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“resolvinG tHe Crisis; restorinG tHe ConfiDenCe”
defensible processes with respect to the sale of portfolios. I was first put in charge of the development, review, and administration of agreements that governed the sale of portfolios in a non-securitized setting—a sale that involved competitive bidding on large portfolios of all manner of performing and nonperforming assets by prequalified purchasers—and of public auctions with respect to smaller bundles of assets.
When I reviewed the basic contracts that were being employed in the portfolio sales, I came away feeling that my predecessors had adopted a mechanism that was unnecessarily complex and that the gov- ernment was taking avoidable risks to promote sales. The unnecessary complexity that I confronted—which, you will be grateful to know, will not be described here—was the brainchild of a law firm that, together with a few others, had gotten all of the lucrative national RTC business to date. Through delicate negotiations with that firm, I succeeded in simplifying the methodology.
More important, I started what became a successful uphill fight to reduce the government’s credit role in the sales: As you will recall, at the insistence of financial advisors and in the belief that mortgage loans would be difficult to sell in the absence of at least partial government backing, the transactions that had been conducted involved enormous sets of representations as to the mortgages and the properties that they covered. Unfortunately, because of the immensity of the task, the RTC knew little or nothing concerning those assets but was nevertheless put- ting the credit of the United States behind what those in the trade referred to as “the reps.”
It took me a while, but I succeeded in convincing the business side of the RTC that putting money behind the reps was unnecessary and could ultimately come back to bite the agency. I also succeeded in breaking the monopoly that a few law firms had on the RTC’s disposi- tion business, by arguing for and achieving what was in effect a national contest to join a roster of firms upon which we could rely. (Rosenman was a successful applicant—fairly, I might add—but that is another story, not dealt with here.) That list, together with my perceived power to control assignments, led me to become very popular among potential
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