write a one page memo

Memorandum

To: John Tuld

CC: Sam Rogers

From: Mario Lizardi, Executive Board

Subiect: Fire SellGo Ahead

I would like to begin by expressing my deepest disappointment with upper management, whose

unadulterated greed sent MBS spiraling out of control. I understand that we have been enjoying great

returns on trades with mortgage-based products however, as Mr. Sullivan has pointed out, it has now

come at a great price. Our trading division has successfully inflated the value of what we thought were

valuable trading products, but in fact, actually have no value what so ever. This is a tragedy thirty months into the making which brings me to inquire why Mr. Dale and Mrs. Robertson of Risk Management failed to foresee this occurrence. lt is my understanding that the reason why MBS invested in professionals who have the ability to calculate risk projections within a certain variance is so

this company can save itself from unscrupulous practices like trading on subprime mortgages.

Nevertheless, the mistake has been made and now it is time to concentrate on unwinding MBS from as

much loss as possible.

As Mr. Dale has recommended, I believe I agree with you John that a fire sell is perhaps the only

reasonable solution. I hate to think of the consequences this will have on the market and what this may do to the other firms we sell this excrement to, but we do have a responsibility to act within the best

interests of our stockholders. The idea of losses shakes me down to my bones and I understand that in

order to offload all the bad stock we have, we must pay for it by selling the securities for pennies on the

dollar. I see this travesty however as an opportunity to start the impending collapse fresh with little to

no volatile investments on our books.

Mr. Rogers made a valid point that if we go through with this fire sell, and the market collapses as a

result of our actions, then MBS will lose credibility amongst other companies we do business with. Our company's reputation as an equity generator has provided us with great financial success. lf other

companies look at us as the next Enron, we won't enjoy as much trading success as we did in recent

years. This unfortunately is part of the risk we must accept in order to remain operational as we deal

with these impending losses. lf MBS loses all credibility as a mortgage provider, then we can always

shift our focus into trading something else. There will always be opportunities for MBS to make money

somewhere and it is up to our invaluable, highly intelligent analysts like Peter Sullivan to find those

venues for us. ln the meantime, the immediate future will look bleak as we see a market crash unfold

before our very eyes. There is also a chance that MBS will probably receive some backlash from media

and from the public from what we are about to do. Let's keep in mind that MBS cannot be completely blamed for a market collapse because we aren't the only company dealing with subprime mortgage

products, we are just the first to proactively attempt to survive from this.