-9-
b. Credit Procedures....................134
c. Review of Risk Classifications ......136
3. CRESCO Loss Reserve Factors...............137
a. Loss Reserves........................137
b. CRESCO...............................137
c. Accuracy of CRESCO Loss Factors......138
d. Same Factors Applied to Loans an
Swaps................................139
e. FNBC’s Credit and Tenor Enhancements.139
D. Static Instead of Dynamic Procedure............141
E. Netting........................................142
1. Types of Netting..........................142
a. Closeout Netting.....................142
b. Single Transaction Netting...........143
c. Multiple Transaction Netting.........143
2. Netting in the Industry...................143
3. Status of Netting Arrangements............144
4. Practicability of Accounting for Netting..146
5. Impact of the Failure To Account for
Netting...................................146
6. FNBC’s Use of Netting Provisions..........147
XII. FNBC’s Adjustments Were Designed To Defer Income.147
A. Overview.......................................147
B. FNBC’s Policy Statements.......................147
XIII. FNBC Had No Schedule M Adjustments...............148
XIV. Nature and Amount of the Proposed Disallowances..148
XV. Petitioner’s Facts Set Forth in Its Petition.....149
XVI. Pretrial Order of August 14, 2000................151
XVII. Expert Testimony.................................152
A. Identity and Qualifications....................152
1. Experts Retained by Petitioner............152
2. Experts Retained by Respondent............153
3. Experts Appointed by the Court............155
B. Procedure Used by the Court To Appoint Our
Experts........................................156
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Last modified: May 25, 2011