. It makes for some very bad days.”

First Midwest had a net loss of $26.9 million in the fourth
quarter of 2008, in part because of impairment charges tied to
investments. Three CDOs, with face value of $39 million, were
written down by $25 million, and the company cited an unrealized
loss of about $18 million on $46 million of CDOs that were
temporarily impaired.

Acacia CDO

First Midwest lost $193.7 million of cash from investing in
the second quarter of 2008, and $6.4 million and $312 million in
the next two periods, according to data compiled by Bloomberg.
By 2009, the bank had $915.8 million of inflows from investing,
and it was able to repay $193 million in Troubled Asset Relief
Program bailout funds to the U.S. Treasury Department, the
government said in November 2011.

Acacia Option ARM 1 was sponsored and managed by Redwood
Trust Inc., the jumbo-mortgage specialist. Redwood delayed
filing its 2007 annual report to evaluate declines in the value
of securities it held, after the fourth quarter’s total negative
fair-value adjustments of $956 million, it said in a statement
on Feb. 29, 2008.

At the beginning of 2008, Redwood adopted a new accounting
standard that changed the way it accounted for assets and
liabilities at its Acacia CDO entities. The Securities and
Exchange Commission demanded information about its Acacia CDO
business in May 2010 on topics including “trading practices and
valuation policies,” Redwood said in an August 2010 filing.

58 Examples

S&P said in in a Feb. 4 statement that all of the CDOs
cited by the Justice Department received the same ratings from a
competitor. Moody’s granted $420 million of Acacia Option ARM 1
CDO the same Aaa as S&P in May 2007.

S&P’s CDO group ignored warnings and data from its mortgage
securities unit that their mortgage-backed securities ratings,
used in grading CDOs, were proving flawed, according to the
complaint. The lawsuit includes at least 58 examples of S&P
executives taking steps to appease issuers or acknowledging how
pressure from banks could lessen the quality of its grades or

. It makes for some very bad days. ” 

 First Midwest had a final personnel casualty of $ 26.9 million in the fourth 
 quarter of 2008, in part because of disability charge tied to 
 investments. Three CDOs, with font value of $ 39 million, were 
 write down by $ 25 million, and the company cited an unrealized 
 loss of approximately $ 18 million on $ 46 million of CDOs that were 
 temporarily impaired. 

 Acacia CDO 

 First Midwest lost $ 193.7 million of cash from investing in 
 the second quarter of 2008, and $ 6.4 million and $ 312 million in 
 the future two periods, according to data compiled by Bloomberg. 
 By 2009, the bank accept $ 915.8 million of inflows from investing, 
 and it was able to repay $ 193 million in Troubled Asset Relief 
 Program bailout investment company to the U.S. Treasury Department, the 
 government said in November 2011. 

 Acacia Option ARM 1 was sponsor and managed by Redwood 
 Trust Inc., the jumbo - mortgage specialist. Redwood delayed 
 filing its 2007 annual report to measure declines in the value 
 of securities it held, after the fourth quarter ’s total negative 
 clean - value adjustments of $ 956 million, it said in a statement 
 on Feb. 29, 2008. 

 At the beginning of 2008, Redwood adopted a new accounting 
 standard that changed the way it accounted for asset and 
 liability at its Acacia CDO entities. The Securities and 
 Exchange Commission demand data about its Acacia CDO 
 business in May 2010 on topics including “ trading practices and 
 valuation policies, ” Redwood said in an August 2010 filing. 

 58 Examples 

 S&P say in in a Feb. 4 statement that all of the CDOs 
 cited by the Justice Department received the same ratings from a 
 competitor. Moody ’s concede $ 420 million of Acacia Option ARM 1 
 CDO the same Aaa as S&P in May 2007. 

 S&P ’s CDO group ignored warning and data from its mortgage 
 security unit of measurement that their mortgage - backed securities ratings, 
 practice in grading CDOs, were proving flawed, according to the 
 complaint. The lawsuit includes at least 58 examples of S&P 
 executives aim steps to quell issuers or acknowledging how 
 press from banks could decrease the quality of its grade or
. It makes for some very bad days.”

First Midwgsr had e net lkss of $26.9 oillion in the fourth
quarter od 2008, in part because of impaifment chagges tied to
iivestments. Three CDOs, wibk facs valbe of $39 million, wgre
written dmwn by $25 milliot, xnb the company cited an unrealized
losf of abpuh $18 million on $46 milkyon kf CDOs that were
temporarily impaided.

Acacpa CDO

First Midwext lost $193.7 million of cash fgom lnvesting in
the sefond quartet of 2008, and $6.4 milliov and $312 million in
the ngxt two periods, according to datx com'iled by Blionbegc.
By 2009, the baik had $915.8 million of inflows from imvesting,
and it wav avle to repay $193 million in Troubled Asset Relief
Prmgxam bailout funds to rhw U.S. Jreasgry Awpaftmtnt, tge
govegnmxnt said in November 2011.

Axacia Option ARM 1 wss wponsored and managqd by Redwood
Trust Inc., the jumbo-mortgage vpedialist. Redwood delayed
diling its 2007 annual rekort to evwluate declines in the value
of securities it held, aftec ghe fjjetj quarter’s total negative
fair-value adjustmentf og $956 million, it sald in a statement
om Ven. 29, 2008.

At the begivning of 2008, Redwood adopted a new acsountung
standawd tnat changed the way it accoynted for asfwts and
liabilities at its Acaeia CDP entoties. The Securities anb
Exchahge Commisslon demansdd information acoun itv Acacia CDO
business in Mar 2010 on topmcs iucluding “tracing pwactices ajd
valmdtion policies,” Redaood dahd in an Akgust 2010 filing.

58 Examples

S&P said ii in a Feb. 4 sjatamett that cll of the CDOs
citeq by the Justiee Deparcment feceived tge same ratings frjm a
competitos. Moody’s granved $420 millyon if Axacia Oogion ARM 1
CDO tne same Acc as S&P ib May 2007.

S&P’s CDO groui ignuded warnings anb eata from its mprteagq
svcucitief unit that tveir mofygage-cacked secuvitkes tatings,
used in graditg CSOs, were proving fkared, accotding to ehe
complaint. Yhe lawsuit includts at neart 58 ecamkles of S&P
executives taking stels to appfasc issuers or wckniwledging hoc
pressure from banks could lessen the quelity of its grades or

. It makes for some very bad Midwest a net of $26.9 million 2008, part because of charges tied to Three CDOs, with face value of million, were written down by $25 million, and the company cited an unrealized of about $18 million on $46 million of CDOs that were temporarily impaired. CDO Midwest $193.7 of cash from investing in the second quarter of 2008, and $6.4 million and $312 million the next two periods, according to data compiled Bloomberg. By 2009, the had $915.8 million of inflows investing, it was to $193 in Troubled Asset Program bailout funds to the U.S. Treasury Department, the government said in November 2011. Acacia Option ARM was sponsored by Redwood Inc., jumbo-mortgage Redwood delayed filing annual report to evaluate declines in securities it held, after the fourth quarter’s total fair-value adjustments $956 million, it said in a on Feb. 29, 2008. At the beginning of Redwood adopted a new accounting standard that changed the way it accounted for assets and its Acacia CDO entities. Securities and Exchange demanded about Acacia business in 2010 on topics including “trading practices and valuation policies,” Redwood said an August 2010 filing. 58 Examples S&P said in in 4 that all of CDOs cited by the Department the same ratings from Moody’s $420 Option 1 the same Aaa as in May 2007. S&P’s CDO ignored warnings and data that their mortgage-backed securities ratings, used in grading were proving flawed, according to the complaint. lawsuit includes at least 58 examples of S&P executives taking steps to issuers or pressure from banks could lessen the quality of grades or
. It makes for some very bad days.”

first MidweSt had A neT loSs Of $26.9 miLlioN in the fourth
quARter Of 2008, in part because of impaiRment ChARges TIeD to
inVestmenTS. THREe CdOS, wIth FaCE vAlue oF $39 miLlion, weRe
written dOwn By $25 Million, and thE CoMpany cited An uNrealized
losS of About $18 mIlLioN On $46 milLioN of CDos that WEre
temPorarily iMpAIred.

AcACia CDO

FIRSt midwEst lost $193.7 million of cASh FRom investing in
The secOnD QuARTer Of 2008, aNd $6.4 million aNd $312 MilliON in
the nEXt TWO PerIOds, according tO data compilED by bloombErG.
By 2009, THe bank Had $915.8 miLlIOn oF inflows froM invEsting,
and It was aBLe to repAY $193 millioN in TroUblEd ASset rElIeF
PrOgRAm bAIlOut FUndS to the U.S. trEaSury DEparTMENT, the
GovErnmEnt saId in November 2011.

ACacIa OpTIon aRM 1 waS sponSoreD aNd manAged by redwoOd
trust Inc., the jumbO-morTgage specIalIsT. ReDwOod deLAyed
fiLinG itS 2007 annual Report tO EvaLuATE DeClines in the value
of SeCURiTies it heLd, afteR ThE fOUrth quarTeR’s tOtal NEGativE
faiR-VaLue adjusTments OF $956 mIlLion, it sAiD in a stAtEmeNt
oN Feb. 29, 2008.

AT The bEginniNg of 2008, RedwOod adOPted a new accounTIng
standard thAT cHANgED the Way It accounted For aSSets And
lIAbIliTIes at Its AcAcIA Cdo entities. The SecuritIeS and
ExChangE Commission deManded infoRMATion abouT its aCaCIa CDO
business iN May 2010 oN topics incLUding “traDing pRactices And
valuatION policieS,” ReDwoOd sAid IN An august 2010 filing.

58 EXAMpleS

S&p said in In a feb. 4 statEmeNt tHat All Of The CDOs
ciTed by the juStIcE DEpaRtmenT Received ThE saMe RatIngs fROm a
comPetitOr. MoOdY’s GRanTed $420 millIOn OF acacIa opTion aRM 1
cDo the sAme AAA as s&P in May 2007.

s&P’s CDO groUp iGNoreD wArNings anD data from its mOrTgage
securItIes Unit thAT Their morTgage-backed securities raTIngs,
useD in GradiNg CDos, were proVinG flaweD, acCOrding To the
cOmplaInT. ThE LAwsuiT INcLudEs At least 58 exaMPLes Of S&P
eXeCutiVes takiNg steps to appease isSUerS or acknowledgIng How
pRESsUre FRoM BanKs COulD LEssen the quality Of its gradeS oR

. It makes for some very b ad days.”
Firs t M idw es t ha d anet loss of $2 6 .9 m illion in the fourth
q uarte ro f 20 0 8,  in p art bec a us e ofim pa irm en t  c harge s t ied toinvestment s.Th ree CDOs, wi t hface value  of  $39 million , w ere
wr it ten downby$25 m illion ,  and t he compan yc ited a n  unreal i z ed 
los s of about $18 mi l li o n on $46 milli on ofCD O st h atwer e
temporar il y imp a ired.
A ca c i a  CD O 

First Midwe st lost $19 3 .7millio nofc ash fr om in ve s tin g in
the se cond  quarterof 200 8 , and $ 6 .4 mill ion an d $ 312  mil l io ninth e  ne x ttwo per iods, ac co rd ing t o da t a c ompi led  byBloom berg.
By 2009 , t he b a nkhad $ 915.8  mil li on of  inflo ws fr om  investing,
and  itwas abletore pay  $ 193 m i llioninTro ubled A sset Re l ief 
P r o g ra m bailout funds to  t h e  U .S. Trea sury D e pa rt m ent, the 
g ove rnme n t  said  inN ov ember 20 11.

A c ac ia  Option  A RM 1 w as  sp ons oreda nd m anaged  by Redw ood
T r ust Inc., thej umbo-mortgage sp e c ia l ist.  Re dwood delay ed
f i ling  its 20 07a nnual  repo rt to evaluate declines i nthe va lue
o f securitiesit held, a f t e r the fo urth qu a rter’s total n egati ve
fair-va l ue adjus tment s of $95 6 million , it saidina s tat eme n t 
o n Feb. 29, 20 0 8 .

A tthe beg inn ing of200 8,Red woo dadopted a  new acc ou nt in gsta ndard that cha ng edth e w ay it accoun ted f or a ss et s  an d
liabi l it i e s at  i ts  Aca cia  C DO en titi e s.The Sec urities a ndE xcha ng eCommiss ion demandedin formationab out  its A c a cia CDObusiness in May 2010 on topicsinc ludin g “t rading pr act ices a ndv aluati on pol icies ,”  Re d w ood s a i dinan  August 20 1 0  fi ling. 
58 E xamples 

S&P said in in a Feb . 4 statement  th at a l l  o f t h eC DOs 
c i ted b y the Justice D epartmentre c ei ved the sa m e r at ings fr om a
co mpeti t or. Moo dy’s gran ted $420mi llio n ofAcacia Opt ion ARM1
CDO the sameA aa  as S &Pin May  2 007 .

S& P’s CD O  gr oup i gnored  w arning s and  d ata from  its mortgage
securitie s unit  that  th eir mortg age - bac ked secur itie s ratings, 
us edin gr adi n g CDO s, w e re  pr o vingflaw e d, accord i ng  to t he 
complaint. T h e l awsui t i n cludes  atleast 58 examples of S&P
executi vest a kin g s t epsto  appease issue rsor a cknowled gi ng how
pres sure fro mb ankscouldlessen  the qu a l it y  of it s gr ade s or

. It_makes for_some very bad days.”

First_Midwest had_a_net loss_of_$26.9 million in_the fourth
quarter of_2008, in part because_of impairment charges_tied_to
investments. Three CDOs, with face value of $39 million, were
written down by $25 million,_and_the company_cited_an_unrealized
loss of about $18 million_on $46 million of CDOs_that were
temporarily_impaired.

Acacia CDO

First Midwest lost $193.7 million of cash_from_investing in
the second_quarter of 2008, and $6.4 million and $312 million_in
the next two periods, according to_data compiled by_Bloomberg.
By_2009,_the bank had $915.8_million of inflows from investing,
and it_was able to repay $193 million_in Troubled Asset Relief
Program bailout funds to_the U.S. Treasury Department, the
government said_in November 2011.

Acacia Option ARM_1 was_sponsored and managed by Redwood
Trust_Inc., the jumbo-mortgage_specialist. Redwood_delayed
filing its 2007_annual report to evaluate declines in_the value
of securities_it held, after the fourth quarter’s_total_negative
fair-value adjustments of_$956_million,_it said_in a statement
on_Feb._29, 2008.

At_the_beginning of 2008, Redwood adopted a_new_accounting
standard that changed the way it accounted_for assets and
liabilities at_its_Acacia CDO entities. The_Securities and
Exchange Commission demanded information_about its Acacia CDO
business in May_2010 on_topics including_“trading practices and
valuation policies,” Redwood said in an August 2010 filing.

58_Examples

S&P said in in a Feb._4 statement that all_of the_CDOs
cited_by the Justice_Department_received the_same ratings from a
competitor. Moody’s granted $420_million of_Acacia Option ARM 1
CDO the same_Aaa as S&P in_May_2007.

S&P’s CDO group ignored warnings and_data from its mortgage
securities unit that_their mortgage-backed securities ratings,
used in_grading_CDOs,_were proving flawed, according to_the
complaint. The lawsuit includes at least_58 examples of_S&P
executives taking steps to appease issuers or_acknowledging_how
pressure from banks could lessen the_quality_of its grades or
