DEPOSITION OF WILLIAM M. ISAAC
" . . . you're talking about examiners trying to be examiners and doing what examiners do -- they hate goodwill -- instead of examiners following the contracts that the agency made as a matter of public policy. We knew (that paying the thrifts with supervisory goodwill instead of cash) was an exception. We knew it didn't conform to all the usual standards that the examiners applied and we made a conscious decision to make -- to do this to save the financial system from collapse and to save the FDIC a lot of money. I tell you if there's some examiner out there trying to second-guess that judgment, they wouldn't be working at the FDIC very long if I were (still) there . . .
"The agreement (to count supervisory goodwill) is very simple. It's very straightforward and I don't -- we've talked two and a half hours now about something that I don't think warrants more than 10 minutes myself . . ."
William M. Isaac was the chairman of the FDIC in 1982 when it was on the verge of writing an $800 million check to pay off the depositors of the failing Western Savings Bank of Philadelphia. Instead, the FDIC convinced the Philadelphia Savings Fund Society ("PSFS") to assume Western's debt instead. After Mr. Isaac, in 1999, signed a sworn affidavit supporting Meritor (PSFS's corporate parent), he was called to give a deposition by U.S. government attorneys who sought to discredit his affidavit. Later, they attempted to prevent him from testifying on Meritor's behalf during the trial itself, but were unsuccessful. Perhaps chastened by their experience while taking his deposition, the government's attorneys limited Mr. Isaac's cross-examination during the trial to just seven minutes; most other witnesses were cross-examined for hours or days. To read Mr. Isaac's deposition in full, click here. (NOTE: You must have Adobe Acrobat Reader installed on your computer; PLEASE ALSO NOTE that the document consists of 24 mb -- if you are connected to a LAN or T-1 line, it should take about five minutes to download. However, IF YOU ARE CONNECTED TO A STANDARD TELEPHONE LINE, IT MAY TAKE UP TO 2 TO 3 HOURS).