Colm Kelleher: We sold enough amounts to allow us to price our portfolio.

Mike Mayo (Deutsche Bank): The new $5 billion of capital would have a modest impact on book value until August 2010. Is that correct?

John Mack: That is right.

Mike Mayo (Deutsche Bank): Will there be impact on fully diluted shares until then?

John Mack: No, it starts accreting in depending on the threshold price. When we actually get the reference price, we will give further details.

Mike Mayo (Deutsche Bank): What count do you give for risk taking at the organization?

John Mack: This was a caveat that we are in a risk business and we will be taking risk. If you look at currencies, the interest rates, if you look what we did in the equity trading businesses, they were exceptional results. This is one desk who in my view took risk that they made a misjudgment on. In the short run, this firm is going to be much more cautious in some of these larger bets. From that perspective we are going to dial it back. For putting risk capital into our trading positions and also into some of our proprietary positions, we will continue to do that. Anytime you have a situation like this and as we have changed reporting our risk monitoring we have Mitch Patrick running the trading areas with more monitors working for him and do we get that set up the way we want? I think we have been sprinting and we are going to be jogging right now for a while, but we will still be in the market taking risk.

Meredith Whitney (CIBC World Markets): Are there any similarities in terms of trading strategies and how are you going to manage risk and look this commodities trading into 2008?

Colm Kelleher: Our commodities issue is a simply one. It was poor trade. We were badly positioned in electricity, natural gas and oils. We have taken steps of moving people around to reenergize that DNA. I do not think there is any issue there of risk management or anything wrong otherwise. We think it is a business that will contribute significantly to our projections going forward.

Meredith Whitney (CIBC World Markets): Compensation expense for your employees in the fourth quarter was a nice number. are you, therefore, optimistic towards 2008?

Colm Kelleher: We have to represent and repay the enterprise value of the firm. The bottom line is, if you had have backed these losses to our businesses this would have been a great year for Morgan Stanley. These losses came from a small desk, proprietary trading desk. We did not feel it was appropriate to punish the rest of the firm for that, but we also think we will have challenging times ahead of us. There are going to be opportunities, where we with our franchise can take real advantage and make money and we want to make sure we have the best people in place for that.

William Tanona (Goldman Sachs): Why your VaR did not increase in the quarter dramatically?

John Mack: VaR is a good representation of liquid trading risk but I can not answer that at the moment.

William Tanona (Goldman Sachs): There were some ratings actions out of S&P this morning on the financials guarantors. The most significant one is being ACA moving to C from A or CCC from an A. What your exposure is to some of these model lines and?

John Mack: Everybody has exposures to these model lines of the business, but we think that all model lines exposure is relatively modest. What we own in the Utah Bank, which is $1.54 billion. We have $1.34 billion of municipal model line bonds and we have approximately $130 million of others positions away from that. In terms of counterparty exposure, we have a net exposure of $761 million.

Steven Warden (JP Morgan): Do you get regulatory capital treatment for the mandatory convert?

John Mack: Yes. We do. Rating agency has different treatments for different pockets, but broadly this is a regulatory piece treated as tier-one and rating agencies give us to a large extent full credit for the whole thing, some savings depending on which rating agencies. This is definitely seen as a capital.

Douglas Sipkin (Wachovia): How do you think about the mortgage asset class going forward?

John Mack: We are not going to pullback on the mortgage business. There is a slowdown if you look at Saxon and they are servicing about 65% of what they did was servicing. We are committed to it though on the origination side that business is going to get smaller. We are still going to be active in it and we are looking at some of the things that we have done internationally and making a decision there or we are going to take a different profile and that is what we are discussing now.