Glenn Hubbard's Countrywide Deposition
http://www1.rollingstone.com/extras/Deposition-Transcript-of-Glenn-Hubbard.pdfMatt Taibbi observes:
Glenn Hubbard, Leading Academic and Mitt Romney Advisor, Took 1200 an Hour to Be Countrywide's Expert Witness: What's fascinating in the deposition is the way Hubbard repeatedly tries to avoid answering the question about what kind of research he did, or didn't do…. His sneering annoyance shines through as brightly as it did in Inside Job, but this time he couldn't just say, "You've got three more minutes." Here, for instance, he actually tries to play dumb when asked if he looked into Countrywide's origination practices:
Q. Did you make any inquiry into how Countrywide actually originated its loans?
A. I'm not sure exactly what you mean by that.
Hubbard here is just being intentionally obtuse: he's trying to see how much of an appetite MBIA's lawyers have for fighting through his dickishness. They press on:
Q. You understand there was a process by which Countrywide originated the loans that it included in the securitizations?
A. Yes.
Q. And there was also a process by which Countrywide examined the loans that it purchased from other originators inclusion in securitizations?
A. Correct.
Q. Did you make any factual inquiry into the nature of either the process of origination or the process of due diligence by Countrywide?
A. I'm not an underwriter in this proceeding, so neither of the assignments that I told you would require such.
He knows it's a yes or no question, but he's letting them know they're going to have to beat it out of him:
Q. And it's fair to say that you gave your opinions without any inquiry into how Countrywide actually originated its loans or how Countrywide examined the characteristics of the loans that it purchased from other originators, correct?
A. I'm not an underwriter. As an economist, what I can do is look at the implications of the claims made by MBIA and its experts.
Q. So is that a yes in response to my question?
A. You have to tell me the question again.
Yikes! If I was Selendy I would have pulled out the sponge and the car battery at this point. Fortunately, the MBIA lawyer is more mature, and went on calmly:
Q. It's a fairly simple question. You gave your opinions without any inquiry into how Countrywide actually originated its loans, correct?
A: I did not underwrite.
That's as close as they got to getting Hubbard to admit that for $1200 an hour, he swore that Countrywide's underwriting practices were irrelevant – without investigating Countrywide's underwriting practices. As for the question of how Hubbard managed to omit the fact that the loans he compared Countrywide loans to also had underwriting problems, there was this exchange:
Q. So in the aggregate, more than half of your entire population in the control group was affected by litigation?
A. I think, well, yes, by number of pools, yes.
Q. And in neither your initial report nor your rebuttal report did you disclose that fact for the benefit of the court?
A. Well I've already told you I didn't think it was relevant from my –
Q. I'm aware that's what you said today. But the fact is in neither your initial report nor your rebuttal report did you disclose that more than half of all the securitizations in your so-called control group were affected by litigation?
A. If I don't think something is a relevant fact, why would I have disclosed that?
Q. You're agreeing with me, you didn't disclose it, right?
A. That's a factual question. You had innuendo attached to it.
Q. Well, sir, I do think it's significant that you didn't disclose that fact, that's why it's in my question. I just wanted to confirm you did not disclose that fact, right?
A. I didn't disclose the fact.
Hubbard must be a very inquisitive thinker. He took $1200 an hour specifically to not learn how subprime loans were created. Moreover, he did this non-learning for Countrywide years after the financial collapse, long after the truth about that company had already become common knowledge pretty much everywhere in the world outside Hubbard's office, long after Countrywide CEO Angelo Mozilo had been charged by the SEC with deliberately misleading investors (and insider trading, to boot), and long after the Attorney General of California had concluded that Countrywide was essentially a giant scheme to use mass fraud to dump pools of bad loans on unsuspecting marks on the secondary market.
Given the great masses of information that was out there about Countrywide, Hubbard in other words had to perform a labor of Hercules to avoid letting the truth about the company slip through a crack in his skull. Naturally, this awesome ability to non-absorb information makes him qualified to be one of America's leading academics. Way to go, American learning!
And this does not sound good:
Q. I'd like to stick with the statement you just made about materiality. In paragraph 53 of your initial report, when you're reporting the results of the regression analysis for your sample of comparable pools, you say that the differences between actual performance and expected performance, where the expected performance is driven by your regression analysis using the comparable pools, the differences are not statistically significant for 14 out of the 15 securitizations, right?
A. On the securitization level, yes, in the initial report.
Q. Yes. And you say on average, however, if you put all 15 together, the difference is statistically significant?
A. That's correct.
