Mario Ugoletti in December 2013:

“At the time of the negotiation and execution of the Third Amendment, the Conservator and the Enterprises had not yet begun to discuss whether or when the Enterprises would be able to recognize any value to their deferred tax assets. Thus, neither the Conservator (FHFA) nor Treasury envisioned at the time of the third amendment that Fannie Mae’s valuation allowance on its deferred tax assets would be reversed in early 2013, resulting in a sudden and substantial increase in Fannie Mae’s net worth, which was paid to Treasury in mid-2013 by virtue of the net worth dividend.”

Ugoletti under deposition May 2015:

Q. Well, let me ask you: Did the conservator, on the eve of the Net Worth Sweep, envision that the deferred tax assets would be written back up in 2013?

A. As I just stated, I did not really think that this was a possibility anytime in the near future. And 2013, the early part of 2013 when this became an issue, it became an issue because, well,   house prices are continuing to go up and we’re going to take — release more loss reserves, and it looks like it’s more probable than not, which is a very low standard, more probable than not, that we’re going to  have to release the valuation allowance on the  deferred tax asset.

So that is when it really came home that this was a possibility.


GSE Reform: Tim Pagliara Files Suit in Delaware Fannie Mae Mortgage Markets
GSE Reform: Tim Pagliara Files Suit in Delaware

Former FNMA CFO Susan McFarland’s unsealed deposition (parts below) reveals a gold mine of testimony. In it she lands body blows to the credibility of Ugoletti & Foster (depositions also included) who were vague, ridden with memory lapses and borderline uncooperative. McFarland is eager to tell her story and does so in very good detail. What she discloses is probably explains why Mario has been out of the country in Ecuador (no extradition to US) since he gave his statement in 2013 (he knew it to be false).

McFarland clearly has no interest in being a “good soldier” here and even in what we see below, is naming names.  Don’t think for a second that these folks have not been deposed also. You’ll also note that despite his starring role in earlier government filings, Ugoletti no longer seems to exist as he is curiously absent from current filings……perhaps even the government is admitting everyone knew about the DTA’s and that they were the reason for the NWS and not the reasons they have stated?

The full doc release is here. Note: please read them carefully, they are not the complete depositions (not all has been released) and even within them they skip sections. Also note that what your read below is only what is vanilla enough to be released (for now). This is by no means “all there is”.


Q. (BY MR. THOMPSON) But I would — this is, as Counsel quite rightly notes, a memo from December 20, 2010. It’s from a Jeffrey Goldstein. The subject is, “Periodic Commitment Fee for GSE Preferred Stock Purchase Agreements.” Ms. McFarland, I would like to direct your attention to the second page. And under the heading, “Reasons to Set the PCF,” there’s a bullet point that says, “Makes clear the administration’s commitment to ensure existing common equity holders will not have access to any positive earnings from the GSEs in the future.”

Now, I am not asking you about December 2010. You weren’t there.

A. Correct.

Q. But when you did arrive in the middle of 2011, did you see any manifestations of the administration’s commitment to ensure existing common equity holders would not have access to any positive earnings from Fannie?

MR. LAUFGRABEN (defendant’s attorney): Object to the form of the question; lack of foundation.

A. The only example that I — that comes to mind of note is the Third Amendment.

Q. (BY MR. THOMPSON: plaintiff attorney) Yeah. And what was your reaction when you learned — you learned of a Third Amendment a couple of days beforehand; is that right?

A. Correct.

Q. All right. And what was your reaction to it?

MR. LAUFGRABEN: Objection; vague.

Q. (BY MR. THOMPSON) Did you think it was the effective nationalization of the companies?

MR. LAUFGRABEN: Objection; form.

MR. BARTOLOMUCCI (defendant attorney): Objection; form.

A. No, I didn’t view it as nationalizing. It borders on that; I can see.

But I had, shortly before that, had a meeting with Treasury whereby we reviewed our forecasts. I had expressed a view that I believed we were now in a sustainable profitability, that we would be able to deliver sustainable profits over time. I even mentioned the possibility that it could get to a point in the not-so-distant future where the factors might exist whereby the allowance on the deferred tax asset would be released. We were not there yet, but, you know, you could see positive things occurring.

So when the amendment went into place, part of my reaction was they did that in response to my communication of our forecasts and the implication of those forecasts, that it was probably a desire not to allow capital to build up within the enterprises and not to allow the enterprises to recapitalize themselves.

Q. (BY MR. THOMPSON) And with whom at Treasury do you have this meeting?

A. So the — which meeting?

Q. The one you just referenced where —

A. Where I had the discussion about the forecasts?

Q. Yes.

A. So it was a common practice for us to meet with Treasury on a quarterly basis to review our results from the past quarter and to update them on our forecasts; you know, our updated forecast.

And that meeting — I don’t remember every specific person in the meeting. I was there; Tim Mayopoulos, who was the CEO of Fannie Mae was there; Dave Benson I think would have been there. He — he was the Treasurer of Fannie Mae at the time. That would have been normal for him to be in attendance. Mary Miller, the Secretary of the Treasury, was there.

Tim —

Q. Bowler?

A. Thank you. I believe he was there. He was normally at those meetings. I believe there was a gentleman — and I can’t remember his name — who used to work at Fannie that was now at Treasury that was, like, a Financial Analyst. I think he was there because they knew part of the topic we wanted to talk about was these projections. And then there were probably other members of — excuse me — FHFA, the U.S. Treasury, and Fannie Mae to talk about some other topics that were going to be covered in that meeting. Because normally we reviewed financials, but they were — you know, there may be one, two, or three other topics that would be discussed.

And both Fannie and Treasury would then make sure they had the — the personnel around the table to facilitate those conversations. I don’t remember in this particular meeting what those topics were and who those individuals were.

Q. Do you remember Jeff Foster being at the meeting?

A. He could have been.
MR. LAUFGRABEN: Objection.

A. He could have been. I can’t confirm yes

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