at Medley?
A.
I remember reading the beginning of
A.
understanding of GSE-related issues, I don't
Objection.
Yeah, again, I mean, I didn't author
the report.
Q.
Well, you did author Exhibit 27.
A.
Apparently.
Q.
And in your report you reference
Correct?
it and actually deciding that, given the fact

that Regina had little, if any, involvement or
- CONFIDENTIAL
J. ROSNER
A.
remember making it to the end of it, sort of
what Regina's source was saying and Armando going
remember actually finding it useless.
after Raines on executive compensation?
Let me show you the next document,
A.
Correct.
which will be Rosner-27, which is Bates-stamped
Q.
And that's what Regina wrote in
Q.
MGA 03409.
Exhibit 26?

Q.
What is this document?
A.
It appears to be a call report on a
call between Josh Rosner and Bob H. of the Wall

Street Journal.
Q.
Is it authored by you?
A.
Appears to be.
Q.
Bob H. is the Wall Street
A.
That is what Regina wrote in Exhibit
26, as I said at the beginning of the report.

I don't think I read to the rest - to the end of the report, but as I said, I didn't
really credit the
Q.
--
the Regina call note.
And that's because you did not
believe she had good sources?

A.
Well, because when you have a source
who you don't even know the name or where they
55 (Pages 214 to 217)

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J. ROSNER
- CONFIDENTIAL
Page 220
2
on that source.
MR. TERRY:
Exhibit
28,
Next document is Rosner
We have to have a word
answer.
A.
Oh.
Q.
Okay. Now, what are these Medley
Global Advisory background documents? Are those
sent to investors or not?
And if you could identify this
document for me?

A.
- CONFIDENTIAL
MR. KARAM:
which is Bates-stamped MGA 03410.
Q.
J. ROSNER
are, you have no reason or comfort with relying
It is a Medley report, background
The word is "yes."
A.
No, to my understanding.
Q.
Who are they distributed to?
A.
Well, the background
10
--
And again, I
report, so I don't believe that it was published,
11
haven't been there in almost three years, so.
apparently last - - last updated by me, dated
12
that right? A little over two.
September 17, 2004.
13
The background report, as I remember
Q.
Did you write a portion of this?
14
the systems there, were reports in process.
A.
I believe so.
15
they would sit in the background.
Q.
I just noticed, a lot of Medley
16
could actually step in to the document and make
17
changes, make edits, during that process.
18
didn't go out until
reports seem to use baseball analogies.

A.
I know. And I'm not even a baseball
Q.
So is there someone who did the
fan.
Is
--
19
later.
20
went out in this form.
So
Other people
They
to clients until sometime
It wouldn't say "backgroundnon it if it

Q.
narrative-type editing, just to add in the punchy
21
metaphors?
22
third paragraph on this Fannie Mae document, it
23
says, "Several sources in Washington have
24
recently been suggesting that if OFHEO finds
25
Fannie Mae has been improperly managing earnings,
A.
remember.
pieces.
You know, I don't specifically

I certainly wasn't editing my own
And in terms of the punchy, yes.
Page 219
Page 221
1
certainly wasn't the guy who added the
they may have done so in a manner that protected
punchiness.
executive bonus pools. "
Q.
Who was the person who did the final
edit?
A.
Well, the final edit was Bob Medley.
Did you write that?
4
5
A.
I don't recall specifically.
Q.
Do you know, is that referring to - -
But that was really again more for a grammatical
The several sources, is that referring to Bob
and accuracy perspective. In terms of the more
Haggerty and the source quoted by Regina?
literary edit, it depended. Sometimes it was
Kevin Muehring; sometimes it was Robert Johnston.
10
At the beginning it was the hyperbolic - - some of
11
the hyperbolic comments were Richard Medley.
12
Q.
Was there any process where
A.
I would assume so, but I would also
guess not exclusively.

Q.
Were there any other sources that
were telling you that at the time?
13
A.
individuals who edited the reports before they
14
. Q.
became final ever pushed back on you as to the
15
issued its interim report of the special
quality of your sources?
16
examination of Fannie Mae?
A.
Absolutely.
17
A.
Q.
And was that sort of an iterative
18
Q.
process where they would ask if you were
19
paragraph.
confident in your source and - -
I don't recall.
IS this before OFHEO had actually
Don't recall.
Could you take a look at the first
It says, "As we have said previously,
20
we expect that sometime in next few weeks OFHEO
A.
Absolutely.
21
will likely make an announcement in regard to
Q.
And were you required to give them
22
their ongoing investigation of Fannie Mae's
some kind of comfort that you were comfortable
23
accounting and governance practices."
yourself with the source before being published?
24
A.
Uh-huh.
25
Does that indicate to you this was

before the OFHEO report was released?
56 (Pages 218 to 221)

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Page 222
1
J. ROSNER
J. ROSNER
A.
yes.
Q.
And before the OFHEO report was
Page 224
- CONFIDENTIAL
- CONFIDENTIAL
in order to maximize compensation?

A.
Not predict but to believe that
released, you were being informed by a number of
there was a strong possibility Chat earnings - -
sources in Washington that OFHEO may find that
that executive compensation would have been one
Fa~ie
Mae had been improperly managing earnings
of the motivations.
to protect executive bonus pools?
8
9
A.
Q.
Actually, I had, again from public
Based on public information, were
you able to learn that that was a risk that the
information in reports that Fannie had put out
OFHEO report Could find, that earnings management
10
there, reports that had been put out there by the
had been done to maximize bonuses?
11
regulator as per Freddie, ascertained largely
A.
Could you restate the question?
12
those findings myself and corroborated the view
Q.
Sure. Based on your review of
13
with others.
14
Q.
public information prior to the release of OFHEO

So prior to the release of the OFHEO
report, was it your view that there was a risk
15
report, you were able to determine, based upon
that the OFHEO could find that earnings
16
what was in the public arena, that the OFHEO
management was done in order to maximize - -
17
report would likely conclude that F a ~ i eMae had
A.
Yes.
18
managed earnings in order to protect executive
Q.
And is it your view that was readily
19
bonuses?
20
A.
apparent in the public record?

Yes.
MR. CAHILL:
Well, hold on. Not
Objection.
A.
In the public record? Again - -
That basis of it or that assertion or that
Q.
Tn the public domain?
assumption of it was something that had been
A.
In the public domain, yes. Was it a
21
specifically to particularly protect bonuses.
22
23
24
floating around. and it didn't seem very
contrarian view juxtaposed with the majority of
25
farfetched to me.
sell-side financial analysts?
It was, but I also
Page 223
Page 222
- CONFIDENTIAL
That was - - The part tying it to
J. ROSNER
recognized the conflicts of interest that most of
executive bonuses, that was something that was
them were subject to.
being told to you by sources in Washington prior
to the release of the OFHEO report?
did not need confidential sources to reach that
Well, Bob Haggerty is not in
conclusion?
That was something that was being
Q.
A.
Washington.
mentioned by I think various sources. And as I
remember - - And I really don't recall, so I'm not
trying to be cagey.
But as I remember, there had
Q.
A.
And is it your testimony that you
Absolutely.
MR. TERRY:
10
Global Advisors report.
been a prior issue in terms of the executive
11
03587.
compensation issues at one of the companies. And
12
so it certainly wasn't farfetched. And,
13
actually, in the Freddie report they raised
14
questions about executive compensation as a
15
driver.
Q.
17
to the release of the OFHEO report, from public
18
sources you were able to at least determine that
19
the OFHEO report would likely find that F a ~ i e
20
Mae had engaged in earnings management?
21
A.
Yes.
22
Q.
And is it also your testimony that
23
based on public sources you were able to predict
24
that very well may be tied to earnings management
25
The next document

It's a Medley
Its Bates stamp is MGA

Q.
If you want to take a break at some
point, just let me know.
16
So is it your testimony that prior
Okay.
is dated Septemher 28th. 2004.
MR. CAHILL:
How are you doing on
time, counsel?
MR. TERRY: Getting towards the end.
Q.
A.
It says "G-7 special report, GSEs:
me?
Where Fannie sits."
It does not look like it went out,
because it has Kevin Muehringls name on it.
Q.
Does this appear to be a draft - -
57 (Pages 222 to 225)

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Page 226
A.
Q.
A.
Page 228
Itdoes.
A.
I think that it was a view that
- - of a report?
legislators on both sides were going to be
Do you know if you drafted it?
polarized by the accounting problems now having
The fact that it's a G-7 special
been shown at both Fannie and Freddie, and there
report, if you let me look.

Yeah.
I don't specifically recall,
would be a recognition that the current regulator
was not strong enough to actually regulate.
I don't see what - - why it
wouldn't have been in part written by me.
but I would
--
Although G-7 special report was typically the

core area, which is Kevin's group.
So I would - -
Q.
And is this report expressing the
view that the OFHEO report provided ammunition,
10
if you will, to combatants on the sides of the
11
legislative debate over Fannie Mae?
I would guess that this may have been
12
collaborative or something of that nature.
13
highlights Kip Bond's approach, which was to
14
battle back.
Q.
Take a look at the first sentence.
A.
In part.
It also, if you continue,
It says, "The long saga of successive government
15
efforts by the Clinton Administration and then
16
It says, "Sources are now suggesting to us," and

it gross through a number of things.
Q.
Let's take a look at that paragraph.
the Bush Administration - - both quietly supported
17
by the Federal Reserve - - to reign in the
18
frenetic, low-capitalized balance sheet growth
19
and market assumptions of government backing for
20
Freddie Mac and Fannie Mae seems to be finally
21
coming to a final showdown."
22
while you're reading, not to speculate. If you

know - -
Did you write that?
23
A.
Actually, I don't think I did.
24
Q.
Do you know what it is referring to?
25
Was that source Steve Blumenthal?

A.
I don't believe so. Let me read
that.
MR. CAHILL:
THE WITNESS:
A.
Let me caution you,
Absolutely.
I don't really know, and I don't
Page 227
A.
Q.
paragraph.
I don't.
Page 229
1
Well, let's continue on.
Why don't we look at the next
It says, "Fannie Mae, of course,
Q.
Okay.
Let me show you something.
Keep Exhibit 29 in front of you, and take a look
remains an extremely powerful corporation, but it
at 30, which is Bates-stamped at the top MGA
has suffered its biggest setback since the early
09762.
1990s. The damning interim report a few days ago
by OFHEO sharply criticizing Fannie Mae's
accounting practices and corporate governance,

internal controls, and senior executive

Q.
Can you identify Exhibit 30 for me?
10
A.
Uh-huh.
11
Q.
What is it?
OFHEO report is only one in what may be viewed as
12
A.
An
an ongoing series of such releases by OFHEO."
13
Q.
Between you and Mr. Blumenthal?
I'll stop there.
14
compensation, has significant implications.
The
Does that give you some context as
outbound call report.
A.
correct.
15
Q.
And drafted by you?
16
A.
Apparently.
A.
Uh-huh.
17
Q.
If you take a look at the call
Q.
What is it referring to?
18
A.
The interim report of OFHEO on the
to what it's referring to?
notes, it says, "Steve indicates several
19
important issues mostly around the belief that
20
Fannie Mae is not going willingly.
21
personal views.
in this report that the OFHEO report would
22
old lobbying tricks, though it was unclear
somehow affect the legislative fight over Fannie
23
whether the independent board members know this,"
Mae?
24
and then it makes a number of points.
Fannie Mae investigation.
Q.
And was Medley expressing the view
MR. CAHILL:
Objection.
25
These are his
Fannie appears to be up to their
Do you see that?
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Page 230
Mr.
A.
Uh-hum.
Q.
And does that reflect comments that
Blumenthal made to you?

A.
I would gather.
Q.
Could you compare that to the third
Page 232
1
that would appear on a G-7 special report or any
other document that was distributed to investors,
anything that refers to sources would be
multisourced?
paragraph of the G-7 special report, which is
Exhibit 29?
A.
Uh-huh.
Q.
And does that paragraph appear to be
A.
Unless it was sourced from an
official document that was public record, yes.

MR. TERRY:
Why don't we take a
quick break.
10
A.
Can I correct that?
encapsulating a number of the points made to you
11
Q.
yes.
by Mr. Blumenthal on this call?
12
A.
Unless it was sourced from a public
A.
Yes, although most of those points
13
document. Not related to; sourced from.
were actually available in Beltway circles and
14
were reiterations of conversations I had with
15
lobbyists on both sides, with Senate and
16
legislative staff.
17
We're going off the tape.
18
Tape 3.
Q.
And what's the date of your call
report with Mr. Blumenthal?
MR. TERRY:
We'll take a quick break
to change the tape.

THE VIDEOGRAPHER:
The time is 2:43.
This is the end of
19

THE VIDEOGRAPHER:
A.
September28th.
20
Q.
And the date of the G-7 special
21
on the record. The time is 2:51.
22
b e g i ~ i n gof Tape Number 4 in the deposition of
report is also September 28th, 2004?
We are going back

This marks the
A.
Correct.
23
Mr. Joshua Rosner, being held at OIMelveny&
Q.
So it appears the G-7, at least this
24
Myers in New York City.
25
draft report, was written the same day you had
The videographer is
Page 231
J. ROSNER
CONFIDENTIAL
your call with Mr. Blumenthal.

A.
Page 233
J. ROSNER
It appears so. Which actually makes
specifically, but makes me even more of the

belief that the report would not have been
written on that call report but that call report
Q.
and confirm information that I already heard.

Who else did you hear that
information from?
All over the place.
A.

Q.
The Kip Bond
Why did you feel it necessary to
triangulate this information?

Because that's actually what my
responsibility was, was not to put out

information from a single source.
Q.
Well, why didn't you feel you
couldn't just trust a single source?

A.
Because that would be, frankly,
irresponsible and derelict of my

responsibilities.
Q.
I'm going to hand you what's been
So are you saying that for anything
Bates stamp at the
top is MGA 09772.
thing you would hear from people on both sides of
A.
I do.
marked as Rosner Exhibit 31.
the aisle in the Senate Banking Committee.
Q.
Mr. Rosner, you understand you're
still under oath?
would have actually been to try and triangulate
A.
CONFIDENTIAL
Washington, D.C.
me even - - And again, I don't recall
Q.
Deposition Services at 1020 19th Street,

me, please?
A.
Appears to be a call report to Steve
Blumenthal.
Q.
Is it a report of a call you had
with Mr. Blumenthal?

A.
It appears so.
Q.
And is it authored by you?
A.
Appears so.
Q.
first paragraph, it says, "Steve views the cut in

dividend as a positive indication that Famie
Mae's management and board are trying to make
59 (Pages 230 to 233)

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Page 234
Page 236
J. ROSNER
good-faith efforts toward the regulator. He is,
- CONFIDENTIAL
Were you surprised that cutting the
Q.
however, surprised that investors have no issue
dividend didn't do more to negatively affect
with the uncertainty this presents on an ongoing
Fannie Mae's share price?
hasis, as the dividend payment will have to be

approved each quarter, and it is conceivable that
A.
it could be cut fully at some point (though he's

not implying that OFHEO will have say or ability
Q.
If they cut it, at some point there
A.
Q.
Well, when it says, "he is, however,
surprised that the investors have no issue with
Do you know what event this
the uncertainty this presents," what is that
paragraph is referring to?

A.
Where do you - - Where is affect
shareholders?
will be lots of dividend growth share holders who

will be forced to sell the stock."
Well, what do you mean by "affect
shareholders"?
to require such action, it would be the company's

choice).
I didn't have a view in terms of its
share price.
referring to?
I assume that it was the first
A.
I would assume that refers to his
aM0unCed cut in Fannie's dividend, but I don't
personal view that you haven't heard investors
specifically recall the dates.
expressing outrage.
Q.
Sometime around January, 2 0 0 5 , did
I'm not sure that it relates
in any way to share price as much as it relates
Famie Mae announce it was going to cut its
to surprise that investors didn't seem to
dividend?
highlight, to talk about. There was quite a lot
A.
Again, I don't remember specific
dates.
of news reports at the time, and you really

hadn't heard much by way of outrage. Everyone
Q.
Was it generally in that time
was continuing to try to spin everything as good
period?
A.
news.
I believe so.
Q.
And Mr. Blumenthal was expressing
Page 235
J. ROSNER
Q.
Page 237
- CONFIDENTIAL
Was it some period after the OFHEO
report had been released?
J. ROSNER
CONFIDENTIAL
surprise that he hadn't heard outrage from Famie

Mae's investors.
A.
I believe so.
Q.
Do you know what Mr. Blumenthal is
A.
Well, again, I can't characterize.
Outrage would be his view.
Surprise. It sounds
referring to in the second paragraph, where he
like he was - - Again, I don't specifically recall
expresses surprise that investors have no issue
it, but it sounds like he was surprised that
with the uncertainty this presents?

MR. CAHILL:
YOU mean the second
investors weren't recognizing that there had been

a change.
sentence?
You have to remember, these

MR. TERRY:
I'm sorry. The second
sentence.
A.
companies had been
--
this company specifically
had been telling everyone that everything was all

Yeah, again, I'm not sure that - -
I'm not sure whether that came out of something
right for a very long time.
Q.
Would you take-a look-at the fourth
that he put out there or whether I had first
paragraph, which begins with, "With Huron"?
commented on my surprise with the uncertainty and
says, "With Huron Doing the internal accounting
he actually agreed.
It
review for the Board's examination, (two former
Q.
What was your surprise?
Anderson partners firm) at a time when the new
A.
The fact that you actually have a
audit firm, Deloitte, will being a serious
situation where the regulator would ultimately
reaudit it becomes harder for Huron to give a
have to approve the changes to the dividend and
puff report to the Board.
investors didn't seem to appreciate or care that
not only come close to concurring with OFHEO's
So they may have to
you had two companies who - - or you had a company
findings, but will have to probably highlight any
who was increasingly at the exposure of the
other internal control and operational problems
regulator.
they find."
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Page 238
J. ROSNER
Page 240
CONFIDENTIAL
Is that paragraph expressing in sum

or substance what Mr. Blumenthal said to you?
A.
Again, I don't specifically recall,
but perhaps, in all likelihood.
Q.
And based on where that language
A.
Uh-huh.
Q.
Do you see that?
A.
Uh-huh.
Q.
Does that reflect the date when the
last edits were made to this document?
appears in the report, is that language coming
That would reflect - - Trying to
A.
from something you were saying or something that
remember how the systems worked.
Mr. Blumenthal was saying?
reflect the date that the last edits were made.
A.
I don't know.
I do remember
That should
Yes.
actually having skepticism that a reaudit that
Okay.
Q.
And that's the same date of
was done at the request of the board would
the last exhibit we just looked at, which was
actually be honest in its findings. And so,
your call with Mr. Blumenthal?
actually, I think Steve's comments were actually
A.
Correct.
supportive of the company and its board in the
Q.
And if you take a look back at
sense that he was - - seems to have been
Exhibit 31, there's a date of an E mail on the
suggesting that the - - given that OFHEO felt they
top.
had done an exhaustive and credible job in their
automatically generated when you put the contact
It says 10:21.
First, is that E mail
work, that Huron would also be doing an
call report into the system, or did you have to
exhaustive and credible job in their review.
actually send it to people?
And did Mr. Blumenthal express the
A.
You know, I don't remember.
view to you that Huron's findings would have to
Q.
The date of that, is January 19th
Q.
not only come close to concurring with OFHEO's
also correct?
but would have to highlight anything else
A.
Uh-huh.
additional?
Q.
And is it 10:21?
Page 241
Page 239
1
J. ROSNER
A.
- CONFIDENTIAL
I don't think - - Again, I think that
the context, as I remember it, was that he was
commenting not specifically on findings but on
A.
Uh-huh.
Q.
And this draft report is about ten
minutes later?
the fact that I had cynical view on the work that
A.
Uh-huh.
someone hired by the company would be able to
Q.
provide, given my view on the company's
strong-arm tactics in some areas.
that his comment, as I understand it, and I
And I think
paragraph of this report, it says, "The

announcement last evening that Fannie Mae will
cut its current dividend by 50 percent comes as
10
believe I understood it at the time, was that
some surprise to us because it does not
11
they actually would be doing credible work.
materially address their capital shortfall and,
12
13
MR. TERRY:
14
15
(Whereupon, Exhibit ~osner-32is

16
17
The next document will
be marked as Exhibit 32, Bates-stamped MGA 03779.
Q.
And first, can you identify this for
A.
Again, appears to be a background
me?
18
while debt-holder friendly, is shareholder

unfriendly."
A.
Uh-huh.
Q.
Is that the same topic you discussed
that same day with Mr. Blumenthal?

A.
~t appears so.
Q.
what does that sentence means?
--
19
report; in other words, not a report in this form
A.
Could you be more
20
it was sent out, but a report in process.
Q.
Did you write that sentence?
A.
YOU know, I don't recall. I may
21
Q.
Is it a report drafted by you?
22
A.
At least in part it appears so.
23
Q.
And there's a date both at the top
24
and the bottom.
25
a.m.?
It's January 19th, 2005, 10:32
well have.
Q.
Sitting here today, do you have any
understanding as what it means by "the

announcement, while debt-holder friendly, is
6 1 (Pages 238 to 241)

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Page 242
shareholder unfriendly"?
A.
Yeah.
Page 244
2
In other words, it actually
strengthens the claim on assets that debt-holders
J. ROSNER
- CONFIDENTIAL
later in this background section, is it not?

A.
Well, it seems to be.
I'm not sure
that it was based on, again, a triangulation of
would ultimately have by retaining capital as
views rather than a singular view.
opposed to paying it out to the benefit of the
think that it was probably informed by other
shareholders.
conversations.
Q.
So is it your view that the dividend
cut was a negative for shareholders?

A.
Well, I don't think that even in and
of itself it necessarily was.
10
11
I think in
conjunction with other things on which I wasn't
12
commenting it may or may not have been.
13
Q.
If you look the next sentence, it
I happen to
You think you had those
Q.
conversations in the ten minutes between the

E mail and - A.
NO.
A.
No.
MR. CAHILL:
Objection.
I think I probably would have
14
had those conversations in the hours before I
says, "While it does send a signal that the new
15
spoke to Steve, because it also strikes me as
management team is interested in demonstrating
16
fairly strange to have that much completed within
their seriousness in addressing regulatory
17
ten minutes of a call.
concerns' - - Let's pause on that for a second.
18
Is that something that
Q.
Whoelse --Whoelsewouldyouspeak
19
with besides Mr. Blumenthal about what the
Mr. Blumenthal had said to you on the call on
20
regulator felt about Fannie Mae's action?
that same day?
21
A.
I don't - - I assume so. You know, I
A.
But I don't think that I actually
22
comment in that background report on the
don't remember - - recall specifically that call
23
regulator's opinion in that.
report, so I would have to read it and tell you,
24
does - - If you go back to 32 at the top?
which isn't recollection. It's reading it.
25
not materially address capital shortfall, and
Right?
While it
Page 243
1
Q.
2
3
Take a look back, why don't
you, at Exhibit 31.
4
5
6
Okay.
It does
Page 245
1
2
J. ROSNER
- CONFIDENTIAL
while debt-holder friendly, shareholder
unfriendly, while it does send a signal new
A.
Uh-huh.
management team is interested, I don't think in
Q.
At the top it says, "Steve views the
there you - - you hear me mention OFHEO as the
basis or it as being a sign that OFHEO approved

or disapproved or had an opinion on as opposed to
cut in dividend as a positive indication that
Fannie's management and board are trying to make
good-faith efforts toward the regulator."
it being a broader opinion that may actually have
DO you see that?
been nothing but my opinion.
10
A.
Right.
10
11
Q.
Is that the - - Is that the same
11
Q.
12
comment that appears in your report as, "While it
12
13
does send a signal that the new management team
13
Q.
14
is interested in demonstrating their seriousness
14
. A.
15
in addressing regulatory concerns"?
15
Q.
16
A.
Yeah, although I don't think that
Could you take a look at the bottom
of this page?
MR. CAHILL:
Which page?
I'm sorry. Of Exhibit 31?

31?
The background.
It says, "The
16
engagement of Deloitte to do a complete reaudit
17
there's anything particularly insightful or
17
may also increase the" - -
18
unique from Steve's view.
18
A.
Thirty-two.
19
lot of people who actually were of that view at
19
Q.
I1msorry,32.
20
the moment.
20
21
22
23
24
25
I think there are a
Q.
That is what Mr. Blumenthal said to
A.
Yeah.
you.
That is also what
Mr. Blumenthal seems to have said.
Q.
And it's what you wrote ten minutes
"The engagement of Deloitte to do a
21
complete reaudit may also increase the pressure
22
on Huron, hired to do the board investigation of
23
the interim OFHEO allegations, to be particularly
24
conservative in their approach and presentation
25
of findings."
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Page 246
Page 248
A.
Uh-huh.
Q.
"The result may drive them to not
Q.
It's not based on what
only come close to concurring with OFHEOPs
findings, but, should they find any, expose any
and a guide map of information that was put in
other internal control and operational issues."
place as a contextual approach used in the
A.
It's based, again, on a guideline
A.
Uh-huh.
Freddie examination, in other public comments
Q.
Did you write that?
that were made and, you know, resupported and
A.
Again, I don't particularly
informed.
recollect that.
I have no reason to believe that
I didn't.
Q.
And that very opinion was something
10
Q.
Was that information that you were
11
aware of in advance of the release of the OFHEO
12
report on Pannie Mae?
that was expressed to you by Mr. Blumenthal on
13
that same day, was it not?
14
occur in Freddie, except it didn't happen as part
15
of an interim process.
A.
Uh-huh. Again, I don't think that
that's a particularly unique or - - unique view or
A.
Absolutely.
We saw the same process
It was a one-step
16
process, the back half of the paper, the Baker
I think there were
17
Botts or the Freddie exam was where that
others who were probably of that view as well.
18
information showed up.
proprietary view of OFHEO.
By way of context, Huron came out of
Q.
19
the Enron scandal and the breakup of an
20
document, which will be Exhibit be 33, which is
accounting firm, and as I recall speaking to many
21
an ~ugust17th. 2004, contact call report
clients about my concern about the integrity of a
22
reaudit and, you know, investors and reporters
23
and others, there were a lot of people who were
24
saying, Don't be so cynical about the quality of
25

Q.
Can you identify that for me?
Page 247
J. ROSNER
Page 249
CONFIDENTIAL
an audit firm to actually have to do the right
A.
Appears to be a call report.
thing in this day and age.
Q.
Is it a call report between you and
Q.
Can you take a look back at Exhibit
Mr. James Moynihan, III?
31 at the third paragraph?

A.
Thirty-one. Uh-huh.
Q.
It says, "OFHEO will now focus the
A.
It appears to be.
Q.
And he worked for Evergreen
Investments Equity?
exam on who was responsible for the problems
A.
Uh-huh.
uncovered in the interim investigation and what
Q.
They were a client of yours?
they kneww?
A.
I don't think they actually ever
A.
Uh-huh.
Q.
And that appears, does it not, in
were.
I think they were a prospect.
Q.
Is this a report that you drafted?
the background in Paragraph 3 of the background
A.
I would assume so.
in the middle, where it says, "Instead, OFHEO
Q.
The summary says, "Want to be on
will probably focus the examination on who was
FASB call.
responsible for the problems uncovered in the
find places to put money to work I am getting out
interim investigation" - -
of Fannie ' " ?
Great meeting that ended with 'as I
A.
Uh-huh.
A.
Uh-huh.
Q.
- - "what they knew, didn't know, or
Q.
Did you write that?
A.
I don't recall, but possible.
should have known"?

That is based, is it not, on what
A.
NO.
MR. CAHILL:
Objection.
Sorry.
Probably.
Q.
Any reason to doubt that - -
A.
NO.
Q.
- - since your name appears to the
author?
63 (Pages 246 to 249)

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Page 250
J. ROSNER
- CONFIDENTIAL
Page 252
NO.
Q.
Did you have calls periodically with
Mr. Moynihan?
because I think there was testimony that
Mr. Moynihan was not a client.

THE WITNESS :
I probably did.
Q.
Why on a two-line contact call
report did you put, "as I find places to put
money to work I am getting out of Fannie"?
A.
I don't remember the broader
Q.
I remember there being an issue with
Correct.
Did you ever find out if any of your
clients were short F a ~ i eMae shares?

A.
Notparticularly. Notby fact.
Perhaps by circumstance, but not specifically.

Sitting here today, can you tell me
Q.
- CONFIDENTIAL
A.
context.
J. ROSNER
A.
10
if any of your clients had a short position of
11
Fannie Mae in 2003, 2004?
a number of Boston institutional investors where
12
one of the analysts who had covered Fannie had
13
actually done a group lunch for some of the large
14
A.
From recollection, not specifically.
Q.
Generally do you recall that some of
your clients had short positions in Fannie Mae?
institutional investors in Boston, and the
15
analyst expressed that, although he had a
16
were short, as I'm sure there were some clients
positive rating on it, he was increasingly
17
who were long or prospects.
concerned and wary.
18
And one of the large
shareholders called the company and, essentially,
A.
I'm sure there were some clients who
Q.
Do you know which were greater,
19
whether there were more short clients or long
the analyst was strong-armed is at least what I
20
clients?
was told by other Boston accounts, into changing
21
his view or having his coverage of F a ~ i eand
22
Freddie taken away, which I think was seen as
23
distasteful by many of the institutional
24
investors in Boston, who increasingly came to
25
MR. CAHILL:
I caution you not to
speculate. If you know you
--
A.
Yeah, I don't know.
Q.
Do you know which clients were short
F a ~ i eMae in 2003 and 2004?

,,
Page 25 1
J. ROSNER
- CONFIDENTIAL
have concerns about Fannie and Freddie.
Q.
Were you happy that Evergreen was
taking its money out of Fannie May?

A.
I didn't care.
I have no conflict.
Q.
But you saw fit to include it in
your call report.

A.
I saw fit to include in the call
report. Yeah.
Page 253
A.
Not off the top of my head.
Q.
Did Medley itself own any shares in
Fannie Mae?
A.
The firm?
Q.
Yeah.
A.
Not to my knowledge. To my
Q.
Why was that relevant?
10
A.
I have no idea.
11
Q.
Aside from this E mail, did you ever
12
I don't
recollect.
come to learn the stockholdings of your clients?
1
2
knowledge we don't own any shares in any

securities.
Q.
Did you own any shares in
securities?
13
A.
NO. Not typically.
14
related issues.
Q.
On some events did you?
15
A.
Well, I mean in the sense that you
16
whether long or short, in Fannie Mae during that
knew who the largest shareholders were by the
17
time period?
fact that they were the ones who were essentially
18
A.
Never.
calling and trying to encourage you to change
19
Q.
Did you ever hold any Fannie Mae
A.
Never.
A.
your views, sometimes h

t
'
w
the threat of - - of
20
Q.
Not of Fannie or Freddie or any

Did you ever have any position,
debt?
either not becoming clients, if they were
21
prospects, or reducing the amount of business
22
through a mutual fund or something I'm unaware
that they would pay.
23
of.
MR. CAHILL:
I'm sorry. Please note
my objection to the form of that last question,
You know, not unless it's
24
Q.
I won't ask about your house.
25
A.
Yeah, exactly.
64 (Pages 250 to 253)

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Page 254
I'm a renter.
- CONFIDENTIAL
Do you still speak to
Q.
J. ROSNER
Actually, it's on the record

already.
Page 256
Q.
me?
Mr. Blumenthal?
A.
yes.
A.
Q.
What is it?
A.
It is an E mail from Anne Canfield
I haven't spoken to him in a very
long time.
--
I think the last time I spoke
don't remember whether it was phone or
to me, from Jason Thomas to Anne Canfield.
E mail.
--
he informed me that he was going to
Q.
Do you know who Jason Thomas was?
work for
--
I'm trying to remember, a buy-side
10
A.
Yeah.
firm.
I don't remember doing what.

Q.
Have you ever, personally, met with
Mr. Raines?
whether it was the RSC, republican study
12
committee or republican policy committee. He was
13
involved in that.
A.
On one occasion.
14
Q.
Was that on a train?
15
A.
NO.
16
Q.
Tell me about the occasion when you
Q.
And tell me a little bit about the
event.
It says RPC on it.
Do you know - -
A.
Oh.
Republican
There you go.
Q.
What was the republican policy
committee?
19
It was at American Enterprise
A.
Institute.
Q.
policy committee.
17
18
met Mr. Raines.
I'm trying to remember
11
Just that.
A.
That policy committee.
20
They - - They developed positions for the -
21
for - - for the republican members.
22
Q.
Of the US Senate?
A.
What would you like to know?
23
A.
correct.
Q.
Who was speaking?
24
Q.
So Mr. Thomas was affiliated in some
A.
Frank Raines was speaking.
25
way with the US Senate as an aid?
Page 252
Page 257
Q.
J. ROSNER
He was giving a speech at the
American Enterprise Institute?
CONFIDENTIAL
A.
Correct,
Q.
If you take a look at his E mail, it
A.
Correct.
says, "Please give this as wide a circulation as
Q.
Brave man.
possible" - -
A.
It was sort of entering the enemy
camp, and he presented, made a presentation.
A.
Absolutely.
Q.
- - "please do not attribute it to
asked a question, because I had real concerns
me.
that they were understating their delinquency and
move MBS off balance is going to blow a $20
default numbers.
billion hole in Fannie Mae's capital. This is
I asked him a specific question
about their application of loss mitigation and
already bigger than Enron."
what those numbers would look like had they

reported without the loss mitigation, because I
A.
the question.
cagey he became.
And after his official speech and
Q&A,
I approached him to try and again get an
answer to the question.
Q.
Q.
Did you ever report that, publish it
A.
did.
No.
Actually, I don't believe I
I remember getting a phone call shortly
after I received this from a reporter who, you

know, essentially said, Did you see this? And
it's funny.
it does.
I had actually thought - - Oh, yeah,
It was bullshit, the second that I
received it.
which is Bates-stamped MGA 04202, which is dated

March 11, 2005.
I remember this fairly
in your reports?
Frankly, several people at that
meeting noted to me that it was interesting how
Yeah.
specifically.
felt that they were, if not intentionally,

functionally deceptive, and he refused to answer
The word is that the use of the q-spes to
I'm sorry for that being on the

record.
But I didn't give it much credit when I
saw it, dismissed it out of hand.
I know a
65 (Pages 254 to 257)

D.C. 1-800-441-3376

Page 258
Page 260
reporter actually called me, thinking that it was
only the information but the source of the
credible, and I said to her - - to that reporter
information, would it not?
that I didn't find it credible.

Q.
MR. CAHILL:
Was that reporter Donna Kapeki?
Objection. Form.
Would forwarding this information
Q.
A.
~twas.
reveal details as to the source of the
Q.
Do you know if she reported on it?
information?
A.
I believe she did.
MR. CAHILL:
Q.
Did you ever learn why Jason Thomas
YOU can answer.
was forwarding this to Anne Canfield?

A.
No.
I mean, I assumed that Jason
was a - - you know, had some other motivations.
A.
Yes.
Q.
And that would have contradicted his
request not to be sourced. Correct?
didn't really give it much credit. And, frankly,

I think other than meeting him at a
--
Objection.
MR. CAHILL:
Q.
Objection.
You can answer.
public - - I don't remember whether it was AYAI or
A.
Yes.
Hudson, at a public event after this, I don't
Q.
And when Ms. Canfield provided this
think I had ever met him or spoken to him, so I
information to you, was she aware that you were
didn't really give it much merit.
an analyst covering Fannie Mae?
Q.
Was this E mail forwarded to you by
MR. CAHILL:
Anne Canfield?
A.
~t appears so.
Q.
At the time was Ms. Canfield working
"analyst covering Fannie Mae. "
for FM Watch?
A.
Objection. Foundation.
I actually have issues with the
A.
Q.
During the period that Ms. Canfield
forwarded this to you, you were working at
Again, I don't know.
I believe so.
Medley.
I think it's interesting, actually,
correct?
A.
correct.
Page 259
Page 261
J. ROSNER
that Jason Thomas in his E mail to Anne Canfield

says, "Please give this as wide a circulation as
Q.
CONFIDENTIAL
And did you periodically publish
reports talking about Famie Mae?
possible," and in Anne's E mail to me she said,
A.
Talking about regulatory,
"Please do not forward this or say where you
legislative, and policy issues regarding Fannie
received this information."
Mae.
So it seems that Anne was actually
Yes.
Q.
also somewhat dubious of the information.
Q.
Well, if you had forwarded the

E mail, it would make apparent who the source of

the E mail was, would it not?
A.
Uh-huh.
Q.
And that would countermand his
request, "do not attribute it to me"?
One more document.
MR. TERRY:
Actually - - Yeah.
We'll
do this.
Q.
A.
I'm sorry?
me?
A.
Absolutely.
Q.
Can you identify this for me?
Q.
And she also asks you not to source
A.
Appears to be an E mail - - I don't
Jason on anything.
Correct?
know whether it's a series of - - back-and-forth
A.
Uh-huh.
Q.
Ms. Canfield wasn't asking you to
Q.
Who is Mr. Heiskell?
not to share this information with anyone, was
A.
At Wellington.
she?
E mail between Andrew Heiskell and Josh Rosner.

Analyst or portfolio
manager at Wellington.
A.
Well, she is.
Q,
Q.
HOW?
A.
It is.
A.
"Please do not forward this."
Q.
So Mr. Heiskell is someone who made
Q.
Well, forwarding it would reveal not
Is that a buy-side analyst?
recommendations as to what Wellington should
66 (Pages 258 to 261)

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Page 262
J. ROSNER
- CONFIDENTIAL
purchase?
A.
Page 264
1
J. ROSNER
2
I don't know if he made
Q.
- CONFIDENTIAL
Does that give you any indication as
to whether the top E mail is referring to the
recommendations or he had the authority to make
OFHEO special examination report?
the decision.
Q.
Your E mail references a report.
What report is that referring to?
A.
No.
That's my point.
The fact that
actually that was the 26th and that report went
out to clients on the 26th leads me to believe
A.
Where are you talking about?
that there would not necessarily be anything
Q.
The first line, "Good. I do have
particularly new to report to him on the 27th.
some interesting tidbits on what could be in the
10
report of a salacious naturen?
11
which says, "Re GSE update:
What report is that referring to?
12
new OFHEO director and juicy OFHEO reports."
A.
I don't know. I don't recall.
13
Q.
If you take a look at the second
14
Q.
Okay. How about the subject line

Announcement of a
Reading that, combined with your

language saying, "I have some interesting tidbits
part of the first page of the E mail from you to
15
on what could be in the report of a salacious
Mr. Heiskell, the original one?
16
nature," does that suggest to you whether the
continue to believe that the OFHEO special
17
report you're discussing is the OFHEO report?
examination of Fannie Mae report will be released
18
by the end of May"?
19
and the timing may have been related to one of
It says, "We
A.
As I said, I don't really remember,
A.
Uh-huh.
20
the internal inspector general reports at Hun.
Q.
Does that refresh your recollection
21
I'm not sure, and I don't remember the timing.
that the E mail at the top is referring to the
22
OFHEO special report of Fannie Mae?
23
MR. CAHILL:
A.
Objection.
Q.
24
I don't know, because - - I really
25
Do you recall what tidbits this is
referring to?
A.
No.
If I remembered what tidbits
it's referring to I would probably remember what
Page 263
J. ROSNER
Page 265
CONFIDENTIAL
don't know. Because you've got a - - You've got a
J. ROSNER
- CONFIDENTIAL
report it is.
report that was actually attached that was
Q.
Were you aware of any nonpublic
already out and available and, yet, I'm referring
tidbits of a salacious nature as to what would be
to "interesting tidbits." So I would suspect
in the OFHEO report release May, 2006?
that it was not related to that.
I'm not sure
A.
what it was related to.

Q.
How many special reports of Fannie
MR. TERRY:
Mae did OFHEO release?

A.
at the top?
But where does it say special report
This is actually the
final document.
You just asked me if that report at
MR. TERRY:
This document is
the top refers to the special report, and I'm not
Bates-stamped MGA 03735. At the top it's dated
sure if it reports - - reflects the special report
December 22nd, 2004.
or a different report.
Q.
Does it refer to a report by OFHEO?
A.
I assume so, but it could also be
Q.
Hun.
Q.
Okay.
And looking at the second
Could you take a look at the top
E mail there?
A.
Uh-huh.
Q.
Is that an E mail from Mr. Medley to
YOU?
E mail, dated April 26, 2006, where it says, "We
A.
Uh-huh.
continue to believe that the OFHEO special
Q.
And some others at Medley?
examination of Fannie Mae reports will be
A.
Uh-huh.
released before the end of May."
Q.
Could you read that, read the text
A.
Uh-hum.
Q.
Doyouseethat?
A.
Uh-huh.
of Mr. Medley's E mail, into the record?

If you could just read aloud that - A.
You could read it.
67 (Pages 262 to 265)

D.C. - 1-800-441-3376

Page 266
Q.
Well, I'm asking you to.
3
4
Page 268
questions.
YOU can go ahead.
MR. CAHILL:
I'm
not sure what the point is, but.
A.
Ityeah,yeah, you could never resist
dancing on Raines' grave.
and respect you for the very scary focus. ~ n d
who would have thought three years ago Josh
Rosner would be supervising and choreographing
We've all come to love
10
the rise of Freddie and the humbling of Fannie?
11
Oh.
That's right.
12
Have you ever had any communications

with Leanne Spencer?
Off the top of my head I don't
I don't recall.
Q.
Do you recall ever attending any
presentations that she spoke at?

I don't recall. I don't believe so,
A.
but I don't recall.
We did."
Q.
And that was something that
Q.
A.
recall.
Did you ever listen in on analyst
earning calls?
13
Mr. Medley had written to you on December 22nd,
A.
Idid.
14
2004?
Q.
How frequently?
A.
AS often as I could.
15
A.
I guess so.
16
Q.
And was it your understanding he was
17
referring to the fact that you had previously
18
written, substantially prior to this, that Fannie
19
Mae would have some significant accounting
20
errors?
21
22
Time
constraints.
Do you recall ever hearing
Q.
Ms. Spencer speak on any of those calls?

A.
Yes.
Not
Again, not specific in
--
terms of - - in terms of statements or substance.
A.
I can't really speak to the basis of
Richard Medley's view.
I think I would
So you don't remember anything she
Q.
specifically said.
23
characterize my relationship with Richard Medley
24
this entire - - that entire period as - - How would
25
I put it?
- - peculiar, to say the least, and
A.
Not specifically.
MS. RANDELL:
That's all I have.
EXAMINATION BY COUNSEL FOR TIM HOWARD
Page 267
Page 269
would point out that I walked in the door at
Medley without many of the sources that you're
Q.
asking about and had substantially the same views
A.
Good afternoon.
as early as mid-2001.
BY MS. NEISH:
Q.
And so for Richard, who had been
Howard.
I'm Laura Neish, and I represent Tim
I'll start off by asking you a very
a - - a strong democratic operative before
similar question to what Ms. Spencer's counsel
actually entering into private enterprise, having
just asked you.
been chief economist to House - - I think House
10
Financial Services and a major democratic
Did you have any interactions with

Tim Howard?
11
fundraiser, I think he had reasons to question
A.
Not that I recall directly.
12
whether there was anything ever wrong with Fannie
Q.
Any conversations with him?
13
and Freddie.
A.
Not directly.
Q.
Do you recall hearing any statements
14
15
MR. TERRY:
questions.
Thanks.
16
17
T don't have any more
THE VIDEOGRAPHER:
by Mr. Howard on analyst calls?

The time is 3:26.
We're going off the record.
18
19
THE VIDEOGRAPHER:
20
22
The time is 3:40.
We're back on the record.
21
EXAMINATION BY COUNSEL FOR LEANNE SPENCER

MS. RANDELL:
23
Q.
A.
Of course.
Not specifically, but
Q.
You don't reoall any specific
yes.
statements by Mr. Howard.
A.
NO.
Q.
I would like to follow up a little
bit about testimony you gave earlier today about

My name
24
is Lauren Randall, and I represent Leanne Spencer
25
in this matter, and I have just a few very brief
your contacts at OFHEO.

You mentioned that you spoke with
Steve Blumenthal?
68 (Pages 266 to 269)

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Page 270
J. ROSNER
Page 272
- CONFIDENTIAL
A.
Uh-huh.
chief economist at times.
Q.
And could you just reiterate about
Mullin at times.
how often you speak with him?

A.
I spoke to Stephanie
I think I spoke to Forest
Pfaffenburg once or twice.
Again, different - - At different
I think that's about
it.
times it would differ in amounts, from
Q.
Who was the chief economist?
frequently, you know, I don't know, once or twice
A.
Hold on.
a week to, you know, not for a month or two at a
chief counsel, but that was back in 2001, I
time.
guess.
10
Q.
And in the 2003/2004 period?
11
A.
I don't specifically recall. I
Q.
I had spoken to their
That would have been when you
were - - before you were employed at Medley.
12
would guess that it was once every three, four
A.
correct.
13
weeks.
Q.
And the chief economist, who was
A.
I don't know why I'm drawing a blank
Q.
14
15
A.
16
17
And I think you also testified that
you met with him for drinks on occasion?

I met with him for drinks on one or
two occasions.
Q.
And what about Mr. Brereton?
19
A.
Same.
20
Q.
The frequency would be about the
21
same with Mr. - A.
on his name. He's still the chief economist.
Q.
Do you recall the frequency of your
interactions with him?

A.
No.
It was really related to
macroeconomic issues, not company-specific. My
No, the frequency was somewhat more,
concerns about the housing market.
23
because as the information officer at OFHEO he
Q.
24
was really the person who was able to tell me
A.
25
what - - or answer questions about things that
releases.
And what about Stephanie Mullin?

Same clarification of press
Infrequent.
Page 27 1
J. ROSNER
1
2
OFHEO had said
Q.
3
4
--
A.
Page 273
- CONFIDENTIAL
or publicly.
How often did you speak with
Mr. Brereton?
J. ROSNER
- CONFIDENTIAL
Q.
Did you ever speak with Mr. Falcone?
A.
Not
--
I don't believe other than a

I did meet him
hello during his time at OFHEO.
The same. Usually when I had a
for - - I don't remember whether it was lunch or a
question regarding interpretation of something
snack after he left, to find out what he was
that OFHEO had done or said, or rumors that were
planning on doing.
running around the market.

So once every few weeks?
Q.
You never spoke with him during his
term at - -
Q.
10
A.
Yeah.
11
Q.
And did you ever meet with him
of substance.
same.
all I have.
12
A.
I don't believe so.

MS. NEISH:
Personally?
14
15
A.
personally?
13
You mean
face-to-face - -
Certainly not
Okay. Thanks. That's
THE VIDEOGRAPHER:
The time is 3:46.
16
Q.
Yes.
17
A.
- - you don't mean - - Yeah. Had
THE VIDEOGRAPHER:
18
drinks with him a few times or lunch or drinks
19
with him a couple times.
Q.
20
21
23
24
25
And when you had drinks with him,
how long were these interactions?
22
just don't remember his name.
18
22
that?
Half-hour, hour.
The time is 3:47.

EXAMINATION BY COUNSEL FOR FANNIE MAE
BY MR. WALSH:
Q.
A.
Oh.
Q.
Did you speak with anyone else at
matter.
A.
Yeah, of course. I spoke with their
under oath.
is Michael Walsh.
OFHEO?
My name
I represent Fannie Mae in this
You understand that you are still

Is that correct?
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J. ROSNER
1
2
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- CONFIDENTIAL
J. ROSNER
A.
yes.
Q.
You previously testify that you and
was going into enemy territory?

A.
Absolutely.
Mr. Medley had a peculiar relationship, and you
Q.
mentioned that Mr. Medley was a democrat, and
A.
I meant that AEI had historically
that you also had your views when you joined
taken a view in favor of the privatization of the
Medley's group.
enterprises.
A.
On which specific part?
Q.
On the fact that you had one set of
13
MR. CAHILL:
views and Mr. Medley had another?

A.
12
Yeah.
not from - - was not
A.
Objection.
For some I would view it as such.

You know, I, personally, have - -
I mean, the set of views was

--
Would you categorize the diverging
views as an ideological divide?
10
11
Q.
Can you elaborate on that, please?
that I referred to is not
It's not terribly different than my views on
14
a partisan set of views.
15
Richard was uninformed about housing and mortgage
It was rather that
to use as an example, which are issues
16
markets and GSE-related matters and, yet, had a
surrounding the rating agencies, where there are
17
somewhat hyperbolic view of the Washington
those who actually would have agreed with me on
18
landscape for the enterprises. And so when I had
my views on the GSEs, but their view were - -
another current controversial issue, which just
19
first arrived at Medley there was this clear
their views were very strongly that the
20
difference.
government should actually not be involved, we
21
reasoned, and his were much more off the cuff.
I think my views were much more
22
Q.
To be clear, what were your views?
23
A.
My views was that the companies had
don't need regulation, we need them privatized.

On the rating agencies I published
an editorial in the Times in which I called for
24
significant issues, that they - - there was a - - a
greater regulation, and I got calls from many of
25
real discussion worth having in Washington
those same folks who had previously seen me as
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J. ROSNER
- CONFIDENTIAL
circles on the political and economic issues
surrounding the enterprises.
distinct.
more focused on hyperbole and - - Excuse me for
whether the enterprises should be public or
the choice or use of the term.
- - I think making
private, whether the rating agencies should be
a sexy story as opposed to a necessarily reasoned
given governmental powers or not.
and fully informed view.
government involvement, you just need to make

sure that there's safe and sound oversight.
Richard's was much
Q,
And who shared your views generally?
A.
Who shared my views.
10
Could you be
more specific?
Q.
11
Did the GSE have any typical folks
And so that was the basis of my view
11
ideological view; mine was not ideological.
who believed that the story was not sexy and
12
needed further examination, besides yourself?
13
I think there's across the board any
If there is a
on the enterprises.
13
A.
My attitude is I'm agnostic as to
10
12
14
their ally and friend and, yet, my view again was
14
Q.
There were those who had an
What was the basis for on your view
Fannie Mae prior to joining Medley?

A.
Work I had done over the prior 12
15
number of people, from conservative and liberal
15
years, including work that my partners and I had
16
regulators and policymakers in central banking
16
done at Graham Fisher originally, really in two
17
communities domestically and overseas, to sort of
17
large pieces, and analysis and recognition that
18
ideologically driven partisan politicians who
18
the - - many of the housing market risks, lower
19
believed either in the government support of the
19
underwriting standards, reduced down payment
20
enterprises or, conversely, that they should be
20
requirements, obliteration of appraisal
21
privatized.
21
standards, move to automated underwriting and
22
who shared some of my views, but not necessarily
22
automated appraisal would lead to significant
23
with the same motivations or reasoning.
23
problems, and that those changes were driven
24
first and foremost by the enterprises.
Q.
24
25
I think there was a myriad of people
And you previously testified that
when Frank Raines spoke at an AEI dinner that he
25
Q.
Speaking of your time at Graham
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Fisher, I think you previously testified in the
surrounding Fannie Mae then move Fannie Mae
2001/2002 time frame that you and some of your
stock, to the best of your knowledge?
partners created one large research report?

A.
On Fannie and Freddie.
Q.
On Fannie and Freddie. Yes.
of F a ~ i eMae that moved the stock price.

What
specifically was the subject of the research?

A.
You know, to my knowledge I would
think that it was largely the accounting issues
A.
IS that correct?
It was - - I'm trying to remember.
Q.
Largely but not - -
A.
Not in its entirety.
Q.
You previously testified, I believe
10
It was fairly comprehensive in its view, but it
11
was really addressing some of the regulatory,
OFHEO becoming proctologically inclined?
12
legislative, and policy issues coupled with the
you previously testified that was a somewhat
13
fact that, you know, many seem to ignore the
common phrase and that you used it with respect
14
off-balance-sheet liabilities of the enterprises.
to the FHA and the Northern Rock issue?
Q.
15
16
And - - So there are political and
regulatory issues that surround Fannie May.
in response to Exhibit Number 2, which referenced

I think
A.
Yes.
Q.
And I believe you stated it was
17
Is that safe to say generally?
often used when a regulator had not been as
18
MR. CAHILL:
aggressive as it could have been.
19
Objection.
There are?
What time frame are you talking about and what - MR. WALSH:
20
Q.
21
I'll clean it up.
Advisors, you believed that there were a variety
23
of political issues that surrounded Fannie May
24
generally.
A.
And if I said, used that
phrase before, let me correct it. As it's

regulatorily mandated to be.
Q.
Is that correct?
It wasn't my belief.
Is that - -
Or not - - I wouldn't characterize it
as it could have been.
So before you joined Medley Global
22
25
A.
As it's regulatorily mandated to be.

Was it your view that in 2003 OFHEO
Those were
had not been as aggressive as it was regulatorily
Page 279
Page 281
actually reported on in the press upon a
mandated to be?
continual basis.
Q.
And the same with regulatory issues.

IS that correct?
correct.
Q.
Did those issues - - Start with the

Did the political issues surrounding
your knowledge?
I
And the regulatory issues
surrounding Fannie Mae, to your knowledge did

they move F a ~ i eMae's stock price?
A.
well, the regulatory issues prior
Yeah.
I think by and large, again
if you go back to work that I had done in 2001, I

had significant concerns about failings of the
regulator.
Q.
You know, I don't really know.
would assume so, but I don't really know.

Q.
Letts start at the beginning.
A.
Fannie Mae ever move Fannie Mae stock price, to

A.
You have to pick a point in 2003.
Q.
January, 2003, prior to Freddie's mea culpa.
A.
political.
A.
And would you say that OFHEO did
become aggressive as it was regulatorily mandated

to be at the time it became proctologically
inclined, as referenced in Exhibit 2?
A.
I think it was actually a process of
actually essentially corrective action and a

change of - - change of culture at the regulator
to - - really prior to Freddie's mea culpa on
and a recognition that the regulator needed to
their accounting, the regulatory issues were just
become a more credible regulator.
issues of oversight.
There weren't any specific
So to that end, I think that they
--
regulatory issues that came out that I think were
They became increasingly concerned that they had
dramatic.
perhaps become somewhat of a captive regulator in
Q.
What about after Freddie's mea
the past and wanted to correct that.
A.
Whataboutit?
itself out?
Q.
Did the regulatory issues
culpa?
Q.
In your view has that process played

MR. CAHILL:
Objection.
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is - - I think "aggressive" is not really the
A.
Which process?
Q.
The process of becoming - - I
appropriate word.
been fully carrying out their responsibilities as
mandated by congress.
apologize.
In your view, is OFHEO now as
aggressive a regulator as it is mandated to be?
A.
Diligent.
I'm going to use the word
6
7
I think they probably had not
And I believe you previously
Q.
testified that Mr. Blumenthal was a good source
"diligent" as opposed to the word "aggressive."
on some matters but not other. What matters was
And I think that - - Remember, I'm not inside
he not a good source?
OFHEO.
To my understanding, OFHEO is actually
executing its legal authority as required.
Q.
In Exhibit 2, Number 4, it says,
10
A.
Matters surrounding OFHEO and what
11
it was intending to do and thinking of doing, and
12
he wasn't a good source because they didn't seek
"OFHEO officials hope they will now get to take
13
him out as a source, and I get the sense that he
the gloves off and show they're able to reign in
14
never would have actually offered me information
those forces of nature."
15
in that regard.
16
it's interesting that none of those documents
17
have been brought forward, but Steve repeatedly,
18
as I told you, I often started conversations with
Is that - - Would you characterize

that as being a diligent regulator?
MR. CAHILL:
A.
Objection.
I would characterize that as being
the words of Richard Medley and not of me.
Q.
And how did you interpret the words
of Richard Medley at the time?
In fact, I would suspect - - And
19
"I don't want to know anything I can't or
20
shouldn't know.'
21
comment on my reports being great and highlight
Steve often actually would
22
the fact that he was concerned that if there was
23
a quote, "fucking leak" in OFHEO, he was going to
moments ago, you asked about my relationship with
24
have to chase it down and execute someone.
Richard, and I thought that his view was quite
25
A.
You know, frankly, as I said a few
So for the most part, the value I
Page 283
J. ROSNER
- CONFIDENTIAL
often not an informed view.
Q.
had in Steve was, again, was triangulating
So you did not share this view at
information. And, frankly, the greater value
the time, to the best of your knowledge?

A.
Page 285
I don't recall.
that he provided to me was his experience as a
I don't recall. I
former hill staffer in the way legislative
think that there was a view, a fairly broad view,
process and vote counts were likely to fall - -
that the regulator was seen as weak and derelict
fall away.
in its responsibilities at that time.
Q.
Q.
I believe that you previously
testified this morning - - and I'll quote it.
"I
clients on political and regulatory risk.
think it's typically a term that would be used

when a regulator has not actually been as
aggressive in its execution of its authority as
it probably or regulatorily is expected to."
MR. CAHILL:
Talking again about
Is that correct?
A.
Talking about
proctologically.
Q.
And this is in your testimony about
proctologically inclined.
So is it your testimony right now
that OFHEO had not been as aggressive in its
execution as it was - A.
AS I said, if I used the word
"aggressive," I think the more appropriate word
Political, regulatory, and
legislative risk.
Q.
Political, regulatory, and
legislative.
proctologically inclined?
MR. WALSH:
I believe you previously testified
that your job at Medley was to assess and advise
Did you analyze financial statements

while you were at Medley?
A.
Did I analyze them as part of the
official duty? No.
Q.
Did you analyze them unofficially?
A.
Did I analyze them for my own
personal use?
Q.
Yes.
Did you perform any balance-sheet
analyses during your time at Medley?

A.
Again, for my personal use to inform
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CONFIDENTIAL
my view of the credibility of information that
Did you have a view as to the impact
was being given to me by various sides of - - of
it would have on Fannie Mae?
issues? Yes.
Q.
Did you analyze price targets during
your time - -
A.
Not specifically.
Q.
Did you take any additional steps to
familiarize yourself with FAS 133 after its
A.
NO.
Q.
- - at Medley?
A.
Not that I recall.
Did you take any steps to or - - I'm
Q.
Did you read analyst reports
implementation?
sorry. Withdraw that.
relating to Fannie Mae's implementation of FAS
Are you familiar with FAS 133
133?
Uh-huh.
where it specifically went into it, at times.
generally?
A.
A.
MR. KARAM:
Remember to answer
Q.
audibly.
Relating to Fannie Mae?
Yes.
So
Did you attend any specific
presentations about Fannie Mae's implementation
A.
Oh.
Q.
Did you take any steps to
Yes.
of FAS 133?
A.
familiarize yourself with FAS 133 prior to its
Just their - - They had - - As I
remember, I think they had a specific investor
implementation?
call that I was on.
I'm trying to remember
A.
Yes.
whether that was - - who was running IR at that
Q.
What steps did you take?
point, but yes.
A.
I spent quite a good deal reading
Q.
the accounting literature, working with FASB
That was my next question.
Do you
remember who was hosting that call?
staff on understanding the implications, working
A.
with FASB staff on potential implementation
I don't.
I remember having
significant follow-up questions.
I believe it
Page 287
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issues, reading prior accounting pronouncements
was Jane Shontell, who I had had prior less than
and the effective changes as discussed in
productive conversations with.
academic literature.
Q.
J. ROSNER
Q.
- CONFIDENTIAL
What were your significant follow-up
What was your understanding of FAS
133 up to its time of implementation. So we'll
A.
I don't specifically remember.
say immediately prior to its time of
Q.
Why were the conversations less than
implementation.
A.
Can you be more specific?
Q.
YOU just described the steps that
10
questions, if you remember?
productive, as you testified?

A.
When we put out that first report in
2001, within probably 15 or 20 minutes of the
you took prior to FAS 133 implementation to
11
report going out we got a phone call, my partners
familiarize yourself with FAS 133.
12
and I. We listened to it on speaker phone, from
A.
Uh-huh.
13
Jane Shontell, who asked why we hadn't sent her a
Q.
What was the end result of those
14
copy of it before it went out.
15
the fact that we left the traditional street
16
because we were tired of being pressured by
steps?
A.
An understanding of FAS 133.
I'm
not - -
Q.
That's fine. And what was that
understanding?
We highlighted
17
investment banking clients and felt no obligation
18
to offer it up to anyone, and highlighted and
19
specifically said to her that we found it
MR. CAHILL: Generally?
20
inappropriate that she would even ask to have an
Q.
Generally. At the time.
21
advance copy of an analyst report, to which she
A.
That it would have differing impacts
on different institutions and
--
You know, I'm
not sure I really - Q.
Thatusfine.
22
responded, Well, I could have prevented you from
23
having mistakes in the report, to which my
24
partners and I laughed and said, We appreciate
25
your concern for our reputation, but if there's
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CONFIDENTIAL
substantial steps to familiarize - -
any mistakes we would be happy to correct them.

She responded that that would be
very embarrassing to us.
found that
--
MR. CAHILL:
We responded that we
We found her concern for us to
be - - to be, you know, thoughtful, but we were
I object to the form.
A.
Repeat the question?
Q.
Is FAS 133 an easy rule to apply, to
the best of your knowledge?
not above issuing a correction, so if she had
A.
Is it an easy rule to apply.
It
specific issues or there were mistakes we would
depends on whether your intent is to actually
like to hear them.
apply it with any degree of credibility, in which
She responded - - And we asked her
case it's complex; and if you're seeking to
whether there were specific issues and mistakes,
circumvent it, it's easy.
to which she started in with "I disagree," and I
In other words, if you go back and
said, "Of course you disagree." And she said,

Well, we think that - - I said
--
look at the comment letters that were sent to
my partner
FASB as they were considering changes to FAS 133,
actually I remember saying, We understand that
the most notable comment letters are coming from
you're going to disagree with a lot of the
two companies who objected strongly to the
report. Are there mistakes.
changes that were proposed by FASB for clearly
It was - - it was, frankly, a fairly
self-interested purposes, and one of those
hostile conversation where she was obviously
companies was Fannie Mae.
trying to get information out of us in advance of
Q.
a report going out, as she had said, actually,

You know, you guys have been on the street long
enough.
You know the way it works.
I'm going to hand you what we marked
as Exhibit 37.
Which we all
considered to be more than offensive, and perhaps
Q.
not only demonstrating impropriety on her part
A.
Need to look at it.
Page 291
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J. ROSNER
but a corporate cultural problem at Fannie.
Q.
in 2001.
CONFIDENTIAL
Sure. Take whatever time you need.
Just to be clear, this was a report
A.
Uh-huh. I don't recognize it, but.
Is this the same report that we talked
Q.
First, going back to your last
about earlier from your Graham Fisher days?

A.
Q.
Yeah.
Yes.
answer, you testified notable comment letters
So she was reluctant to
coming from two companies who objected strongly

to the changes. Can you just - -
ever take my phone calls when I was at Medley,

though I tried repeatedly to speak to her.
Q.
She never took them?
A.
Once or twice.
A.
And that's why I was
Q.
Okay. You don't - - You say you
don't recognize - -
trying to remember, going back to the 133

conference call.
AS I recall, it was F a ~ i eand
Freddie.
I don't remember whether it was
Jane or who it was after that call, but I spoke
...
A.
I don't recognize it but
Q.
But does this appear to be an E mail
to someone because I had significant follow-up
from - - an E-mail exchange between you and Kevin
concerns - - And I don't remember specifically
Muehring?
- - and got off of the follow-up
A.
Uh-huh.
call feeling, once again I had been sort of spun
Q.
Dated 10-30, 2003?
and not really given answers.
A.
Uh-huh.
Q.
The bottom E mail, does that appear
what they were.
Q.
Is FAS 133 an easy rule to apply, to
your knowledge?
to be an E mail from you?

Counsel,
A.
The bottom E mail - -
He's told you he's not a
Q.
The 12:03 a.m.?
A.
NO. That appears to be forwarded - -
MR. CAHILL:
This is way - - easy?
CPA.
Objection.
He's not here to testify as an expert.

MR. WALSH:
I'm not asking for his
24
expert opinion. He also testified that he took
25
It's definitely not from me.
Q.
That's definitely not from you.
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A.
Yes.
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J. ROSNER
issue, however, is that FNM has been suspected of
Q.
Can you tell who it might be from?
smoothing earnings (actually a few years ago they
A.
I can't, actually.
would brag about the number of pockets that they
Q.
It references - - Kevin in his middle
had) and OFHEO will correctly ask how good their
E mail, the 6:38 a.m. chain, references a Burt P.
systems and controls are if this could happen."
Do you recognize the name Burt?

A.
Where are you?
Q.
This is the middle chain.

A.
"Burt
suspects it is no big deal other than looking

bad. "
I'm sorry. Maybe I
--
MR. CAHILL: Which part?

Q.
You could start with the suspicion
of smoothing earnings.
It's right above the globe, the
globe icon?
A.
A.
That the company has been suspected
of smoothing earnings.
Right above the globe icon.
Oh.
It's self-evident, isn't
it?
I would guess, therefore, that
that must be Burt that authored the bottom.
Q.
By whom?
A.
Generally.
Q.
Do you know who Burt - -
Q.
Generally by - -
A.
I would gather one of Kevin's
A.
By all of its critics, by anyone who
sources.
Q.
actually had any questions about their

The second sentence of the E mail
accounting, by obviously folks within the
from one of Kevin's sources says, "People I know
academic world, within the fed policy world,
who know about FASB 133 say it is the most
within other circles.
complicated and confusing ruling in the whole

canon.
133 itself is about 200 pages of very
dense reading (the Bible) and even worse is
Q.
And was this suspicion that they
were smoothing earnings inappropriately?

A.
The suspicion was that they were
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J. ROSNER
- CONFIDENTIAL
another several hundred pages of interpretation
smoothing earnings inappropriately.
(the Talmud).
know, this is sort of a f u m y line of
Very few people are experts on
this, and mistakes are made all the time."

When you received this E mail from
Kevin, did you have any opinion on its content?
Form.
Foundation.
questioning, because we're talking about an

ambiguous and amorphous "they," which I'm not
very comfortable with.
Q.
Well, let's explore that.
Who to
you is "they"?
MR. WALSH:
I'll withdraw the
question.
A.
Well, anyone who disagreed with
Fannielsassertion that they were fully in
Q.
Do you agree with that?
A.
That it is certainly one of the two
or three most complicated I'll agree with.

Q.
But, you
compliance is "they."
Q.
And your E mail at the top and sent
at 8:31 a.m. said, "Is right, even FASB itself

has acknowledged the need to ultimately change
133. "
Is all earnings - - Is all smoothing
of earnings inappropriate to you?

MR. CAHILL:
Objection. Form,
foundation.
A.
Is all smoothing of earnings
inappropriate.
A.
That it is way too complex and, as
MR. WALSH:
Let me withdraw the
question.
we're seeing in the current macroeconomic
A.
The answer is no.
environment, has created other problems in terms
Q.
Do you believe that there are proper
of valuation of instruments in terms of

illiquidity and subjectivity to the
implementation and assumptions.
Q.
The next sentence says, "The real
ways to smooth earnings?

A.
Do I believe that there are proper
ways to smooth earnings?

MR. WALSH:
Let me withdraw the
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J. ROSNER
Q.
Do you believe that all earnings
THE COURT REPORTER:
smoothing is inappropriate?
MR. CAHILL:
the objection.
Objection.
Form and
And there was
I'm not sure I caught the end of
your question.
foundation.
You can answer.
A.
- CONFIDENTIAL
ultimately incorrect application of") - -
question one more time.
The smoothing of earnings for
Q.
Famie Mae?
A.
Well, remember my analysis was
regulatory, legislative, and policy driven. So
nonbusiness purposes are more a concern than
it affected my analysis in the sense that they
economic business decisions to manage earnings.
were apparently not off by a little bit or
Q.
arguably in - - in line with the SEC guidance but
Do you know if FAS 133 adjustments
reflect the underlying economics of a company?

MR. CAHILL:
Objection.
foundation, and possibly broad.
apparently were a mile apart from the correct
Form,
application.
Beyond the
MR. WALSH:
scope.
The videographer needs
to change the tape.

I mean, come on, counsel. What is
THE VIDEOGRAPHER:
that supposed to mean, that question?

You can answer it if you understand
Q.
The time is 4:21.
We're going off the record. End of Tape 4.

it.
THE VIDEOGRAPHER:
Restate it and I'll - -
A.
Do FAS 133 adjustments
Q.
earnings
We're going back
on the record. The time is 4:26.

--
Do
This marks the beginning of Tape

Number 5 in the deposition of Mr. Joshua Rosner
--
MR. WALSH:
Let me withdraw the
being held at OrMelveny& Myers, New York City.
question.
The videographer is Terry Carruthers, here on
Q.
Do earnings reported under FAS 133
behalf of Esquire Deposition Services, located
Page 299
J. ROSNER
- CONFIDENTIAL
reflect the underlying economics of a company?

MR. CAHILL:
Objection. Form.
Arguably no and arguably yes.
J. ROSNER
And I
- CONFIDENTIAL
1020 19th Street, Washington, D.C.
Foundation. No context.
A.
Page 301
1

Q.
Mr. Rosner, you're aware you're
still under oath?
Correct?
don't mean to be pedantic with that, but
A.
I am.
certainly the companies would argue that they
Q.
Are you aware that
don't .
Q.
What would the other side argue?
A.
There are those that would argue
that they do.

Q.
Why?
MR. CAHILL:
speculation. Lacks foundation.

MR. WALSH:
Q.
I'll withdraw it.
Did Fannie Mae's ultimately
--
Are you aware
that at all points - - Are you aware that KPMG
You just testified that your analysis - - You were
10
a mile apart on the correct application - -
11
A.
12
Q.
--
13
A.
NO.
NO.
of FASB 133.
Is that correct?
14
MS. OSORIO:
Objection.
15
MR. CAHILL:
Objection.
16
Q.
You just testified that Famie Mae
incorrect application of FAS 133 affect your
17
and the SEC were a mile apart on the correct
analysis of Fannie Mae?
18
application of PAS 133.
MS. OSORIO:
A.
Objection.
19
Repeat the question?
20
MR. CAHILL:
21
Could you read it back,
Madam Court Reporter.

(Whereupon, the following was read
back by the reporter:
QUESTION:
MS. OSORIO:
Objection.
Mischaracterizes his testimony.

A.
Would I be able to ask the court
22
reporter to read back the question that led to
23
that answer?
24
Did Fannie Mae's
--
25
Q.
Absolutely.
(Whereupon, the requested portion of
76 (Pages 298 to 301)

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Page 302
1
2
Page 304
the record is read back by the reporter.)
A.
So your question following is - -
Q.
So you don't know who this E mail - -
MR. CAHILL:
A.
Well, in other words, it may be
I don't think there was
a question.
what you said, which you now just heard.
7
8
question?
Q.
don't know.
I think he was trying to remind you
clients. It may be clients and sources.
It may
be - - It may be any number of groups of people,
So now, counsel, I assume you have a
and I'm not really sure of specifically who.
Are you aware that KPMG at all times
bottom of the E mail.
Q.
Can you take a quick look at the

It says, "Warning,
10
signed off on Fannie Mae's interpretation of FAS
significant personal liability, up to $250,000
11
133?
per work infringed plus other possible damages,
12
13
MR. CAHILL:
Objection.
MS. OSORIO:
Objection.
Form and
14
copying or unauthorized disclosure of these

materials."
15
A.
It's my understanding they did.
16
Q.
And is it also your understanding
17
that OFHEO looked into Fannie Mae's application
18
of FAS 133?
19
20
and criminal prosecution can result from any
foundation.
A.
In light of that, is it safe to say

that this E mail would not have gone to people
that someone at Medley did not want it to go to?
MR. CAHILL:
That's not my understanding.
would have no reason to know that.
21
Q.
22
your research - -
A.
You never came across that during
23
A.
24
accounting? No.
25
Q.
speculation.
Although I can, within a range,
address that.
If
--
I know that the firm had had
significant problems, certainly after this
That OFHEO had blessed the
towards the end of my tenure at the firm,

where
Did you read
--
I'm going to pass
--
and actually before this, which is why
this ended up on there, where people were without
Page 303
1
you a document that is marked as Rosner Exhibit
38.
MR. WALSH:
For those in the room,
this one was predesignated, and the Bates number
is MGA 09054.
7
8
authorization forwarding it, and we couldn't

figure out who or where or what.
essentially stealing Medley's intellectual value.
Q.
So TT is some distribution list, to
your knowledge.
Q.
Not this
specific reports, but reports broadly,
(Whereupon, Exhibit ~osner-38is
Page 305
I'm going to ask you, after you've
A.
To my speculation.
Q.
Can you look at the last sentence of
10
had a chance to read it, if you recognize the
11
document.
12
A.
Not with specificity, but I recall
for their investigation into Fannie Mae
Q.
This appears to be an E mail dated
Freddie board members who specifically discuss
13
14
the first paragraph, which reads, "As we explain

in the report, OFHEO has also created a roadmap
it.
especially in light of conversations between two
15
12-12, 2003, to TT.
16
distribution list that is called TT?
Do you know who is on the
17
A.
Idon't.
18
Q.
So you weren't responsible for the
earnings management at Fannie Mae."

A.
Uh-huh.
Q.
The report referenced is the report
that is attached, dated December 12, 2003?
19
distribution - - Is it - - Would it be fair to say
A.
Uh-huh.
20
that you believe this to be an E mail to Medley's
Q.
Did you write that report?
21
clients?
A.
I believe I did.
Q.
Do you know - - Did you write the
22
MR. CAHILL:
23
24
25
Objection.
I caution you not to speculate,
cover E mail?
Mr. Rosner.
A.
A.
Yeah.
That would be speculation.
been me.
That I don't remember.
It may have
It may have actually been one of the
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1
2
J. ROSNER
editors.
Q.
Is it customary for you to have some
input into the cover E mails for reports that
you've authored?
A.
Did you author this brief?
I don't know if I would actually be
able to characterize anything as customary over a
three-year period.
Q.
11
E mail for the report that you authored?

"Enough of the games camp" doesn't
sound like my language, but at the same time - -
14
So I don't think it would actually have been my
15
writing.
16
had wrote it in - - essentially informed by the
17
context of the report.
I think that whoever wrote it obviously
Again, you know, that's - - That
A.
Q.
Do you have any reason to believe
that you did not have input into the cover

A.
No.
--
I don't have any reason to
believe that.
Q.
Q.
DO you know what the last sentence
A.
Absolutely.
21
Q.
What did it mean?
22
A.
That the OFHEO report on - - on
20
And did you author the cover E mail
would even be less likely that I would
13
18
I don't see a reason to believe that
it was not me.

dated February 2nd, 2004?
that you did not have any input into this cover
A.
remember.
Again, I don't specifically
Q.
10
12
regulations near, February 2nd. 2004."

A.
7
9
- CONFIDENTIAL
equity brief, GSEs: New corporate governance
19
Page 308
Again, this goes to TT.
Is that a
distribution list?
meant?
MR. CAHILL:
Objection.
A.
As I said, I would assume so.
Q.
The second paragraph of the cover
E mail says, "While Freddie has already agreed to
23
Freddie, the Baker Botts report as well, created
institute several of the changes proposed, Fannie
24
a fairly clear roadmap that investors should be
Mae has not.
25
using to get a sense of how OFHEO was likely to
similar changes to those by Freddie, we could see
If Fannie is required to make
Page 307
1
J. ROSNER
Page 309
- CONFIDENTIAL
J. ROSNER
- CONFIDENTIAL
choose to investigate Fannie and the process by
a change of auditor, separation of the chairman
which they would do so.
and CEO positions and, if applicable, changes in
As a matter of fact - -
executive compensation structures to support
Q.
What was the process?
long-term corporate goals and not short-term
A.
I think if you read this and if you
earnings goals."
4
5
6
7
read other reports that Medley had put out, we
A.
Uh-huh.
specifically actually I believe in other reports
Q.
DO you know what that means?
referred to it as the road map, the Freddie
A.
Yeah.
10
report as the road map for a Fannie
11
investigation.
12
13
14
15

Q.
17
18

MR. WALSH:
predesignated.
Q.
And after you've had a chance to
Q.
know, generally in looking at it, recall it.
23
don't remember it.
marked as Exhibit 40.

MR. WALSH:
I don't specifically, but I, you
22
Q.
Fannie and the regulator as. you had between
the document.
24
It means that ultimately you ended
It's Bates Number MGA 09062.
20
25
A.
Freddie and the regulator.
read it, I'm going to ask if you've recognized

A.
How SO?
This one has been
19
21
Q.
up with a similar set of agreements made between
marked as Exhibit 39.
16
It means that that analysis
was ultimately proved correct.
It's also been
predesignated, Bates Number MGA 03131.

I
Let's start with the attachment this
time, the equity brief, "Medley Global Advisors
Q.
And when you've had a chance to read
it I'm going to ask if you recognize it.

MS. KERN:
Sorry to interrupt, but
did somebody say in the cover letter that there
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J. ROSNER
Page 312
- CONFIDENTIAL
were going to be enough documents even for
accounting requirements.
provided, even for the predesignated one?

MR. WALSH:
MS. KERN:
I believe so.
sole mission is to make sure that a company that
Sorry to interrupt.
A.
Okay.
Q.
A.
I recognize it.
it regulates operates in a safe and sound

condition, including reputational risk, market
I don't
risk, credit risk, liquidity risk, and as a

result that its capital assets management
specifically remember it.

Q.
FASB direction.
A safety and soundness regulator's
earnings liquidity and sensitivity are all
Does it appear to be an E mail that
you authored?
managed appropriately.
That's the CAMELS
process.
A.
It does.
Q.
The "to" line is blank here.
Prior to the changes at OFHEO, OFHEO

Does
that have any significance to you?
did not have a CAMELS process.
They brought in
new heads of examination for both companies,
A.
Not particularly.
whose job was to make sure that they were
Q.
Did you have any practice of bcc'ing
operating in a safe and sound condition, manner.
a distribution list?
A.
No.
SO that's actually
This, as you see down in the
--
I don't know
if that's your answer or answers your question,
subject line, this looks like it was a
but I guess what we specifically mean is that the
confirmation of a report sent. So, therefore,
market view was that there weren't issues in
the "to" line might well be a default blank on a
terms of
report that was already sent out.
restatement, and OFHEOts bottom line isn't a
As you see, it
says "sent flag group including equity financial

So I assume this is just a report that had
or that OFHEO's bottom line was a
restatement of safety and soundness.
services, equity general, excluding" blah blah

blah.
--
And I think there's a broad

misunderstanding in New York Wall Street
Page 311
Page 313
already gone out.
Q.
J. ROSNER
- CONFIDENTIAL
investment investor minds as to what a regulator
And subject lines that are similar
to that sent flag are confirmations, you said?
does, which is part of the reason that I think

there was a very strange misunderstanding that
A.
I believe so.
regulators can ever be out to get a company that
Q.
An automatic response that something
they regulate.
A.
I believe so.
soundness regulator actually, by seeing the
Q.
If you look at the first paragraph,
went out?
By definition, a safety and

I believe so.
failure of one of its institutions, actually sees
it says, "While investors are increasingly
its own authorities diminished. So I've never
convinced that Fannie Mae will not be found to
heard of a financial regulator actually seeking
have significant operational or financial control
the destruction or a safety and soundness control
issues during the remainder of OFHEO's
issue at a company it actually regulates.
investigation, these views may not fully account

for the way a safety and soundness regulator
executes an examination process."
MR. CAHILL:
Q.
How does a safety and soundness
regulator execute an examination process?

Depending on which one. They don't
particularly care about accounting, and they
As of May 26, 2004, when you sent
or at least your specific clients, did not

understand this.
Objection.
A.
A.
Q.
this, you believed that the investment community,

Is that correct?
MR. CAHILL:
A.
Objection.
I wouldn't say my specific clients.
I would say that if you opened up the papers and

you heard this, the company actually claim that
it was in full compliance with all applicable
accounting guidelines, given the fact that, as I
don't particularly care about reported earnings
remember, there were 22 analysts at the time, all
in terms of compliance with SEC requirements or
of whom had buy ratings on the stock, yet, none
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J. ROSNER
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1
of whom understood how regulatory, legislative,
J. ROSNER
- CONFIDENTIAL
looking at the - - the SG&A relative to the growth
and policy issues in Washington worked, yes, it
of Fannie's portfolio after the Freddie report
was the general view that there were not these
came out and recognizing and realizing that
issues out there.
Fannie had underspent on G&A in a very similar
manner to Freddie.
Skipping down on the fourth
Q.
paragraph, third sentence.
"We expect that OFHEO
must still review issues such as Fannie's

application of FASB Statements 91 and 133,
Well, again, a safety and soundness
8
9
regulator, that's a critical issue. And so I

found it peculiar that I would - - I should say I
accounting for derivatives generally, their
10
contingency and reserve accounting, their
11
wouldn't look at those same issues, as well as
executive compensation and incentive structures,
12
many of the other issues that I have.
the allocation of capital to G&A relative to the
13
MR. WALSH:
growth of the portfolio, their accounting for
14
for about five minutes.
beneficial interest in securitized financial
15
assets, board independence, and management lines
16
of reporting."
would find it impossible to believe that they
Can we go off the record
THE VIDEOGRAPHER:
The time is 4:48.
17
To your knowledge did OFHEO
18
THE VIDEOGRAPHER:
ultimately opine on all of those issues?
19
A.
To my recollection they didn't on
all of those issues.
Q.
20
21
The time is 4:53.

Mr. Rosner, you previously testified
that you were a consultant to the plaintiffs.
Q.
They did not on - -
22
Did you have an agreement with the plaintiffs, a
A.
On all of those issues.
23
written agreement?
Q.
Do you know which ones that they did
24
not opine on?
MR. CAHILL: Asked and answered.
25
I think we - -
A.
Page 315
- CONFIDENTIAL
J. ROSNER
A.
head.
Page 317
J. ROSNER
- CONFIDENTIAL
So the answer is yes, you did have a
Q.
I could probably guess.
Q.
NO need.
A.
yes.
What was your source for this
Q.
Can you please provide copies of
information?
A.
6
The Freddie Mac investigation
report.
Q.
So based on the Freddie
investigation report?
A.
That was largely actually spelled
that written agreement?

MR. KARAM:
and I will take it under advisement whether we'll
waive privilege on that issue.
10
11
out in the Freddie report and in the consent
12
13
MR. KARAM:
14
A.
15
Q.
OFHEO would look at the Fannie Mae?
16
No.
That it created - - My analysis,
18
19
of risk. And if you read the Baker Botts report
20
and OFHEO's responses to the report and the
21
follow-up agreements that they had, those were
22
the key issues. Many of which actually also
23
existed within Fannie.
24
I remember quite specifically
that those
17
information and risk manage and assess priorities
25
I object, but I will not
request the witness not answer.
It was spelled out in the Freddie
remember my job is to analyze, to triangulate
Did you create billing records in
Q.
your capacity as a consultant?
report and the consent decree that that's what

A.
I will object to that,
decree.
Q.
written agreement?
A.
.I believe so.
Would you please provide copies of
--
If I still have them.

MR. KARAM:
I will make the same
objection and state the same provision.

MR. WALSH:
Okay.
That's all I
have.
EXAMINATION BY COUNSEL FOR KPMG
BY MS. OSORIO:
Q.
Hi, Mr. Rosner.
My name is Claudio
Osorio, and I represent KPMG.
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Joshua Rosner Confidential

Page 318
J. ROSNER
- CONFIDENTIAL
Page 320
J. ROSNER
And I guess first I want to start,
- CONFIDENTIAL
had essentially conflicted out all but a handful

of lobbying firms in Washington.
earlier today several times you explained how
your work revolves around looking at regulatory,
legislative, and policy issues and analyzing risk
in relation to those three areas.
Q.
Do you have an understanding as to
why they had done that?

MR. KARAM:
Objection.
I have a belief as to why they may
IS that correct?
A.
A.
Broadly.
have done that.
Q.
And as part of your work did you
Q.
And what was that belief?
ever have occasion to learn about Fannie Mae's
10
A.
So they would be continue to be able
lobbying activities?
11
to advance their - - their political goals on
12
Capital Hill against the regulator and - - in
Did you
13
regard to policy issues.
discuss Fannie Mae's efforts, lobbying efforts,
14
with anybody that you could recall?
15
conflicted out firms in order to not have

opposition to their efforts?
A.
Yes.
Q.
And who did you discuss
--
A.
That's a broad question. Yes.
16
Q.
Was that something that you
17
discussed with Mr. Blumenthal?

A.
18
I don't - - I don't specifically
Q.
And do you believe that they had
MR. WALSH:
speculation.
19
Q.
Your belief
mean, not in substance, perhaps in passing, that
20
A.
My belief is absolutely.
I recall.
21
Q.
If1 couldreferyoutoExhibit17,
--
Q.
If I could refer you to Exhibit l?
22
A.
Uh-huh.
23
A.
Okay.
Q.
If you look, I think it's the middle
24
Q.
If you look at the second paragraph
of the paragraph.
It's a long sentence, but the
25
please?
it says, "Look. I told you legislation would
Page 319
J. ROSNER
Page 321
- CONFIDENTIAL
middle of the paragraph refers to a concrete wall

of F a ~ i epolitical clout.
DO you see that?
Do you have any recollection what
J. ROSNER
last standing. They made a mockery and beat the

Senate, the House, and the White House."
that refers to?

A.
- CONFIDENTIAL
die, and once again, Fannie and Freddie are the
Do you have any recollection of the
If you remember, I'm not sure that I
context in which Mr. Blumenthal might have
was even at the firm at the time that document
communicated the substance of this paragraph to
was authored.
you?
Q.
I understand.
But do you have any
memory or any knowledge of what that might refer

to?
A.
I would be speculating to actually
answer specifically to that document.
Q.
Okay.
Based on your knowledge of
MR. WALSH:
Objection.
Calls for
speculation.
A.
Can you clarify the question?
Q.
From earlier testimony - - And
correct me if I'm wrong.
- - I understood that
when you have a call report and you have quotes
Fannie Mae's lobbying efforts, do you believe
in the call report that that means that it's not
that Fannie Mae was active in its lobbying
necessarily a direct quote but the sum and
efforts?
substance of what he communicated to you.

MR. WALSH:
MR. CAHILL:
Objection.
Objection to form.
A.
Correct.
Q.
So I'm asking if in Paragraph 2 if
Q.
You can answer.
you have a recollection of what context
A.
Well, by definition they were active
Mr. Blumenthal might have communicated the
in their lobbying efforts. Were they aggressive

in their lobbying efforts?
substance of this sentence.
Yes.
Q.
What do you mean by "aggressive"?
A.
It was my understanding that they
MR. WALSH:
A.
Same objection.
I think that my understanding was
that Mr. Blumenthal was of the view that Fannie
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Page 322
J. ROSNER
CONFIDENTIAL
Page 324
1
and Freddie could move or stall any legislation

that they so desired.
And why did you believe - - Did you
J. ROSNER
Q.
CONFIDENTIAL
Because Fannie Mae would have
stalled the legislation due to their power.
A.
Correct.
ever get an understanding from Mr. Blumenthal as
Q.
If you could look at Exhibit 6,
to why he might have thought that?
Q.
MR. WALSH:
A.
Objection.
I think that was not just
Mr. Blumenthallsview.
please?
I think that was a fairly
broad bipartisan view in Washington at the time.

Certainly that was the view that
investors relied upon.
If you look at the paragraph that
starts with 3 at the bottom.
Legislation and Treasury.
10
thing stinks. All three of the existing bills
11
have FNM fingerprints all over them."

Does this again - - To your
12
The view - -
Q.
I'm sorry?
A.
That seems to be a view that Fannie
13
investors relied on.
It says,
It says, "This whole
understanding, does this again refer to the
14
legislation that was trying to get passed with
15
regards to moving Fannie Mae to treasury?
Q.
That Fannie could stall - -
16
A.
A.
Absolutely.
17
but to - -
Q.
- - any legislation it wanted to?
18
Q.
I'm sorry. OFHEO to treasury?
A.
Or, as a result, policy.
19
A.
Not moving OFHEO to treasury, to
Q.
If you would look at Exhibit 7,
20
please.
A.
Okay.
Q.
On the first page if you look, maybe
Not moving Fannie Mae to treasury
come up with a solution, a new regulator,
21
regardless of where it was.
22
bills out there.
There were competing
It reflects a view that - - And
23
again, it wasn't really his view.
almost halfway but not quite, it starts, "Steve
24
view that all three of the proposals out there
It reflects a
goes on to say that FNM's/FRE's power increases
25
were crafted in some sense with Fannie and
Page 323
Page 325
at the end of a session, so I rush to get
Freddie's involvement. Really more Fannie
something done when their power is at its peak.
because they were more aggressive in their
I would expect that this will continue to be
lobbying efforts.
worked on but that the original push has

subsided.
Come January we may see a new bill or
Q.
So when it says "all three of the
existing bills have FNM fingerprints all over
a reintroduction of the Treasure/Baker bill, but
them," that means they basically had input into
we will have the same issue.
the writing of the bills?
Fannie has been
fighting every issue."

Do you have a recollection of this
part of the conversation with Mr. Blumenthal?
A.
That's the suggestion.
Q.
If you look a little bit further
down, about seven lines down it says, "As we
A.
Generally.
speak, FNM is working with Treasury to draft the
Q.
What do you recall about that part
administration's bill.
of the conversation?
A.
Well, as I said before, the value
There will be a five-year
moratorium preventing Treasury from increasing

capital requirements of the agency as part of the
that I saw in Steve was for his legislative
trade with FNM.
understanding, and this was largely personal
get-out-of-jail-freecard."
opinion.
It was understood, and so I think that
That's like a
Do you have any understanding as to
he was actually pointing not to either an OFHEO
what the get-out-of-jail-free-cardstatement
involved or understood position but that Fannie
meant here?
does have the ability to actually stand up and
MR. WALSH:
move legislation, and while Treasury and Richard

Baker wanted to move tougher legislation, they
wouldn't have the ability to do so unless they
waited a bit.
Objection.
A.
What do you mean?
Q.
Do you have any - - Well, let me back
UP.
IS this - - the statement, "That's
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Page 326
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like a get-out-of-jail-freecard,' do you know
Q.
Okay.
whether those are your words or Mr. Blumenthalls
A.
I don't recall it specifically.
words?
don't have reason to believe that it wasn't mine.

A.
I don't specifically remember. And,
you know, I don't think it - - it is really
Q.
Okay.
We have several copies of
this in the production from Medley, but they're
material, because I think there are a lot of
all redacted.
people who were uttering similar words at that
have any idea who this call might have been from,
time .
this inbound call from - - and then blank?

There were, you know, the position
on the enterprises is, A, that their capital

requirements are significantly lower than a
similar bank institutions and, therefore, the
Just looking at this now, do you
A.
I don't recall.
Q.
Okay.
A.
There's actually nothing in here
that would lead me to an understanding.
regulators should have the ability to increase
Q.
If you look about two-thirds of the
capital requirements as necessary, and what was
way down on the first page, it says, "I called
being discussed in that sentence was the
one of my sources who called me back and said
suggestion that there would be an agreement cut
that Fannie has been spreading these rumors" - -
by which the new regulator wouldn't have the
Let me back up a little bit.
authorities to change the capital requirements
At the top where it says Call Notes,

it says, "She said that she is hearing" - - she
for five years.
Q.
Right, but the agreement - -
A.
This is legislative proposal.
that Shelby may have to postpone the vote as he
MR. CAHILL:
may lose a member.
Q.
being the unnamed source - - "that she is hearing
Wait for the question.
The agreement that is being
When she called Shelby's
staff, their silence made her think there was
discussed here appears, at least from this
some truth to it.
I did not know there was such
Page 327
Page 329
statement, from this document, to say that Fannie
J. ROSNER
CONFIDENTIAL
a meeting so I made a couple of calls to a few
Mae was the one making this proposal to not have
good sources (but did not tell this to' - -
to increase their capital requirements.
blank - - "other than to say she is being spun ...
MR. WALSH:
Q.
Objection.
period.)
MR. CAHILL:
IS that a question?
MS. OSORIO:
I thought it was.
called me back and said that Fannie has been
MR. CAHILL:
I don't think so.
spreading these rumors out of desperation trying
I think you answered the question I
was trying to ask.
"I called one of my sources who
to create chaos (as usual FNM lobbying tactic). I 1
Okay.
MS. OSORIO:
Do you have any recollection what

I would like to - - Can
this refers to?
I have an exhibit sticker?

Q.
Mr. Rosner, this is Exhibit 41. Do
you recognize this document?

A.
I think I've got
A.
Idon't.
Q.
The sentence that talks about Fannie
spreading rumors out of desperation, trying to

create chaos, are you familiar with Fannie May
trying to creat chaos in the past with lobbying
- - Not
efforts?
specifically.
Q.
MR. WALSH:
If you look at Page 2 where it says
Objection to form.
MR. '%ARAM: Objection to form.
author, it says Josh Rosner?
A.
It has been my personal view that
A.
Uh-huh.
they at times have done - - sought to actually do
Q.
that.
that you did not author this document?

A.
Let me actually read the document,
if I could.
Q.
In what way?
A.
Disinformation campaigns.
Q.
What kind of disinformation
83 (Pages 326 to 329)

DOCo
- 1-800-441-3376

Page 330
Page 332
campaigns?
A.
relationship somewhere.
Well, trying to change the subject
Q.
From your conversations with
- - From your conversations
matter, trying to actually assassinate
Mr. Blumenthal or Mr.
characters, trying to actually make sure that
with anyone at OFHEO, did you have any
certain members of the house or senate remember
understanding about OFHEO's reactions to Famie
that they are - - their constituents are obligated
Mae's legislative efforts?
to, using the groups, some of the public interest
I1msorry?
A.
groups that - - and line-standers to fill the

committee hearings.
MR. CAHILL:
Other than as
previously described?
They're fairly aggressive in

stacking the deck such that when I would go to
MS. OSORIO:
I'm sorry?
MR. CAHILL:
Other than he's
committee hearings, quite frequently - - actually,
.previously testified?
usually you couldn't get in.
question.
It was among the
only hearings in Washington that you couldn't get
Q.
This is a very broad
OFHEO's reaction.
I'm interested in
actually into the hearing rooms because Fannie
knowing if you had any understanding as to what
and Freddie would pay line-standers to take up
OFHEO's position was to Fannie Mae's lobbying
all of the room seats so that they could actually
efforts.
have their nonprofit groups and lobbying
Well, not to Fannie Mae's lobbying
A.
interests show up and be represented, you know,
efforts.
Remember, the interactions I had on
Lorraza, ACOR, some of the alliances, and often
these subjects were largely personal, not
actually sought to lobby through some of the
professional views of the people I was talking to
public interest groups, coordinating them
and understood as such. OFHEO had a public view
aggressively.
Q.
on legislation, which has been out there visible
By lobbying through some of these
and consistent, which is they support the move to

.
.
.
Page 331
J. ROSNER
- CONFIDENTIAL
public interest groups, do you have any specific
examples of which groups they might have used?
A.
Page 333
I think if you take a look at
create a stronger, more well-empowered regulator.

Did you have any understanding,
Q.
though, of an opinion held by OFHEO with regard
comment letters on any piece of potential
to specifically F a ~ i eMae's effort to stop a
regulation or legislation affecting - -
stronger regulator from being created?
potentially affecting either Famie or Freddie
you'll see any number of - - of shell nonprofits
9
10
11
MR. WALSH:
A.
that were used and shell lobbying groups or shell
understand
groups that were used to lobby of their behalf.
bit?
Q.
And do you think that Famie Mae
Q.
Objection to form.
Yeah, I mean, I'm not sure I really

Could you flesh that out a little
--
Well, what I'm trying to find out
12
used these tactics when there were bills being
is, we've talked about Fannie Mae's lobbying
13
worked on that related to creating a stronger
efforts, and you told me about some of the
14
regulator?
15
A.
tactics..theylveemployed, and I'm trying to

Absolutely. And you have to
understand if you have any knowledge of OFHEO or
16
remember, there were also relationships that
Mr. Blumenthal or anybody that you spoke to at
17
existed with certain members.
OFHEO having any reaction to those tactics used
18
of certain senators and congressmen who happened
19
to have worked for Famie's partnership offices,
20
et cetera, they - - They really aligned various
21
interests with their own.
22
23
24
25
Q.
know who
A.
So family members
Who would that have been?
by F a ~ i eMae.
A.
Any reaction. Again, on a personal
level I think that - - I think that most people

would have personal views that would find, you
Do you
know, sort of aggressive interference with the

public - - the public work of elected officials to
--
Off the top of my head, I think it
was Bennett. And I think Burning had a similar
be somewhat distasteful. But I should clarify,

that is not an institutional view, as I
84 (Pages 330 to 333)

D.C. - 1-800-441-3376

Page 334
J. ROSNER
Page 336
CONFIDENTIAL
J. ROSNER
Q.
So did you have any idea whether
undercapitalized as a regulator.
Mae because of Fannie Mae's legislative efforts?

A.
Have you ever heard Fannie Mae
Q.
Objection.
described as arrogant?
Lobbying efforts, yes. Not
necessarily legislative issues.

Q.
CONFIDENTIAL
impacted OFHEO, because they were woefully
there was any antagonism between OFHEO and Fannie

MR. WALSH:
the - - the appropriations process definitionally
understood it, at OFHEO.
So you believe there was antagonism
between OFHEO and Fannie Mae because of Fannie's
A.
Quite frequently.
Q.
And do you share that view?
A.
Current or past?
Q.
Let's start with past.
Did you
share that - -
lobbying efforts.
A.
In certain specific areas, yes.
Q.
What would those areas be?
A.
Well, I mean, as example, as I
A.
Not across all issues, but I
certainly did share that view in many instances.
discussed earlier, you know, one significant
Q.
And why is that?
A.
I found it, you know, such
example is, it's a matter of public record that
behaviors, as I talked about before, of an IR
Fannie Mae's top lobbyist, Dwayne Duncan,
person calling and demanding a research report
approached Kip Bond and asked him to send a
before it's published, to be an arrogant move.
letter to HUD demanding an inspector general
find it to be wholly inappropriate, arrogant, and
investigation of OFHEO.
verging on unethical, if not illegal.
a d , in fact, HUD
actually responded to that pressure from Senator
Q.
And what about now?
Kip Bond and came up with an investigation report
A.
It seems to be a somewhat changed
that really I think people viewed as an attempt
culture.
to stifle the regulator from doing its job.
Q.
Similarly, there was language put in
You don't think Fannie Mae is
arrogant anymore?
Page 335
Page 337
J. ROSNER
in appropriations bill that sought to actually
A.
- CONFIDENTIAL
Well, I think in their lobbying
reduce the budget of OFHEO unless Armando Falcone
was let go.
in terms of their lack of transparency and
attempts by Fannie to interfere with the
disclosure I've got concerns.
legislative process and, as a result, stifle the
wouldn't really characterize them as arrogant in
ability or hobble the ability of OFHEO to carry
the same way today.
out its work.
Q.
So there was some pretty significant
Do you believe that Fannie Mae's
efforts they can still be aggressive, and I think
Q.
Okay.
I wouldn't - - I
Just one more.
Would you say that if Fannie Mae had
efforts to stifle OFHEO1s ability to carry out
10
behaved differently with OFHEO that there might
its work had an impact on OFHEO's special
11
have been a different outcome to the special
examination of Fannie Mae?
12
examination?
A.
Idon't.
Q.
You don't think
A.
Well, I mean, I think it probably
MR. CAHILL:
13
--
14
was undercapitalized.
Q.
Okay.
A.
I think they had been a
you know,
Q.
TO the best of your knowledge.
16
A.
well--
18
unlike most regulators in Washington, they have
19
been subject to an appropriations process.
20
And
You name it.
15
MR. WALSH:
17
--
Objection. Form,
foundation. Calls for speculation.
A.
Same objection.
To the best of my knowledge? It is
speculation.
Q.
I'm asking for your opinion. Yes.
so, frankly, if congress wants to make them
21
MR. CAHILL:
operate on a shoestring budget, that's what
22
MR. WALSH:
happens, unlike the FDIC or the fed who has the
23
ability to charge those institutions that it
24
regulates for its overhead, being subject to
25
Objection.
Objection.
MR. CABILL: YOU can answer.

A.
Yeah, I mean, it's my opinion that
Fannie actually, just as Freddie, got in trouble
85 (Pages 334 to 337)

D.C. - 1-800-441-3376
MD - 1-800-539-6398
VA - 1-800-752-8979

Page 338
J. ROSNER
Page 340
- CONFIDENTIAL
for their actions. And I think that the

regulator woke up a little too late and,
ACKNOWLEDGEMENT OF DEPONENT
therefore, the actions were of a much larger
I, JOSHUA ROSNER, do hereby acknowledge I have
scale by the time they were found.
read and examined the foregoing pages of
And so, no, I actually - - it's my

opinion that Fannie's misbehaviors were what
ended up in Fannie's problems.
Q.
testimony, and the same is a true, correct, and

complete testimony given by me, and any changes
or corrections, if any, appear in the attached
Okay.
errata sheet signed by me.
MS. OSORIO:
I have no more
Oh.
--
I'm sorry.
Q.
Just to confirm, I think you
--
Just
Joshua Rosner
Date
want to confirm, you said you were not an

accountant?
A.
Correct.
Q.
And you were not a CPA.
A.
correct.
MS. OSORIO:
more questions.
Okay.
That's it.
No
Thank you very much.
MR. CAHILL: Anybody else?
We want to note for the record that

we intend to designate portions, probably
significant portions, of this transcript as
confidential or highly confidential pursuant to
the PO in your case. We'll do that within the
Page 339
1
2
J. ROSNER
Page 341
CONFIDENTIAL
C E R T I F I C A T I O N
designated time frame, which I understand is 21
I, PATRICIA MULLIGAN CARRUTHERS, a Certified
days from today, unless I've got a different
version of the protective order, but please be on
Shorthand Reporter and Notary Public of the State
notice.
of New Jersey and a Notary Public of the State of
We're concluded.
THE VIDEOGRAPHER:
New York, do hereby certify that prior to the

This concludes
today's proceeding in the deposition of Joshua
Rosner.
The total number of videotapes used is
10
five. We're going off the record.
11
5:21.
12
13
The time is
sworn by me to testify as to the truth, the whole

truth, and nothing but the truth.
I do further certify that the foregoing is a
true and accurate transcript of the testimony as
taken stenographically by and before me at the
(The exhibits are retained by the

court reporter.)
14
commencement of the examination the witness was
(Whereupon, signature not having
15
been waived, the deposition concluded at 5:21
16
p.m.)
time, place, and on the date hereinbefore set

forth.
I.do further certify that I am neither of
counsel nor attorney for any party in this action
and that I am not interested in the event nor
outcome of this litigation.
17
18
Patricia Mulligan Carruthers, CSR
19
Certificate No. XI00780
20
Notary Public of the State of New York
21
Notary Public of the State of New Jersey
22
23
Dated:
24
25
My commission expires October 23, 2010 (N.J.)
86 (Pages 338 to 341)

D.C. 1-800-441-3376
MD 1-800-539-6398
VA 1-800-752-8979

Page 342
May 7, 2007
JOSHUA ROSNER
C/O MARK D. CAHILL, ESQUIRE
CHOATE HALL & STEWART, LLP
Two International Place
Boston. Massachusetts 02110
Re: FANNIE MAE SECURITIES LITIGATION
Witness: JOSHUA ROSNER
Date taken: May 6, 2008
Dear Mr. Rosner,
We enclose for your review and signature a copy
of the above-referenced transcript. We ask that
you read the transcript carefully. If it is
necessary to make any corrections, please do so
on the enclosed errata sheet, and reason for such
correction. The errata sheet must be signed and
dated. Also, you must sign the certificate of
deponent enclosed in the transcript. If you do
not complete the reading and signing within 30
days, you will be deemed to have waived your
right to make corrections. Please return the
certificate of deponent and errata sheet to
Esquire Deposition Services, 1020 19th Street,
N.W., Suite 620, Washington, D.C. 20036.
Very truly yours,
25
Page 343
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2
3
4
5
6
7
ESQUIRE DEPOSITION SERVICES

1020 19TH STREET, N.W., SUITE 620
WASHINGTON, D.C. 20006
(202) 429-0014
ERRATA SHEET
Case: IN RE FANNIE MAE SECURITIES LITIGATION
Witness: JOSHUA ROSNER
Date Taken: May 6, 2008
Job No.: 186576
8
Page No.
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Line No.
Joshua Rosner
Change
Date
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1.C. - 1-800-441-3376
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VA - 1-800-752-8979

Paee 344
A
ability 184:19
234:8 323:21,24
326: 14 335:7,7,10
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able 16:18 42:8
139:3,7 211:5
222: 15 223: l9,24
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above-referenced
342: 10
abroad 32:8
absolutely 2 1:13
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219:17,21 225:7
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276:3 301:24
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322:17 331:15
Abusive 8: 16
academic 287:4
296:21
accent 7 1:22 92: 15
accept 135:13
acceptable 158:9
accepting 138:8
access 65:8 109:11
171:5 180:25
accessed 1l2:6
accessible l53:2 1
153:23 154:2
accommodate
16:24
account 3ll:l4
accountant 126:8
338: 14
accountants 123:6
accounting 8: 17
17:20 18:20,25
50:14,21 55:21
105:20 115:13
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139:17,21 140:25
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157:4,18,19,20,24
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accounts 250:2 1
accuracy 176:9
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accurate 66:21
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accurately 67: 18,21
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ace 133:5
acknowledge 33:22
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acknowledged
169:18 295:16
ACKNOWLED...
340:3
ACOR 330:21
acronym 39: 13
Act 148:25

D.C. - 1-800-441-3376
acting 22:8 78:7

85: 19
action21:16 51:14
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actions 338:2,4
active 3 19:l6,2l
activities 32: 13
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actual 133:14
add 218:21
added 201: 19 219:2
additional 176:15
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adjustments
298: 11,21
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administration
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. 226:16,17
administration's
83:lO 133:24
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administrative
32: 19 200:9
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admission 178:13
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advance 172:25
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advancement
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adverse 5 1:14
advice 22: 1l,25
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advise 34:3 40: 10
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advisors 7: 12,14,17
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advisory 30:3 32:6
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AEI 275:25 276:5
affect 94: 14 227:23
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affiliated 256:24
affirm 93: l8,24
affirmation 153:22
153:22
affirmative 13 1:3
affordable 204:7
afternoon 161:9
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age 247:3
agencies 83: 12
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89:24 93: 16
276: 16,22 277:5
agency 325: 15
aggressive 60: 17
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330: 11 333:22
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agnostic 277:3
ago 69: 18 122:23
212:23 227:7
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agree 22: 10 66:23
73:11,13 191:lO
295:11,13
agreed 173:9,12
235: 17 276: 17
308:22
agreeing 131:6
agreement 22: 18
23:4,7 24: 16,19
3 l6:22,23 317:3,6
326: l7,21,24
agreements 309: 13
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ahead 266:3
ahold 172:13
aid 256:25
aisle 23 1:14
Alan 38: 15
aligned 331:20
allegations 170:22
172:5,20 173:10
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alleged 205:20
alliances 33O:2 1
allocation 314:13
allow 21:4 22: 17
27:4
allowing 173:12
ally 277:2
aloud 265:24
alter 9 1:18 94:25
ambiguous 297:5

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Joshua Rosner - Confidential

UNITED STATES DISTRICT COURT

Videotaped Deposition of JOSHUA ROSNER

Job No.: 186576

Patricia Mulligan Carruthers, CSR

Esquire Deposition Services

Joshua Rosner - Confidential

Tuesday, May 6, 2008

Washington, D.C. 20036-5306

ON BEHALF OF LEANNE SPENCER:

MAYER, BROWN, ROWE & MAW, LLP

Pursuant to notice, before Patricia Mulligan

ON BEHALF OF FRANKLIN RAINES:

ON BEHALF OF FANNIE MAE:

Esquire Deposition Services

Joshua Rosner - Confidential

ON BEHALF OF THE WITNESS:

ROSNER DEPOSITION EXHIBIT

Two International Place

E Mail dated 2-27-04 from R. Seiler

11 Contact Call Report 1-15-04

E Mail datedll-18-03 from S.

Terry Carruthers, Videographer

Contact Call Report 11-9-03

Contact Call Report, 9-8-03

MARK D. CAHILL, ESQUIRE

12 Equity Brief dated 1-29-04

ROSNER DEPOSITION EXHIBIT

Contact Call Report 2-2-04

Contact Call Report 2-3-04

Medley Global Advisors Background

Medley Global Advisors GSEs Update

18 E Mail dated 5-14-04 from J. Reston

MGA 02071 -75

Contact Call Report, 8-27-03

19 Equity Brief dated 5-17-04

MGA 02317 -18

17 Contact Call Report 4-19-04

MGA 02036 -37

Contact Call Report 03-02-04

Contact Call Report 02-06-04

MGA 09100 - 101

Lquire Deposition Services

Joshua Rosner - Confidential

ROSNER DEPOSITION EXHIBIT

E Mail dated 3-11-05 from A. Canfield

E Mail dated 5-19-04 from J. Rosner

E Mail dated 4-27-06 from J. Rosner

Contact Call Report 6-9-04

E Mail dated 12-22-04 from R. Medley

E Mail dated 10-30-03 from J. Rosner

E Mail dated 9-30-04 from K. Muehring

E Mail dated 12-12-03 from Medley

Medley Global Advisors GSE Update

E Mail dated 2-2-04 from Medley

contact call Report 9-17-04

E Mail dated 5-26-04 from J. Rosner

ROSNER DEPOSITION EXHIBIT

Contact Call Report 9-17-04

ROSNER DEPOSITION EXHIBIT

E Mail and Contact Call Report

Medley Global Advisors Special Report

E Mail and Contact Call Report

E Mail and Contact Call Report