Key questions from the second quarter earnings call conducted by Merrill Lynch & Co., Inc. on July 17, 2008.

Roger Freeman (Lehman Brothers): You had $8 billion enterprise value on the FDS transaction; you are going to sell a majority stake. How much capital on an after-tax basis do you expect that to bring in?

John Thain: It is easier to do the Bloomberg one because that is done, so in the case of FDS $3.5 billion is the enterprise value, because it is a Letter of Intent there are a number of pieces of the transaction that are not finalized yet. We will sell a controlling stake, so we will sell more than 51%, but the exact percentage has not been totally determined yet. But no matter how much of the actual amount that we sell we do expect to be able to book the entire valuation on the company. I think for modeling purposes you can simply use the $3.5 billion number although that will not be the exact number, it will change around, but that is a good number just to use for now for your purposes and that is a pre-tax number too.

Roger Freeman (Lehman Brothers): Could we get the Tier 1 and total capital ratio?

John Thain: That is not useful because you should look at the pro forma numbers, but as of June 27 the Tier 1 number will be 7.5% and the total capital number will be 12%.

Roger Freeman (Lehman Brothers): How do you think about the capital going forward?

John Thain: Going back to the first of the year we would look at all of our options and decide what we thought made the most sense for the long-term interest of our shareholders. Right now we think we are in a good position, we are well capitalized with 9.5% Tier 1 and 15% total versus risk rated assets, and we also have been able to and will continue to shrink our risk rated assets. We will look at this both directions, how much capital do we need and how can we improve our risk rated asset ratios by reducing risky assets but right now we believe that we are in a comfortable spot in terms of our capital.

Roger Freeman (Lehman Brothers): How much of the assets you have been selling this quarter have you had to finance to move those assets off the balance sheet and which asset classes would that have been particularly relevant to?

John Thain: The simple answer is almost all of the sales were for cash and then I will give you what the exceptions were. On the leveraged loans we did two trades of approximately $3 billion where we did provide financing and that financing was a significant haircut so one of the trades it was a 50% haircut so we provided 50% leverage and the other trade it was mixed because it was different between bonds and bank loans but on the bonds we also provided 50% leverage and on the bank loans we provided 75% leverage. Those are the only two trades out of the leverage loan book that had any leverage to them. In the commercial sale, again it was almost all for cash, there was a small amount that was financed but also on totally commercial terms. Almost all the asset sales were for cash.

Roger Freeman (Lehman Brothers): Are you financing Bloomberg and FDS sales?

John Thain: We are financing the Bloomberg sale and we will, although we have determined the total amount yet, finance a significant part of the FDS sale.

Roger Freeman (Lehman Brothers): How important have they been the sales that you have done to establish market based pricing for the level threes, are they coming down a lot?

John Thain: Yes.

Roger Freeman (Lehman Brothers): Are you going to see flow backs from three to twos because of these sales during the quarter?

John Thain: Yes.

Prashant Bhatia (Citigroup): The gross long CDO exposure was down about $6 billion. Can you breakout what drove that decline and the same on the short side that was down about $4 billion?

John Thain: It is mostly markdowns. There are sales, but it is mostly markdowns.

Prashant Bhatia (Citigroup): On the short side, is it just the ineffectiveness basically on the $4 billion?

John Thain: Yes, the single biggest impact was the ineffectiveness of one of the hedges.

Prashant Bhatia (Citigroup): You had said on an if-converted basis, you are going to be on book value per share at about the same level as the first quarter. Is that correct?

Nelson Chai: That is correct.