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MILBANK, TWEED, HADLEY & M<;CLOY LLP 1 CHASE MANHATTAN PLAZA LOS ANGELES BEIJING NEW YORK, N.Y. 10005-1413 8610-5123-5120 2 I 3-89 2-4000 FAXo 8610-5123-5191 FAXo 213-629-5063 212-530-5000 HONG KONG WASHINGTON, D.C. FAXo 212-530-5219 202-835-7500 852-2971-4888 FAXo 202-835-7586 FAXo 652-2840-0792 SINGAPORE LONDON 020-7615-3000 DOROTHY HEYL 65-6426-2400 OF COUNSEL FAXo 65-6426-2500 FAX: 020-7615-3100 DIRECT DIAL NUMBER FRANKFURT tAX: 2 I 2-8.2 E-MAIL 49-69-7 I 9 I 4-3400 TOKYO 2~5088 dheyl@milbank.com 6 I 3-3504-1050 FAXo 613-3595-2790 FAX: 49-69-71914-3500 MUNICH January 4, 2011 49-69-25559-3600 FAXo 49-69-25559-3700 Cassidy D. Waskowicz, Esq. Deputy General Counsel Financial Crisis Inquiry Commission 1717 Pennsylvania Avenue. NW, Suite 800 Washington, DC 20006-4614 Re: Potential Use of Quotes Dear Ms. Waskowicz: This letter responds to your letter of January 3, 2011, in which you ask for Professor Gorton's comments on the following sentence based on an excerpt from an interview recorded with Professor Gorton on May 11, 2010, under an understanding of confidentiality: AIG executives said that one bullish Bear Steams analyst they met was "out of his mind" and "must be on drugs or something." On behalf of Professor Gorton, we strenuously object to this characterization and paraphrase on the following grounds: • AIG, the parent of AIGFP, did not participate in the meetings described by Professor Gorton, and was not informed about them; • Professor Gorton was never an ''AIG executive," nor an "executive" of AIGFP. He was a university professor retained by AIGFP as a part-time consultant; • Professor Gorton believed that a well-known Bear Steams mortgage analyst was overly optimistic, and five years later used hyperbole to convey that reaction in his interview. As is evident from the recording, he used a humorous analogy that was so inappropriate that not only his attorney, Andrew Tomback, reminded him that he was on tape, but the FCIC interviewer, Dixie Noonan, reminded him as well. • Professor Gorton did not state that he or any AIGFP "executive," or any participant in a meeting with Bear Steams, actually used either of the two quoted #48 I 5-7919-7192 Cassidy Waskowicz, Esq. Page2 January 4, 2011 phrases at the time. The full quotation makes clear that Professor Gorton was using a simile, and not quoting actual statements by himself or others: And he was a very well-known analyst in the mortgage market but he was very optimistic. And he was sort of so optimistic that we came out afterwards thinking- you know, talking to ourselves like this guy is just out of his mind. He must be on drugs or something. In short, the language in your January 3 letter distorts the record and takes the quoted language out of context necessary to understand what was said. We respectfully submit that creating such confusion would undermine the FCIC's mandate, rather than support it. Please let me know if you would like to discuss an accurate way to convey Professor Gorton's point. Dorothy Heyl #4815-7919-71 92
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