Barclays

13. In a January 29, 2008 Oppenheimer & Co. Inc. research report, which was circulated internally among traders at Barclays, analyst Meredith Whitney wrote:
- Among the myriad of negatives that surround financial stocks today, we see no issue more critical than the fate of the monoline insurers.
  - The fate of the monoline insurers is of paramount importance to financial stocks, as further downgrades of major monoline insurers by the rating agencies could put another $100 billion in assets held by banks in jeopardy of further writedowns.⁹
- ⁹ Exhibit 358, BARC- ADS-00263822-855 at 823

-- Reply Report of Fiachra T. O’Driscoll, Submitted on Behalf of Lead Plaintiff

8. For instance, on November 19, 2007, Total Securitization, a well-known trade journal cited in my Initial Report, reported that:
Deutsche Bank in London found that spreads on AAA prime residential mortgage-backed securities ... moved out again in the last week to just over 40 bps. The firm’s report said structured finance markets were impacted by a combination of negative news linked to banks and financials, the looming prospect of portfolio liquidations in the collateralized debt obligations and structured investment vehicles space and growing uncertainty over
monoline capital adequacy.⁴
⁴“Euro ABS Mart Sees Renewed Spread Widening,” Total Securitization, November 19, 2007, p. 7.

-- Reply Report of Fiachra T. O’Driscoll, Submitted on Behalf of Lead Plaintiff

12. By late 2007, the monolines had also become a target for short sellers, reflecting negative market sentiment regarding the monolines and complicating their ability to raise capital. Hedge fund manager William A. Ackman had long been a short seller of MBIA, Inc., the largest monoline. The New York Times reported on December 1, 2007 that “[a]t the investor presentation he held this week, Mr. Ackman predicted that ⁶ “Monolines May Be Worse Off Than Moody’s Thinks, Says UBS,” Total Securitization, December 24, 2007, p.4- 5.⁷“Rating Actions On Monolines Jolt Market,” Total Securitization, December 24, 2007, p.17. 5 the holding company could be bankrupt by the second quarter of 2008, which MBIA says
is preposterous.”⁸
The article went on to say: In the 1990s, MBIA began to guarantee not just muni bonds but so-called structured finance vehicles, including those now infamous C.D.O.’s that are causing so much trouble.
- “If you analogize it to life insurance,” said [Sean] Egan [the co-founder of Egan-Jones, an independent bond rater] — who uses the kind of pithy language that escapes Mr. Ackman — “it is as if they once insured only 18-year-old women who didn’t smoke or drink. Now they are insuring the Evel Knievels of the world.”

-- Reply Report of Fiachra T. O’Driscoll, Submitted on Behalf of Lead Plaintiff

2009 0315 - AIG Press Release - AIG Discloses Counterparties To CDS, GIA And Securities Lending Transactions - 6p
- Attachment D – Payments to AIG Securities Lending Counterparties Institution Payments to Counterparties by U.S. Securities Lending
- -- Total $43.7 <International 28.6 Billion / US - 15.1 Billion>
- Barclays $7.0
- Deutsche Bank 6.4
- BNP Paribas 4.9
- Goldman Sachs 4.8
- Bank of America 4.5
- HSBC 3.3
- Citigroup 2.3
- Dresdner Kleinwort 2.2
- Merrill Lynch 1.9
- UBS 1.7
- ING 1.5
- Morgan Stanley 1.0
- Societe Generale 0.9
- AIG International Inc. 0.6
- Credit Suisse 0.4
- Paloma Securities 0.2
- Citadel 0.2

206. In an effort to avoid having to recognize losses tied to its monoline counterparty exposures, Barclays joined a group of other Wall Street banks to bail out the insurers.
- On February 1, 2008, TheStreet.com and other news agencies reported that a consortium of banks, including Barclays, were “working in conjunction with New York Insurance Superintendent Eric Dinallo to hammer out a bond insurer bailout plan.”
- Barclays knew it had to bail out the monolines in order to stave off writedowns on its own mortgage-related exposure, because if the insurers failed, Barclays could no longer claim its exposure was insured or hedged by the monolines.
- As soon as the monolines could not backstop those losses the credit ratings on those bonds would fall, resulting in huge losses for Barclays.

2013 - LC - In re BARCLAYS BANK PLC SECURITIES LITIGATION, Case 1:09-cv-01989-PAC Document 66 Filed 09/16/13 Page 81 of 101 - 101p