When Magloire was finished, Jane Longsworth took the stand. During the period in question, she was the manager of information systems and later took on responsibility for managing the securitization transactions. She explained that DFC was in a hurry to get cash and so it broke the cardinal rule of borrowing money more expensively than it loaned hat same money, thereby ensuring a loss.
David Price,
"Securitization would only be worthwhile if the cost of it would be lower than the cost you would incur in procuring it. If your funding costs were higher than what you were investing it in, then it wouldn't make much sense."
Jane Longsworth, MIS
"Well sometimes if you need cash, expensive money is better than no money at all. In the BMC project, we were already involved in some investments in the housing development project etc. and we needed money. By the time we were getting into the North American transaction, I could remember us really juggling, Creole would say, 'from Peter to pay Paul,' and we needed cash to balance things out."
Longsworth discussed the negative spread, the difference between how much DFC paid for the money and then how much les sit loaned it for. Longsworth's testimony continues on Thursday.
