August 25, 2011 The Honorable Richard Brown Secretary of Finance Patrick Henry Building 1111 E. Broad St.

, 3rd Floor Richmond, VA 23219 [Via E-mail] Dear Secretary Brown: In light of some recent cases involving Mortgage Backed Securities (MBS) I would like to get answers to the questions below: 1. How much in MBS does VRS hold at present? 2. How much in MBS's has VRS purchased in the last year? 3. What was the dollar valuation when these were first purchased? 4. How much has the dollar valuation varied since 2007? i.e. how much has VRS lost on the drop on MBSs? 5. How much was lost by VRS in 2008 when the Wall Street Rating firms drastically re-evaluated the AAA rating of the MBSs held by VRS on a single day? 6. Does the VRS ask the rating agencies for their methodology in evaluating MBSs? 7. What exposure does Virginia, the Virginia Retirement System and local governments in VA have to Real Estate Backed Securities (RMBS) and RMBS derivative investments? 8. Has the McDonnell Administration asked the local governments and authorities what the potential impact could be to their ability to recover losses from these types of investments were VA to sign off on a waiver of civil or possibly criminal liability for all mortgage related issues as may be considered in the nationwide Attorneys General MBS global settlement process? 9. I realize that one level of government may not tax another level of government, but if the special Real Estate Mortgage Tax Investment Credit tax status (REMIC) of the RMBS trusts have been violated through break in chain of title or lack of collateral behind the RMBS, what is the potential federal tax liability or other

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funds transfers of the local and state government entities including Industrial Revenue or other state or local created authorities including VRS holding these investments? 10. Were the REMIC tax status of the RMBS trusts to have been violated, what is the potential tax revenue due the state? 11. Based on filings and pleadings in various national cases brought by investors in Real Estate Mortgage Backed Securities (RMBS) against banks and trustees (most often banks) that in most cases the collateral was never secured by the trustees even though the trustee certified annually that the assets were secured. (See AIG v. BANK of America for 15 Billion dollars http://www.nytimes.com/2011/08/08/business/aig-to-sue-bank-of-america-overmortgage-bonds.html?_r=1&pagewanted=all; Knights of Columbus v Bank of NY Mellon http://online.wsj.com/article/BT-CO-20110527-709621.html; and AHMSI v. Lender Processing Services (LPS) http://www.housingwire.com/2011/08/23/ahmsi-sues-lps-and-docx-over-robosigningscandal?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A +housingwire%2FuOVI+%28HousingWire%29) Regarding the AHMSI case, it appears from the court filing that AHMSI is admitting that the notes were NOT transferred to the trusts. This supports what a Bank of America attorney testified to last year in a similar case where it was acknowledged that it was the standard practice of the bank NOT to transfer the collateral notes to the trusts. Therefore, what steps has the Commonwealth, VRS or other appropriate state agencies taken to secure any investments related to RMBS or REMICs? Thank you for your time and assistance. If you have any questions please contact me at 703-853-4213. Sincerely,

Delegate Bob Marshall RGM/ccg cc: Attorney General Ken Cuccinelli