Key questions from the fourth quarter earnings call conducted by JPMorgan Chase & Co. on January 16, 2007.

Glenn Schorr (UBS): There is 35% year-on-year increase in trading assets and you still have the same $21 billion equity allocated to the IB. Does that need to change or is that just inter-department accounting?

Michael J. Cavanagh: I would not get too caught up on. The leverage has increased. We look at that like a rating agency would and you have seen leverage of investment banks ticking up, so we take that into stock. As we look ahead, we will be looking at capital in a Basel II world against all our businesses. You know the scene, which is that hold the amount of capital in each business related to what each of them would need if they stood alone and needed to get a single A rating. That is still the framework that we think about, but as the environment evolves, that could lead to some changes. We did consider that in leaving the number flat this past quarter, these past few quarters.

Glenn Schorr (UBS): How do you think about timing given the outlook that you just described in terms of you too partaking in troubled but still good franchises?

James Dimon: In terms of either buying assets or buying companies, we are open minded and if we think we can do the right kind of due diligence and understand the values and that we are giving the value that we are getting, we would be happy to do it. This environment does not change that at all. It just may make it more likely.

Michael J. Cavanagh: The first priority is to use our capital and balance sheet to build our existing businesses, meeting client needs across the board.

Glenn Schorr (UBS): There is a potential for $5 billion going from held-for-sale to held-for-maturity. What type of assets are those and what would be the theoretical accounting?

James Dimon: Those are the assets that are in syndicated leverage finance of the $26 billion and at these price levels, we think some of them may be terrific long-term assets to hold. Since we have the capital, we would look at the ones we think are good long-term investments, recession proof. The accounting is simply that you move it over and fully disclose and all that, you move it to held for maturity. Over time you have to build up proper loan loss reserves against those. We would fully disclose that so that there is no issue about what that did to the company.

Mike Mayo (Deutsche Bank): You are guiding credit card losses to be 50 to 100 basis points higher than you were before, but without a recession. What do you think the root cause is for these consumer losses getting worse at an accelerating rate?

James Dimon: Credit card was always abnormally low, so part of what you are seeing is the catch-up to getting back to a more normal. The second effect is that in California, Arizona, Miami, Michigan, Ohio, we are seeing that credit card delinquency loss is simply going up. Where we have real visibility, we know it is going to hit 4.5% or thereabout in the first and second quarter, with less certainty about the second quarter. Home prices are worse than people think. Therefore, if you roll that through, while there is nothing in the current data that shows it, more likely than not it will be 5% by the end of the year and that is barring a real recession. In the credit card, in the consumer business, on top of all this other stuff we talk about which has normally driven credit losses, real cyclical credit losses is unemployment. That will still be a factor if you see unemployment going up on top of this other stuff.

Mike Mayo (Deutsche Bank): Sub-prime mortgage should be about $75 million a quarter in losses. You were already at $71 million in the fourth quarter, so is that part stabilizing or is that unique?

Michael J. Cavanagh: Yes, the additional reserves contemplate real increase of $40 million a quarter. The reserve is for losses higher than what we are currently running at.

Mike Mayo (Deutsche Bank): Is there a preference to troubled situations or healthy firms, U.S., non-U.S. in terms of acquisitions?

James Dimon: I have no preference.

Guy Moszkowski (Merrill Lynch): You had given us some expectations of $250 million to $270 million a quarter of write-offs in home equity and this quarter you came in at 248 in line with the guidance. If you translate your 155 to 160 loss rate ahead into something else, that could speak to e an extra $100 million or so a quarter of losses, which presumably you would then see reflected directly in the P&L. Is that fair?

Michael J. Cavanagh: We do see in the first quarter losses ticking up from the level they are at to something like 140, 150, from what a 105 charge-off rate in the quarter. We do see a tick-up from the level we are running at. The reserves would be sufficient if we stabilize ultimately at a charge-off rate in the 155 to 160, so that is the way to think about the guidance there.

Guy Moszkowski (Merrill Lynch): If you do not stabilize at that level, do you anticipate provisions to be higher ahead but otherwise the provision would still show up in the 250 to 270 a quarter range?

Michael J. Cavanagh: The provision will equal charge-offs in the near-term, but that is the way to think about whether we would need to have future reserves, if we saw the stabilized rate going through those 155 to 160 numbers.

Guy Moszkowski (Merrill Lynch): You had spoken about loss rates, delinquency and loss rates spiking specifically in home equity from the third party originated area. Can you give an update on how that is performing relative to your self-originated portfolio?

James Dimon: If you separate home equity into good bank, bad bank, and broker, it is less than 20% but a lot of the losses are coming from that 20%, which is high LTV broker originated business - stated income, high LTV, broker originated business. The high LTV business is also bad in our own if you look at sell by sell. It is two or three times worse in any broker sell.

Guy Moszkowski (Merrill Lynch): There is rising concern about the credit default swap market and that is a product that in many ways you originated. What have you done in recent months to make sure that your counterparty risks there are well controlled and what you want them to be?