Free Motion to Strike - District Court of Federal Claims - federal

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EXHIBIT C EXCERPTED DEPOSITION TRANSCRIPTS OF DANIEL R. FISCHEL MOTION OF PLAINTIFF TO STRIKE TESTIMONY OF DANIEL R. FISCHEL

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Daniel R. Fischel

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May 4,2004

Chicago, IL
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1 somehow attempted to link the payment of dividends I than Dr. Baxter's assumption. 2 to the amount of capital, particularly given the 2 Q. How does -- how if at all does the 3 decision in the real world to limit dividends 3 assumption about dividend payments affect the 4 because of the amount of capital, I would say that 4 amount of damages -- strike that Does the 5 other assumed model w ~ u l d subject to caveat be 5 assumption about dividend policy affect the amount 6 number one, but would be more plausible and 6 of damages and, if so, how? 7 therefore less speculative than the actual 7 A. Well, I think Dr. Baxter can speak for 8 assumption that Dr. Baxter made. 8 himself. but the more dividends there are, the Q. Did you compare the capital ratios that 9 smaller the but-for bank is, the less capital that 9 10 Northeast actually had during this period with those 10 it has and, therefore, the less ability it has to 11 that Dr. Baxter's model shows the but-for bank 11 lever and purchase the assumed foregone assets, so I2 having? 12 it could have an effect in that way -- I should say 13 A. I don't recall doing that. 13 would have an effect in that way. Q. If they turned out to be similar, would 14 Q. Let's take a look at assumption number 14 15 that answer the point you were just making a minute 15 eight and let me s M by asking the same question, 16 ago about the relationship between dividend policy 16 how does Exhibit 6 tell us that he's assuming that 17 and capital constraints? 17 the but-for bank would have securitized the same 18 A. You know, I guess I'd want to look at it. 18 loans at the same times that the actual bank I don't recall in Dr. Baxter's justification for 19 securitized its loans? 1 19 any attempt to equate dividend , A. Again, without being able to know -amount of canital that the bank had. ( 2 0 w~thout 21 checking whether this is a correct citation . 22 so I'd want to look at it. 22 or a typo, the amount of credit losses can affect Q. But you were saying that that was the-23 the amount of assumed foregone assets. 24 the key driver of dividend policy? Q. In your last couple of answers about 24 25 A. I wasn't saying it was the key driver of 25 this, you said you'd have to check to see if it was

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dividend policy, I was saying in the real world, the bank made the statement about cutting dividend policy because of the need to conserve capital. To the extent there would be greater capital in the but-for world because of the existence of the ability to count supewisory good will as capital, the assumption that the bank would make the same dividend decision at the same time is speculative for the reasons that I've described. If there was some subsequent attempt to link the dividend assumption in the but-for world to the capital situation in the but-for world to show that it was the same or substantially similar to the capital situation in the real world when Northeast eliminated the dividend, I think that would make that assumption more credible. Q. In -- when you talk about the relationship between the capital situation and dividend policy, are you referring to the absolute dollar level of capital or the ratio of the amount of capital to the amount of assets? A. I wasn't making any specific reference, I was just suggesting that the assumption would be more credible if there were some basis for it which, from what I'm familiar with, there isn't any other

1 a typo. How would you go about doing that, go ask 2 Mr. Ross or would there be some document you'd 3 consult? 4 A. Both. I think I'd ask Mr. Ross and Miss 5 Mendel, I think I'd also go look at other of 6 Dr. Baxter's exhibits to see whether one was more -7 Q. -- enlightening -A. -- or carefully tailored to these points, 8 9 although I do think Exhibit 6 is a perfectly 10 appropriate citation for these points. Q. Well, I'll tell you what, the next break 11 12 or over night, if you wouldn't mind just confirming 13 or denying that Exhibit 6 is the right citation for 14 this, I'd appreciate that. 15 A. Okay. Speaking of which, should 1 do it 16 rightnow? Q. If you'd like to, that's fine. 17 18 A. One last break. MR. KIRK: I should know better, anytime I 19 20 mention the word break. (After a brief recess, the deposition 21 22 was resumed as follows:) (Fischel Deposition Exhibit Number 3 23 was marked for ide~~tification as 24 25 requested.) 39 (Pages 150 to 153)

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