Free Motion in Limine - District Court of Federal Claims - federal

Case 1:93-cv-00531-LAS J. Paul Ramey, Jr.

Document 260-22

Filed 02/05/2008

Page 1 of 19

April 12, 2005 Annapolis, MD Page 1

UNITED STATES COURT OF FEDERAL CLAIMS

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AMBASE CORPORATION and CARTERET BANCORP, INC., Plaintiff vs. THE UNITED STATES OF AMERICA Defendant NO. 93-531

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The deposition of J. PAUL RAMEY, JR., was held on Tuesday, April 12, 2005, commencing at 10:00 a.m., at the Radisson Hotel, 210 Holiday Lane, Annapolis, Maryland, before Ronald E. Bennett, Notary Public.

APPEARANCES: DAVID THOMPSON, ESQUIRE On behalf of Ambase Corporation DAVID C. HOFFMAN, ESQUIRE On behalf of U.S.A.

ALSO PRESENT:

LESLIE A. CONOVER, ESQUIRE GARY A. KUIPER, ESQUIRE

Alderson Reporting Company 1111 14th Street, NW Suite 400 1-800-FOR-DEPO

Washington, DC 20005

Case 1:93-cv-00531-LAS J. Paul Ramey, Jr.

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Annapolis, MD
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A. Yes. Q. Has it been a while? A. A long while. Over ten years. Q. Okay. Do you recall what case you were deposed in? A. No. Q. Was it a Windstar case? A. I don't know. Q. Let me go over the basic background rules. If you answer one of my questions, I'm going to assume you understood it. If it's not clear, let me know. If I think it can be clarified, I will endeavor to do so. We can take a break anytime you would like to take a break today. So really just feel free to speak up, ifyou want to take a five or ten minute break. With that, why don't we dive in. Could you first sketch what your educational background is, where you went to college, when you graduated? A. East Carolina University. Graduated in 1967 with a bachelor of science degree in business administration. Q. When you graduated from there, do you take employment? A- Two weeks later 1 began workina with FDIC.
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section. Q. Approximately what year was that? A. It was '84. Q. What were your responsibilities in that position? A. Working with failing commercial banks, resolution of them, trying to get a purchaser to take the deposits and possibly some of the assets. Q. Was that banks that you were dealing with or -A. Commercial banks. Q. That was at the FDIC? A. Yes. Q. SO you were there. Did you have responsibility for selling branches as well in these failed banks? A. Yes. Q. Did you sell any other types of the operations, did you ever do a whole bank transaction? A. Yes. Q. How long did you stay on with those responsibilities? A. Until August of '89. Q. When FIREA was passed?
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In what capacity? A. As an assistant examiner. Q. How long did you remain an examiner approximately? A. About five years. Q. After you ceased being an examiner, what responsibilities do you undertake? A- I was a review examiner in the regional office in Atlanta Q. How long did you have those responsibilities? A- About four years, 1 believe. Q. Then what responsibilities do you undertake? A. Then I was assistant regional director in Omaha, Nebraska. Q. Was that still in an examination capacity? A. Yes. It was safety and soundness. Q. How long did you stay on with, in that capacity in Omaha? A. I was there about two years. Q. All right. And then what did you move on to? A. I went to Washington as assistant director in the Failing Banks and Assistance Transactions

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A. Yes. Q. At that time did you go to the Resolution Trust Company? A. Yes. On detail. Q. How long do you stay on detail to the RTC? A. I think it was 'til the end of the year. Transferred permanently. Q. How long did you stay with the RTC? A. December 31st of'95. Q. And then where did you go? A. Home. Q. Very good. Did you retire at that time? A. Yes, I did. Q. SO you are not currently employed? A. No. Q. In terms of your responsibilities at the RTC, from August of'89 through December 31st, '95, what were your responsibilities? A. Pretty much the same as they were at FDIC, in that what we were, when an institution was failing or scheduled to fail, we would try to put together a package to offer to other institutions or individuals that might be interested in purchasing it. O. Do vou have a title when vou were at the

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3 (pages 6 to 9) Alderson Reporting Company
1111 14th Street, NW Suite 400 1-800-FOR-DEPO Washington, DC 20005

Case 1:93-cv-00531-LAS

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J. Paul Ramey, Jr. Annapolis, MD
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RTC? A. Yes. I don't remember all the titles. I think the first one was, director field Resolutions, I believe it was. Q. To whom did you report? A. When I first went to the FDIC -- to RTC, to Bill Roelle. Q. Do you recall what his position was - not the title, but what his responsibilities were? A. He was -- he shared -- not shared. He was one of the top two individuals in the organization that answered to the executive director, who was David Cook eventually. Q. At any point did your responsibilities change while you were at the RTC? A. Yes; eventually. Field Resolutions were the smaller institutions. That's what I worked with. Eventually I became vice president of Resolutions, which included all of the institutions. Q. SO you have the director of field Resolutions reporting to you. Also the director of major Resolutions reporting to you? A. Yes. Q. Was the cut off approximately $500 million?
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CEO. Q. When you talk about the asset side, were those the people in charge of selling the loans, securities, and other assets in the failed institution? A. Right. Q. On the Resolution side, were your responsibilities confined to selling the branches and the deposits? A. Yes. Well, when you say the branches, do you mean the physical structures? Q. You tell me. What came within your purview when you are Director of Resolutions? A. We would try to resolve the institution to sell anything from the deposits only. That would be one extreme. And the other extreme would be, an entire institution with all but minimal assets. That would be the other extreme. Q. Okay. When we talk about there being the asset side of the RTC, they would get involved only if you were going to sell the assets and the liabilities separately. Ifit was going to be a whole bank transaction, would you all-A. They were always involved. Q. Assets being sold, they were going to be
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A. I believe so.
Q. SO how long did you, approximately, stay

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in your role as Director ofField Resolutions? A. I don't remember the exact time period, but probably three, three and a half years. Q. SO that would place it end of '92, beginning of'93, when you became director of Resolutions approximately? A. I don't remember. That is approximately. It could be off a year. I just don't know. Q. Sure. And then once you became vice president of Resolutions, to whom did you report? A. In the beginning it was still Bill Roelle and then to Jack Ryan. Q. Mr. Ryan -- was he head of -A. CEO or executive. He was the -- yes, he was the head of the RTC. He answered to the board of directors. Q. Did Mr. Roelle have that same role or did you just stop -A. Bill Roelle, the duties -- I pretty much took over the duties of Bill Roelle in the Resolutions area. There was another side, the asset side, that I did not deal with. You still had the two branches reoorting to the executive director or

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involved? A. Because we never knew. Q. In terms of divisions, the thrift we are here to talk about is Carteret Bancorp, Inc. Carteret had a division that did loan servicing down in Clearwater, Florida and it was sold. Would the sale of a servicing division be something that Resolutions people that reported to you would have been in charge of or would that have been a different group within RTC? A. We may have been in charge of selling the entity itself or including it in a transaction. We would not have been involved in evaluating whatever it was, any of the assets. Q. Okay. If there was a sale of a division, it wouldn't have been you or your subordinates who were valuing, for example, the loan servicing business, and trying to figure out how much you should get for it? A. That's correct. Q. And, likewise, Carteret also had a origination business. Is that something you would have been involved in, the decision making as to whether you should try to sell it or just shut it down?

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4 (Pages 10 to 13) Alderson Reporting Company
llll l4th Street, NW Suite 400 l-800-FOR-DEPO Washington, DC 20005

Case 1:93-cv-00531-LAS J. Paul Ramey, Jr.

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Annapolis, MD
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A. Yes. Q. In 1994 was Mr. Held, Herb Held, was he the head ofthe Office ofMajor Resolutions? A. I believe he was. Q. The RTC was pursuing the congressional mandate to implement. One question I had; are you aware of any discrimination by the RTC, racial discrimination, in selling of branches or any aspect of selling financial institutions during your tenure at the RTC? A. No. Q. During your tenure at the FDIC, were you aware of any racial discrimination in the federal government in selling branches or failed institutions? A. No. Q. We are done with that document. [ would like to ask the court reporter to mark as Ramey Exhibit 2, a document that bears the Bates number WOP2990739. And it extends through WOP2990800. (Deposition Exhibit Number 2 marked for purposes of identification.) BY MR. THOMPSON: Q. [ know this is a long document. [ only

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Q. You know minorities were not eligible to get interim capital assistance; is that correct? A. Not that [ recall. Q. Continuing on in that paragraph. Performing loans and other performing assets may be made available to eligible minority acquirers in Resolutions covered by B and C above. Is the way this part of the program worked that they would have the option to acquire certain loans after they closed on the branches? A. That's my understanding, but not in all instances. It says they may make -. le!"s see. Performing loans and other performing assets may be made available. It means what it says. Q. You don't have a recollection that is inconsistent with this? A. No. Or consistent. Q. Okay. Fair point. Let's turn to what is designated page 6. Paragraph under asset sales. First couple of sentences talk about the asset option that we just described. The second sentence reads; in addition, the RTC may make available on a rent-free basis, to any minority depository institution or woman-owned depository institution anv branch office facility owned bv a failed savings

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have a few specific questions about it. So the record is clear, the title page states that this is a Resolution Trust Corporation, Division of Resolutions is the header. Summary of RTC Minority Preference Resolution Programs, amended February 28, 1994. Is that correct? A. Yes. Q. Turning to what is the second page of text, the third page of the exhibit, in the first paragraph under Subheading C. These efforts by the RTC to enhance participation in the resolution process and to increase the viability of minority institutions shall be hereinafter referred to as minority preference residence resolutions. In conjunction with all ofthese marketing efforts, the RTC may make interim capital assistance available. Let's stop there. Is interim capital assistance, was that ever shorthanded ICA? A. I don't recall. Q. We'll call it interim capital assistance. Was that essentially a loan from the RTC to the minority bidder that would facilitate an acquisition? A. Yes.

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association located in a predominantly minority neighborhood. Do you recall this feature ever being used? A. No, [ don't recall it. Q. Okay. You don't recall whether Carteret's branches were ever subject to this rent free situation? A. No. Q. I have no further questions of this document. I would like to ask the court reporter to mark as Ramey Exhibit 3 a document that bears the Bates number C-AM-A-OI30527. (Deposition Exhibit Number 3 marked for purposes of identification.) BY MR. THOMPSON, Q. Mr. Ramey, I'm going to represent to you that the e.mail has -- the way these e.mails appear to be formatted -- certainly, if you have a different understanding at anytime today, let me know, but it appears that in the top box you have the to, the copies and the from. Then you have to go down to the bottom, original message. Those two correspond. To the extent peonle have comments or ...

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7 (Pages 22 to 25) Alderson Reporting Company 1111 14th Street, NW Suite 400 1-800-FOR-DEPO Washington, DC 20005

Case 1:93-cv-00531-LAS J. Paul Ramey, Jr.

Document 260-22

Filed 02/05/2008

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letting me know. Why don't we move on. I would like to ask the court reporter to mark as Ramey 4 a document that bears C-AM-A-0130546. (Deposition Exhibit Number 4 marked for purposes of identification.) BY MR. THOMPSON: Q. This is an e.mail from you to Mr. Mahaney. A. Yes. Q. It's dated August 20th, 1993. Doyousee that? A. Yes. Q. I checked and we do have substantial interest in Carteret. A normal resolution under our current guidelines and policies would not require that we furnish loans to an acquirer if we are successful in obtaining bids on the first round offering. However, under our current policies, should we not be successful on the initial offering we would be obligated to fall back to an offering of the remaining offices to minority acquirers, offering interim capital assistance and loans to fill the hole. In terms of filling the hole, is that a
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correct? A. Yes. Q. Were you referring to the minority bidding 4 process that's described here as the new feature? 5 A. I believe that is correct. 6 Q. When you talk about the obligation to furnish loans, are you talking about the practical 7 8 problems of having to start due diligence from 9 scratch? l o A . It would be easier to facilitate. I 11 believe. 12 Q. That's a fair reading of it? 13 A. Yes. 14 Q. Do you have any independent recollection 15 of the Home Unity deal and the decision to take 16 loans out of the Carteret conservatorship? 17 A. No. 18 Q. Do you know when the loans left the 19 Carteret conservatorship, whether it received cash 20 for the loans or would have been some-21 A. I don't have any recollection. 22 Q. Either as a general matter or specific 23 matter? 24 A. No. I don't believe I would have been 25 involved in the actual transaction itself. I don't
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reference to some of these institutions had negative capital? A. I would assume so. It would be to balance the books. We would need more assets to balance the books. That would equate to capital deficit, I would assume. Q. Right. Let's continue. There is just no way of telling what will happen; additionally, no doubt new legislation will be passed in conjunction with any funding we get. Who knows what the requirements of this will be. Since this is new to us, this is only the second transaction we have done to date, if it goes through I would think that Bodi and company should get whatever consideration they need to make this go as smoothly as possible. That is, these loans are packaged and have had a certain amount of due diligence performed. This would make our obligation to furnish loans in the Home Unity deal about $100 million less painful than having to go elsewhere and start from scratch. I leave this to your infinite wisdom in these matters. When you talk about, this is new to us, and only the second transaction you have done to date. You had done manv Resolutions bv '93' is that

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know what the consideration would have been. MR. THOMPSON: At this point let's have marked as Ramey Exhibit 5 a document C-AM-A-OO14578. (Deposition Exhibit Number 5 marked for purposes of identification.) Q. I believe, Mr. Ramey, when you read this, if you have a different recollection, let me know. This is an e.mail from Dave J. Bodi to Donna Pillard and others. The original message of Mr. Bodi's e.mail from September 15, '93 is referenced in the bottom of the page. And then in the middle are your comments to Herb Held, and others. Let's start with the original message. Since we have been unsuccessful in our efforts to negotiate the release ofthe due diligence for the Carteret loans from First Boston, please issue your own SOS under the National DD TOA and ask John Tierney to waive for use. Do you have any recollection of what the alphabet soup of SOS and DD TOA? A. I believe SOS was solicitation of services. The others I donlt know. Q. I discussed this with Tom Horton and he has concurred. Tom also stated that we should not oav First Boston for due diliQence on this oroduct

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9 (Pages 30 to 33) Alderson Reporting Company
1111 14th Street, NW Suite 400 1-800-FOR-DEPO Washington, DC 20005

Case 1:93-cv-00531-LAS J. Paul Ramey, Jr.

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A. No. MR. THOMPSON: I would like to ask the court reporter to mark as Ramey Exhibit 10 a document C-AM-A- 001-275. (Deposition Exhibit Number 10 marked for purposes of identification.) BY MR. THOMPSON: Q. This is an e.mail from Herb Held to yourself and Mr. Jumpiter. September 19, 1994'1 A. Yes. Q. I talked with Manny Friedman and Karen Edwards this morning. I told them that Jack Ryan was not talking with any of the bidders on Carteret since he may be the deciding party on the case. They wanted to make sure that we weren't giving out any additional info on the assets. I assured them that no information would be given to the bidders until after closing. Do you recal1 whether it was the standard procedure of the RTC not to disclose information on the assets, that the minorities would have an option to acquire until after the closing on the branches themselves? A. I don't recal1. Q. If that were the policy, you don't recall
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Q. The e.mail reads; it is my understanding Tommie Thompson and Paul Ramey met last week to discuss among other things the operational side of resolution preparedness. Who is Mr. Thompson? A. I believe he worked with Ed Mahaney. I'm not certain. Q. Out of this conversation came the message to Mr. Ramey that the major resolution case prioritization was open to revision if there are justifiable reasons. It was in this light that Steve Haley and I cal1ed you today to request Carteret-4-92 DOC 12-4-92, less than two months since intervention be moved from Round A to Round B. And my question is; what did it mean to be moved? Did you have targets -- we want to sel1 these institutions first and the second and the third? A. That's correct. Q. And? A. A would be the first. Q. Over one year since intervention was proposed as a placement for Carteret in round A. The rationale is Hansen's MAPP is done with AGLARS comoletion scheduled for Aoril 30th, 1993. This is
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the reasons for it? A. No. Q. I'm about to leap into some documents that pertain directly to the sale of Carteret's branches. I don't know whether you would like to take a short break now? A. Now would be a good time. (Brief Recess) MR. THOMPSON: I would like to ask the court reporter at this time to mark as Ramey Exhibit II a document that has the Bates number C-AM-A- 0120028. (Deposition Exhibit Number II marked for purposes of identification.) BY MR. THOMPSON: Q. This is an e.mail from Darryl Burton to Mr. Held, copied to yourself and several other people. January 26, 1993. Is that correct? A. Yes. Q. Do you recall what Mr. Burton's responsibilities were at this time? A. No. Q. Do you have any recollection of Mr. Burton? A. No.
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ideal for Round A which will commence within 30 days of funding. Do you recall what the MAPP and AGLARS, what those acronyms stand for? A. No. Q. Conceptually can you explain what the point that the author is trying to make here as to why Hansen should go in front of Carteret? A. It would be speculation if! said anything. It would be because Hansen had been over one year since its intervention. Q. You don't have an independent recol1ection of this decision? A. No. Q. When it says this is ideal for Round A which will commence within 30 days of funding. Is the funding referred to there congressional funding? A. Yes. Q. Was the funding necessary so that, if you are doing branch sales, you have got cash to give the acquirer? A. The funding was necessary to do any resolutions period. We never knew what the requirements would be, cash requirements for any individual institutions. Once we used the
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12 (pages 42 to 45) Alderson Reporting Company
1111 14th Street, NW Suite 400 1-800-FOR-DEPO Washington, DC 20005

Case 1:93-cv-00531-LAS
J. Paul Ramey, Jr.

Document 260-22
Annapolis,
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appropriated funding, we had to stop period. Q. Do you recall whether there were such periods while you were at the RTC? A. Oh, yes. Q. How frequently did this happen? A. Not very often. I don't recall how frequently. It was infrequently. Q. Do you recall what the gap tended to be? A. No. Q. To the extent you could do a resolution that didn't cost any money, say someone were going to pay a big enough premium, could you pursue those sorts of opportunities? A. I don't recall any such times like that. Q. Okay. A. There may have been. Q. Right. I understand. Continuing on. On the other hand, Carteret's MAPP and AGLARS are not projected for completion until June 25th, '93 and May 31 st, '93 respectively. Again, were these the target dates for resolution? Is that a fair inference of what these dates mean? A. I wouldn't assume those dates are resolution dates. Thev needed to be completed
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A. Yes. Q. That is your signature on the first page of this document? A. Yes. Q. Do you have any recollection of preparing this document? A. No. Q. Do you recall whether it was typical at the end of the resolution to do this sort of postmortem analysis? A. There were postmortems done. I don't know how often or in how many instances. Q. Do you have a recollection as to whether they were only done when there was a sense that there was a problem that needed to be fixed? A. I don't recall. Q. I have a couple ofthings that I wanted to understand here. On the second to last page of the document, Bates number 188 at the bottom. It's the last comment. First comment Resolution costs increase significantly the longer the institution is in conservatorship. And your comment was, I doubt that anyone at RTC would dispute this and it certainly was not the intent of any RTC officials or personnel to
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before the resolution. Q. You can't recall what these things are? A. No. MR. THOMPSON: At this point I would like to ask the court reporter to mark as Ramey Exhibit 12 a document that bears Bates number C-AM-A- 0125185. (Deposition Exhibit Number 12 marked for purposes of identification.) BY MR. THOMPSON: Q. This is a memo from yourself to Mr. Horton, dated October 26, 1995; is that correct? A. Yes. Q. The opening paragraph states; as requested in your memorandum of October 23, I995k, I offer the following observations/comments on the hypothesis list which was attached. It must be taken into consideration in all my comments that I have absolutely no idea as to what the circumstances were that led to the individual items on the hypothesis list attached to your memorandum. However, it appears to me the list was put together to come up with something skewed to support FDIC methodology. I have only commented on the Resolutions section. Do vou see that?

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continue conservatorships any longer than was necessary. As stated earlier, use of the conservatorship vehicle was not the RTC's preferred method of moving forward toward resolution. Do you agree with that assessment? A. That was my assessment at the time. I don't recall-- it's logical is all I can say. Q. Okay. Is the reason it's logical that the longer an institution is in conservatorship, its deposits run off, its key managers leave, its loan operations slow down or shut down, and those things taken together negatively impact the franchise value? A. Those could be some of the reasons. But I would assume that one of the main reasons would be that, first of all, the institution is going down hill to begin with and was in bad shape, was not being, probably not being run correctly. And so conservatorship would not necessarily cure these ills. So, conservatorship cannot cure that necessarily. So the institution is going to continue to go down hill and could lose value, as it would if it were still an opening operating institution.
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Alderson Reporting Company

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1111 14th Street, NW Suite 400 1-800-FOR-DEPO

Washington, DC 20005

Case 1:93-cv-00531-LAS J. Paul Ramey, Jr.

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Q. SO you would look at the institution's earnings trend in the period prior, and it's reasonable to assume those would continue? A. I wouldn't look at the earnings trends. Q. Just in tenus of the conceptual point you were making, the longer the conservatorship, I understand what you are saying, if the institution is losing money right before you take it, it's probably going to keep losing money during conservatorship. Is that a fair point? A. Yes. Q. Are there any other factors that you think support this logical proposition, that the longer the institution is in conservatorship, the more costs it is to its owner? A. Any delay in resolution, whether it be in conservatorship or the closing of an operating institution, any delay will likely cost more as time goes by through no ones fault except whoever causes the problem. Q. Okay. Let's set Ramey 12 aside. We may come back to that. Let's continue on here. Ask the court reporter to mark as Ramey Exhibit 13 a document that bears the Bates C-AM-A- 0126412.
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Q. Do you recall whether it was common to have policies that limited branch sales? Do you have any recollection as to whether this was typical or atypical? A. That limited branch sales? Q. Yes. A. I don't recall anything that limited branch sal es. Q. That's why this document struck me. I was wondering whether -A. I don't know what that policy was. Q. Okay. You don't know how common it was to have such a policy? A. I do not. MR. THOMPSON: I would like to ask the court reporter to mark as Ramey Exhibit 14 a document that bears the Bates number C-AM-A- 013 1492. (Deposition Exhibit Number 14 marked for purposes of identification.) Q. This is letter from David Chafey, executive vice president of Banponce Corporation to yourself, dated November 7, 1994. Is that correct? A. That's correct.
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(Deposition Exhibit Number IJ marked for purposes of identification.) Q. This is a memo from Jay Jumpiter to Robert Smedley. Subject; Carteret's Bernardsville Branch Sale. It's dated November 12, 1993. There's a concur signed by you and Mr. Horton. Is that correct? A. Yes. Q. Your concurrence is dated November 16,
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A. Yes.

Q. This memo recommends the sale ofthe
Bernardsville branch in the first couple of paragraphs. The last paragraph; we recommend as an exception to current policy of limiting branch sales, that the deposits of Bernardsville be marketed immediately to all parties expressing interest in both Carteret or in the state of New Jersey. My question is; do you recall anything about the current policy of limiting branch sales that was in effect in November of '93? A. No. Q. Would that have been a policy that your office would have set?

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Q. Is that your handwriting in the right-hand comer ofthis document? A. Yes. Q. Your handwriting says; Sharon. Original file received earlier by fax. Letter has been responded to. Then your initials. A. Yes. Q. In the third paragraph. We are sure you realize that Carteret FSB was experiencing a significant run-off in deposits prior to July 31, which certainly will have a serious negative impact in the profitability ofmany ofthese branches, with a corresponding impact to its ultimate acquirer. Do you have any reason to doubt the validity ofthat statement, either the fact that the deposits were running off or the fact that it would have a serious negative impact? A. I don't have any reason to believe it's true or not true. I just don't know. That was his comment, whoever wrote the letter. Q. Then he says; for this reason, our bids cannot remain open indefinitely, and we must reServe the right to cancel them at anytime. Do you think that was a reasonable nosition for him to take?

14 Alderson Reporting Company 1111 14th Street, NW Suite 400 1-800-FOR-DEPO

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72 hour clock, et cetera, as pointed out in their letters. And is it fair to say, based on this e.mail, that MidLantic was concerned about the run-off of deposits that was occurring during the bidding process? A. That's what they said apparently. Q. You don't have any reason to doubt that they actually believed that; do you? A. Nor agree with it. Q. Okay. Do you know what they are referring to when they say the 72 hour clock? A. I don't recall. Q. Okay. A. Was there a reference earlier about 72 hours? That number just seems familiar. Q. Right. I think that it was the reference that we saw earlier that after the first bids come in, the high bid, any minority that is within 10 percent of it, then had 72 hours to make the second bid. Presumably that is what they are referring to here. A. Okay. Q. Okay. Turning to the next page here, second to last paragraph. We emphasized that this

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understand your concern with the delay in closing the institution. Was that an accurate statement, that you and your staff were working to resolve Carteret as soon as possible? A. I would assume so. Q. Do you have anything to add? A. No. Q. When it says that you understood Mr. McNeese's concern with the delay in closing, was that the delay and cost associated with it in terms of impact on franchise value? A. I don't know. I don't know what his concern was with the delay. It could have been a self-serving concern that he had that I did understand. I just don't know. Q. Okay. I would like to ask the court reporter to mark as Ramey Exhibit 18 a document that bears Bates number C-AM-A- 0077166. (Deposition Exhibit Number 18 marked for purposes of identification.) BY MR. nfOMPSON: Q. This is a document from Ms. Yore to yourself, dated September 6, 1994. The subject is update status of minority bids for Carteret FSB and

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is a top priority and everyone is devoting 100 percent of their time to it. Do you have any reason to doubt that dissolving Carteret at this time was a top priority? A. I don't know that it was the top priority. Q. You can't think of anything that was a higher priority? A. No. I just don't know. Q. Do you know why it was a top priority? A. No. Q. Was Ms. Yore a competent employee? A. Very competent. Q. And I would like to ask the court reporter to mark at this time Ramey 17, a document with Bates number C-AM-A- 0131444. (Deposition Exhibit Number 17 marked for purposes of identification.) BY MR. lliOMPSON: Q. This is a letter dated October 13, 1994, to a Stanley McNeese from yourself; is that right? A. Yes. Q. Okay. And it says in the second sentence of the first paragraph; I assure you that the Resolution staff is 100 percent committed to resolvinl! Carteret as soon as nossible and do
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closing; is that correct? A. Yes. Q. And turning to the last page ofthe last paragraph of this. Carteret is currently losing approximately one million dollars a day in deposits. Several bidders have already complained about the delay in closing and loss in the deposits. Bidders were given July 31, 1994 deposit numbers to base their bids on. Do you have any reason to doubt the accuracy of Sharon Yore's statements here? A. I have no reason to believe differently, I mean that they complained. I don't know their complaints were justified. I have no reason to disagree with that statement. Q. You just don't recall whether the complaints were justified? A. No, I do not. Q. Can you think of any reasons why these bidders were complaining about the deposits, that they were generally concerned about the deposit run-off of a million dollars a day? A. That would be speculation. There could be a case where a bidder would complain about the denosits runninl! off so we would l!0 ahead and do
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16 Alderson Reporting Company 1111 14th Street, NW Suite 400 1-800-FOR-DEPO

(Pages 58 to 61)

Washington, DC 20005

Case 1:93-cv-00531-LAS J. Paul Ramey, Jr.

Document 260-22

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enough for them no matter who it was. But I don't recall any specifics in the minority community. Q. Okay. Do you recall any complaints about the Carteret bidding process? A. No. Q. This memo continues; to ensure that the efforts of the RTC are coordinated and that the program is administered in a manner that fully implements the spirit and intent of the law, I am requesting that the three of you serve as members of a special purpose task force. The mission ofthe minority resolution task force is to, one, outreach to potential minority acquirers; 2, answer questions and provide direction regarding policies and procedures; 3, arrange consortia of minority and majority bidders where appropriate; 4, promote post resolution sale ofPMN offices; and 5, ensure that the resolution process is administered consistently and make recommendations for changes where appropriate. I expect the task force will remain in place until all resolutions have been completed. By working together we should be better able to ensure the success of this important effort. Do you recall having been a member of the

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A. No. Do you recall how that impacted Resolution of Carteret in any way? A. No. Q. One of the purposes of this task force was to outreach to potential minority acquirers; is that right? A. Which in turn would reduce the cost to the RTC and taxpayer. The more bidders, whether minority or non-minority, increases the chances of you getting more and better bids. Q. Well, let me ask you, did the minorities, do you think that they competed effectively against the non-minorities? A. That I couldn't answer. In certain instances they had the ability to match bids. So it would stand to reason, the more you had as far as minority bidders, the more participation you would have. I don't have any specific recollection. Q. Let's look back at Ramey Exhibit 12, and specifically the second to last page of that exhibit. 188 Bates number. The last hypothesis. And comment reads; pre-screening of bidders and minority bidder preference programs may discourage bidder interest and lower premiums received.

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minority resolution task force? A. No. No. Q. Do you recall ever having any meetings with Ms. Booker or Mr. Horton about this task force? A. I recall that we did meet. I recall this. But I don't recall specifics. Q. What do you recall about the minority resolution task force? Do you have one meeting or several meetings? A. I have no idea. Q. Do you have any recollection of what sorts ofthings you would have talked about generally? A. I know that Johnnie Booker, Tom Horton and I met regularly about minority resolutions. I don't think we ever necessarily said this is a task force meeting. We met as the task force to discuss the issues. 1 don't think we had scheduled formal meetings. Q. Okay. What were the issues that you all focused on at a high level of generality to the extent you can recall? A. To increase the minority participation in the process was -- I think was the primary focus. Q. Do you recall what you did to try to effectuate that?

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Although the statement may be true, I believe apples and oranges have been mixed here. What do pre-screening of bidders and minority bidder preference programs have in common. Pre-screening, if you are talking about up-front disqualification from bidding, would likely result in a lesser number of initial attendees at a bidders' meeting and theoretically decrease the competition. As for any type of bidding preferences, it has been my personal opinion that this is a deterrent to the competitive aspect of bidding process; however, this is not been definitively proven to be the case. Now, do you have any, at the time you wrote this, do you believe that you had this opinion? A. I'm sure I did. Q. Was the reason that you had that opinion that, if one group knows that another group has a preference, and is going to be able to come in and match the bid at the end of the day, there's going to be concern in that first group they are going to do a lot of due diligence, spend a lot of time and still not !!oin!! to !!et to close even ifthev had the

19 (Pages 70 to 73) Alderson Reporting Company 1111 14th Street, NW Suite 400 1-BOO-FOR-DEPO Washington, DC 20005

Case 1:93-cv-00531-LAS

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J. Paul Ramey, Jr. Annapolis, MD
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highest bid as initial matter. Is that a legitimate concern? A. That's a legitimate comment. MR. HOFFMAN: Let me object. Does your question relate to what he's saying here? BY MR. TIIOMPSON: Q. Let me ask you. With respect to the comment that you made here, it has been my personal opinion that bidding preferences of any type are a deterrent to the competitive aspect of the bidding process. Is one of the reasons you had that opinion the fact that a bidding preference makes it less attractive to those who don't have the preference because they may waste a lot of time and money on due diligence? MR. HOFFMAN: Can you point out the statement that you are referring to. BY MR. TIIOMPSON: Q. As for any type of bidding preference my personal opinion this is a deterrent to the competitive aspect of the bidding process. However, this has not been definitively proven to be the case. Do you see that sir? A. Yes.
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A. No. Q. Can you think of any other reason why a bid preference would be a deterrent to the competitive aspect of the bidding process? A. I can't think of any. That doesn't mean there are not some. Q. Okay. Let's put 12 to the side. We may or may not come back to that. A. It's been over nine years since I have considered bidding rationale. I just don't know a lot of times whenever you ask me this. It may sound reasonable now. But at the time when it was realIy going on maybe it wasn't realIy reasonable. I just don't know. When you ask me is this reasonable, it sounds reasonable now. Whether it was or not I just don't know. Q. That's fair. One ofthe reasons, Mr. Ramey, we ask you these questions is because there will be a trial in this case in alI likelihood. Certainly, if you were to come in, you know, six months from now and say, give opinions, make statements about what your opinion is now, we would want to know about that beforehand. It's perfectly legitimate for you to say, you know, to quality it in the way you have.
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Q. That was your opinion at the time you wrote this document; correct? 3 A. I would assume so. 4 Q. And is one of the reasons you had that 5 opinion at that time because if you have a bidding 6 preference, those that do not have the preference 7 wilI be concerned that they may waste time and, 8 therefore, money doing due diligence, make the 9 highest bid and still not get to close? l o A . That is a logical statement. I would 11 assume that that is at least part of my reasoning 12 here. 13 Q. Isn't in fact that was one of the reasons 14 why minority bidders had to be within 10 percent of 15 the high bid. Because otherwise, it would just be 16 carte blanche for minority bidders on the due 17 diligence of the high group bid and therefore be a 18 significant deterrent to the high group bidder? 19 A. I don't know. 20 Q. Okay. Is that a reasonable inference as 21 to why there was that 10 percent requirement that 22 minority bidders had to be within 10 percent? 23 A. That is reasonable; yes. 24 Q. Can you think of any other reason why you 25 would have that sort of requirement?
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A. That will be going forward. Q. Right. We are just trying to get a complete record here. I appreciate the comment you have made. Now let's mark at this point Ramey Exhibit No. 23. Which has a Bates number of C-AM-A- 0014502. (Deposition Exhibit Number 23 marked for purposes of identification.) BY MR. TIIOMPSON: Q. This is a letter from Mr. Horton, dated May 16, 1994, to American Financial Services Corp by Mr. Greer. Do you see that? A. Yes. Q. It starts by saying; there are new opportunities available for minority investors to purchase deposits, and it lists Carteret there, and then it says, since, under the Resolutions minority programs, each of these institutions is designated as a whole institution located in a predominantly minority neighborhood. A minority neighborhood may receive interim capital assistance, may purchase loans at market value, and may occupy those RTC owned association branches located in PMNs for up to five

20 (Pages 74 to 77) Alderson Reporting Company
1111 14th Street, NW Suite 400 1-800-FOR-DEPO Washington, DC 20005

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Filed 02/05/2008

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J. Paul Ramey, Jr. Annapolis, MD
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funding. If we have 10 million outlay on institution. Yet we have assets held back that are going to recover is $900,000. The loss is $100,000 there. In very general terms. Q. That was one ofthe things when we come back from lunch I'll try to have a hypothetical that focuses. Just assets are cash. Take that piece out. We'll come back to that. I don't want to waste your time. I did want to go to this bid document for one moment. And to the 4th page of it. The premium -- the bidder had to list the premium for each cluster of branches they were bidding on; is that right? A. From this document I would assume so. But also, perhaps I would have to assume that this is the final document. This was revised May 20th. I don't know if there was a further revision. Q. Is it consistent with your recollection that, whether this was the exact form or not, you wanted to know what the premium was going to be in evaluating the least cost solution to taxpayers? A. Yes. Q. And the premium, how does that work? Let's say it's a branch with $100 million ofinsured Page 83

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demanding for your assets, whether they be loans or cask? A. Your statement is correct in all cash transaction. Q. Provided the loans are properly valued, why would it really matter to the RTC whether it was being funded with loans or with cash? A. Everything being exact, I don't know why there would be a difference. We prefer to pass assets. Q. You mean loans? A. Loans. Securities. Everything. Q. That was the RTC's preference? A. Yes. Q. Why was that? A. I don't know how to answer. Normally an ongoing institution would be better qualified to collect assets than the RTC. We would prefer to shorten the term of the receivership to get the best returo on the assets by passing them to an ongoing institution. Q. Because the sooner they are in an institution, the easier it is to preserve the value of those assets. Is that right? A. In some cases; yes. I can't give you Page 85

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deposits. There are no uninsured deposits. And acquirer comes in and looked and says, this looks like there is some value here. I'm willing to pay a 10 percent premium. Is the way the transaction would work, the acquirer would say, okay, I'll take on that 100 of deposits. Pay me $90 million in assets. That difference between the 10 million would be the premium. Is that a fair statement? A. Yes. Q. Okay. All other things being equal, the RTC wanted to get the biggest premium possible; is that correct? A. That's correct. Q. The reason for that is, the fewer assets that had to transfer, the more assets there would be to cover all the other expenses in receivership? A. Sometimes we were indifferent whether assets would pass or not or whether it was funded in cash. Q. I mean cash is an asset too. A. Okay. Q. Isn't it true that the RTC wanted to get the biggest premium possible, and the reason is because, if an acquirer is willing to pay a higher nremium that is another way of saying they are
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definitive yeses in every case. We resolved over 700 cases. Q. You had made a general statement that the RTC preferred to fund the branch sales with assets with loans rather than with cash. I wanted to get-A. Also, it makes it more attractive to a bidder in a lot of cases if they are able to acquire the assets that are in the institution. Q. Wouldn't the bidder be indifferent unless there was, if you give them mortgage securities, they could go out and buy in the open markets at the same time; what do they care? A. You're getting out of my field. I don't know. I'm thinking about whateYer you talk about servicing needs of your community, whatever that loan is, stays in that acquiring institution and you have an ongoing depositor loan relationship with the community that can be attractive to a bidder. Q. It would depend on the type of loan? A. Yes. Q. All right. And with respect to most of the transactions that you supervised as a general matter, most ofthe branch sales were funded with cash?

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J. Paul Ramey, Jr. Annapolis,
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unfair or is this just another delaying tactic for some who probably won't be able to do a deal anyway. Do you see that? A. Yes. Q. Was the concern that you were expressing here about a potential delaying tactic by those who wouldn't be able to do a deal anyway, was that based on your experience that the minority bidders who were de novo had a harder time closing deals than established financial institutions? A. I don't recall. Q. Is that a reasonable inference from this? A. Not knOWing who the other groups were. I probably wouldn't know who they were if you told me. It could have been someone that I was familiar with that had possibly tried a delaying tactic some other time and it was not able to consummate a transaction. It could have been something like that. But I don't know. Q. You were concerned with delay? You didn't want a delaying tactic. Is that fair? A. Not for the sake of delaying, when we had everyone ready to go. It was in the form of a question. I was asking them what did they think. Q. Sure. The next document that I would like
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not have been able to close on the entire franchise? A. In part. Because we feel we are going to get a better transaction by delaying. Q. Just so I'm clear. The delay that's contemplated here on your August 16th memo is pushing the bidding back from August 15th, which had been planned, to August 26. Is that correct? A. I believe so. Q. And then you're making the point here that, look, the minority bidders under the new regime we will be able to bid on the southern and northern portions of the franchise; is that correct? A. I think so. Q. Okay. And was the concern that, if it was a whole, if the entire New Jersey franchise were sold, that it would be difficult for a minority group to participate as one of the new owners? A. And that we might not have as much interest -- the more options we could give bidders, the better chance we had of doing a deal, a better deal. Q. Okay. It was a combination of those two things? A. I think so. Q. Let's move on to Ramey 28, Bates number
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to have marked as Ramey 27 is a document that bears the Bates number C-AM-A- 0014370. (Deposition Exhibit Number 27 marked for purposes of identification.) BY MR. TIlOMPSON: Q. Mr. Ramey, the original message is from Mr. Hambric to yourself, dated August 16, 1994. You can see that at the bottom. Then you make some comments to Mr. Hambric. Rather than reading this into the record, ifyou wouldn't mind taking a moment to read this, I'll ask you a question or two. (Pause) A. Okay. Go ahead. Q. In your comments you are making the point that putting the bid off from August 15th to August 26th is going to be beneficial because it will allow potential acquirers to focus on the northern and southern franchises separately. [s that the point you are making in this e.mail? A. Give me your question again. Q. Let me strike that and ask the question this way. Are you explaining in your comments in this e.mail that one of the reasons, and the quote real problem, close quote, was that a minority group workin2 either alone or with non-minorities would

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C-AM-A- 0077122. (Deposition Exhibit Number 28 marked for purposes of identification.) BY MR. TIlOMPSON: Q. This is e.mail from you to Herb Held, Mr. Jupiter, Ms. Yore, dated August 30th, 1994. Is that correct? A. That's correct -Q. Okay. This is just five days after the bids have come in. And the e.mail reads in part; Johnnie Booker just called me, 5:45 p.m. Tuesday. Glen Sergeon just called and reported that Mike Berman... with FD Terrell had called him and said they had been notified by us that they were in the running, and had to show evidence of something to us by tomorrow. They are asking Sergeon to buy them out or come in with them. Because they, FD, don't have money or regulatory approvals. I told Johnnie that we would just have to wait and see what it really comes up with, but we can not flip a bid from one group to another. Also, I would assume that Terrell would want Sergeon's money, if he has any, that Booker would want to maintain control. I doubt that Sergeon would be too resoective to this.

25 (Pages 94 to 97) Alderson Reporting Company
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Case 1:93-cv-00531-LAS J. Paul Ramey, Jr.

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just to review this. And then I'll ask you some questions. (Deposition Exhibit Number 32 marked for purposes of identification.) A. Okay. Q. This is e.mail from yourselfto Mr. Held and Ms. Yore, dated September 6, '94; is that correct? A. Yes. Q. It references a conversation with Mike Burgee. You reference a couple of problems that you had with Terrell. Is it fair to say one of the problems was the fact that they were talking to other bidders? A. That's correct. Q. Is the concern there basically a concern over potential, I would call it price fixing, but a coordinated bid so rather than competitive process -A. That was a concern. Q. And then the second thing that you reference here is the fact that his statements about how much cash he had appear to be a false statement. Was that a concern? A. Yes.

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approval. Among other things. That just comes to mind. Q. In terms of the regulatory approval, the regulators would do a lot more due diligence for someone who wasn't an established player. Is that it? A. That's correct. Especially if it's not an established player -- checking backgrounds and so forth. Q. In the second part of that sentence. We began this process in mid-April and have worked very closely with all minority groups in an attempt to accommodate their needs. Was the work that you did with the minority groups and outreach that you did, was that an attempt to satisfY the congressional mandate? A. In part. And in part it was to try to get as good a deal as we could. We would be working with minority groups and others prior to even scheduling a resolution. We might not have one scheduled. If we had an institution in conservatorship, then people would know sooner or later we are going to resolve it. They might come to us ahead of time and sav, when vou get ready to

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Q. The third thing was, he breached confidentiality agreements. Was that a concern? A. Yes. Q. Were all these reasons to reject his bid? A. So far as I can tell. Q. Let's mark as Ramey 33, Bates number C-AM-A- 0131553. This is a letter from yourself to Mr. Burgee, September 6, '94; is that right? A. Yes. (Deposition Exhibit Number 33 marked for purposes ofidentification.) Q. Okay. And the first sentence says; I am writing in response to a letter that he had written. But my question really refers to the second page, the second paragraph. We do understand that it is difficult for any de novo or private investor group to complete this process based upon the amount ofcapital and structure required. However, we began this process in mid-April and worked very closely with all minority groups in an attempt to accommodate their needs. What were the difficulties that a de novo minority investor would face? A. Raising caoital and gettinl! regulatorv
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resolve this institution, we want to be considered. What do we need to do. We would work with them, whether it be a minority or otherwise. Because of congressional mandate we were, I won't say we worked harder with them. We didn't. We want to be sure that we did everything that we were mandated to do, plus try to get the best deal. We are talking about all minority groups. That's because he is involved in a minority group. Had this been someone other than a minority group, we would have probably said we have worked with all bidders in attempting to do this. Q. One question I had was, in terms of the outreach, did that take extra time to the minority community? Did you spend more time, and did that extend the process, because you were trying to be inclusive and reach out to as many minority bidders as possible? A. It may have taken more time indirectly, but it also widened our, broadened our base of bidders. You might think that it was a detriment to the resolution process; whereas, there were times when it probably benefitted the process because we did bring more groups to the table. O. With resoect to Carteret do vou have an
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opinion as to whether the bids would have been the same with or without the Minority Preference Program I still don't know anything about Carteret. We are talking about Carteret here. I don't even know how 5 big it was. I don't know -- I don't remember 6 anything about -- Leslie told me where it was a few 7 days ago. I just don't remember. 8 Q. I understand. I'm just trying to make 9 sure we have a full record. It's not a problem. l O W e were going to look at this one, which 11 was -- we are done with 33. 12 We are going to go to the next Exhibit, 13 Ramey 34, and it has a Bates number of 14 C-AM-A- 0014288. 15 (Deposition Exhibit Number 34 marked 16 for purposes ofidentification.) 17 BY MR. THOMPSON: 18 Q. This is a letter from MidLantic to 19 Mr. Ryan. You're a cc on it; is that right? 20 A. Yes. 21 Q. It's dated September 14th, '94. I would 22 like to direct your attention to the second 23 paragraph towards the end where it says; in spite of 24 RTC bidding procedures for minority preference 25 resolutions, bidding rules which provide for a 72
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BY MR. THOMPSON: Q. This is a letter from Peter Knight, Director of the office of Governmental Relations to representative Peter King. Did you ever have any dealings with Peter Knight? A. Yes. Q. This is dated September 27, 1994, a couple weeks after the events we have been looking at. First paragraph makes reference to a letter that Representative King had sent on behalf of Francis Terrell. Do you have any recollection of congressmen contacting your office about the Minority Preference Program? A. No. Q. Mark as Ramey 36 a document that bears the Bates number C-AM-A- 0131543. (Deposition Exhibit Number 36 marked for purposes of identification.) BY MR. THOMPSON: Q. This is a letter from Representative Rangel to Mr. Ramey. You are listed as the copy in the bottom left-hand comer. First sentence makes reference to the fact that Mr. Rangel is writing in response to Mr. Terrell concerning the RTC policv
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hour match period, see bid overview,... the RTC provided the minority match bidder over 120 hours or until 5:00 p.m. on Wednesday, September 14, 1994, to provide a matching bid and proof of capital. Do you see that? A. Yes. Q. Do you have any reason to doubt the accuracy of that factual statement? A. No. Nor to agree with it. Q. If it were true, would it be evidence of the resolution's department commitment to try to get a minority investor to acquire Carteret? A. Not necessarily. It could be evidence of us doing what we try to do, is to try to do is to get the most cost effective resolution. So is the 72 hour match period is not mandated by Congress. That was a guideline that we went by. If it took less or more time, if we thought that the resolution process would benefit by it, then we would probably do it. Q. Let's look at the next exhibit, which would be Ramey 35. And it bears Bates number C-AM-A- 013 1544. (Deposition Exhibit Number 35 marked for Durooses of identification.)

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implementing the Minority Resolution Preference Program. Do you have any recollection of seeing this correspondence? A. No. Q. Does this refresh your recollection that Members of Congress were keenly interested in minorities acquiring Carteret? A. Not Carteret specifically. I just know they were interested in minorities in general. Q. Were they applying pressure for you all to sell institutions to minorities? A. I was never involved in any pressure from any congressman. We may have had meetings and they would express concerns. In no way was I ever pressured from any congressional office to do other than what we were supposed to do. Q. Okay. In the third paragraph Representative Rangel says; as you know, in creating the RTC's Minority Resolution Preference Program Congress's intent was clear. The first goal was to resolve failed thrift institutions in an expeditious

manner.
As I understand this process of the Minority Preference Program, it adds on a second laver of bidding. Do vou think that the Minority

29 (Pages 110 to 113) Alderson Reporting Company 1111 14th Street, NW Suite 4001-800-FOR-DEPO Washington, DC
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Case 1:93-cv-00531-LAS

Document 260-22

Filed 02/05/2008

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J. Paul Ramey, Jr. Annapolis, MD
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April 12, 2005
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Preference Program really expedited the resolution of conservatorship? A. In certain instances it did. Yes; I'm sure it did. Q. Can you name any? A. I can't name any institutions specifically. But there were times we didn't get any bids to help minorities acquire institutions. Q. Can you recall any instance in which the only bids you all received were pursuant to the Minority Preference Program? A. I believe there were some. I cannot remember any specifically. Q. Wouldn't those bidders have won anyway? There is not a second round of bidding. A. There is more to the minority preference bidding procedures than matching bids. Q. The interim capital assistance? A. Yes. I don't know what else. There are a lot of factors involved in the minority preference. The matching bid ability was just a portion of that. This would delay the bidding, the final bidding process. There were times when we never received any matching bids. Q. Then it's irrelevant.
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banks and thrift institutions. When you do this, you are not establishing an institution in an area that's neglected. You're going into an area that exists with a banking institution. Q. I understand. Mark this as number 37. (Deposition Exhibit Number 37 marked for purposes of identification.) BY MR. THOMPSON: Q. This is e.mail from yourself to Mr. Held, Mr. Jupiter, Ms. Yore, Mr. Smith and Ms. Starke. A. Yes. Q. It's dated September 22, 1994? A. Right. Q. It's just after, shortly after the Terrell bid has been rejected. It references some concerns about Mr. Sergeon. Even though we have put a 14th deadline on Sergeon, it won't be done by then and the end of the month is likely, if at all. On the 14th probably the best we can hope for is, some sort of indication from the regulators that he can possibly be approved with some background checks still outstanding. Money in the bank for the capitalization but not for the debt to be raised by ML. Also, that investors aren't as firm as we would have liked to
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A. Yes. Also, I don't know, in all due respect to Congressman Rangel, it sounds like he's preaching to us that here's what the intent was. I don't know that that was the intent. I'm not sure he knows what the intent was. That's his opinion. He's free to write that down on a piece of paper. The first goal to receive a failed thrift in an expeditious manner. I don't know, I don't think that had anything to do with their intent. That is his opinion. Q. Let's look at the second goal that he references. A. To promote ethic diversity in the banking community to better serve communities, including some which I represent that are frequently neglected by banks and thrift institutions. Q. Do you believe that was one of the goals of Congress? A. I don't know. Except I don't see where acquiring an institution that's not in one of those areas helps that area. Q. I'm sorry? A. In other words, he says ethic diversity in the banking community to better serve communities, including some I represent that are neglected by

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believe. Serge