David Viniar: We compensate our people individually. We don’t start with a ratio and give it out. We look at each person. We reward people for their performance, for the firm’s performance, for their business unit’s performance. We also look at the market environments or look at all those things. We also did have 15% head count growth over the course of the year and when we took all those things into consideration, we felt that that was fair compensation for our employees and fair income for our shareholders.

Glen Schorr (UBS): Was there any major movements between Level 2 and 3?

David Viniar: There are always lots of movements. The net number will be fairly similar. At the end of the second quarter, it was roughly 6% of our assets. At the end of the third quarter, it was roughly 7%. At the end of the fourth quarter, it’s back to about 6%. We think that there’s much more focus on it than there should be. There are things like Level 3 assets at the end of the third quarter included a lot of leverage loans. Some of those were sold. Some of those moved into Level 2 because there’s a much more active market in leverage loans. On the flip side, Principal Investments, by definition, are Level 3 assets and we made more principal investments in the fourth quarter. Hence, it goes up for that. It was roughly flat, a little bit down on a percentage basis.

Meredith Whitney (CIBC World Markets): On FICC, since 2000, you did have single digit growth year and then you had negative growth on the equity lines and the obvious negative growth years in 2001 and 2002. Under what circumstances could you fathom a not just not double-digit growth but a negative growth scenario in FICC?

David Viniar: Environment like the month of November that lasts for the entire year of 2008. Clearly we would not see growth in FICC revenues if that happened because basically what happened because of the lack of liquidity, because of the volatility, clients sat on the sidelines. There was not a lot of activity and for us, that’s what drives our revenues and in all of our businesses but in FICC as well. It’s not the direction of interest rates or the direction of commodity prices or the directions of currencies, it’s activity levels. In the month of November, there was a big lack of liquidity in the markets and very little activity so that would certainly not be a good environment for FICC. We would not have double-digit growth. I doubt we would have any growth if that happened.

Meredith Whitney (CIBC World Markets): Could you comment on how you manage counter party risk in your various businesses?

David Viniar: Counter party risk, credit risk, market risk are all part of our risk management. We don’t separate them. We have a large group of people who look at our credit risk around the world and therefore counter party risk and we have like in market risk and in credit risk, we have risk limits. We have risk limits by counter party, by industry, by geography, so it’s cut in many different ways and what we tend to put in place to enable us to continue to do business with counter parties if we get near or at their limits is we put mitigates in place like collateral. We will have collateral-based triggers of credit exposure to firms or we will hedge certain things with CDS depending on what’s happening but we look at our counter party exposure as closely as we look at any other risk and we set a whole series of limits and that’s how we operate.

Roger Freeman (Lehman Brothers): Last quarter you thought that we were closer to the bottom in valuation. What do you think about the market right now and specifically when do you think there’s going to be a bid for some of the higher quality tranches in CDOs? Do you expect to actually be a liquidity provider in that area?

David Viniar: We are still closer to the bottom and I don’t think there’s a problem with the bid. There’s a bid, I don’t think there are many offers. Hence, it’s a question of people being willing to sell what they have, not the fact that there aren’t buyers. There are buyers there and for the right assets at the right price, yes, we would be a buyer.

Roger Freeman (Lehman Brothers): Could you comment on the commercial mortgage market? Also, can you talk about your hedging? Do you have sufficient credit hedges?

David Viniar: It’s not a bigger business for us than the residential business. We are a big player in it. We provide financing for people and we trade CMBS and it’s a risk that we manage like all of our other risks. It’s not different than anything else. We look on a day-to-day basis at our exposure. We look at if we have commitments. How do we hedge them? We look at times to go long and times to go short. It’s not necessarily a bigger business than the residential business. It’s part of our mortgage business which is an important business but certainly not outsized in the context of our FICC business.

Roger Freeman (Lehman Brothers): Can you expand a little bit more on the level of client engagement, specifically talk about December versus November so far and maybe by product? Where did you seethe weakest client engagement and where was it still relatively strong last month?

David Viniar: December is two weeks old so it’s very hard to say how things are going to unfold and our expectation is for the rest of December, which there is not going to be that much going on because we’re getting towards the holidays and a lot of people go away, and hopefully it will pick up in January. The weakest thing environmentally in the fourth quarter was the credit markets in November. They were very volatile. There was a lack of liquidity, there were very difficult markets and it’s too early to tell in December.

Mike Mayo (Deutsche Bank): How much in total write downs did you take in the quarter? Do you have write downs on mortgages or CDOs elsewhere?

David Viniar: It’s not a number we disclose. Our mortgage business was profitable over the year. We took some write downs on our long mortgage inventory and in cases where we had hedges or other short positions. In the context of some numbers you’ve seen, both sides were relatively modest.

Mike Mayo (Deutsche Bank): You had $42 billion leveraged loans at the end of the third quarter. Where is that now and how did it get there?

David Viniar: We had $42 billion of unfunded commitments at the end of the third quarter. In the fourth quarter, we sold or canceled $16 billion. $9 billion was funded. We made $10 billion of new commitments and that leaves us with $27 billion of unfunded commitments at the end of the fourth quarter.

Mike Mayo (Deutsche Bank): Can you talk about your non-US growth in the fourth quarter versus your US growth and what you’re seeing by geography? How much is the rest of the world getting dragged down by the credit situation in the US?

David Viniar: Towards the end of the fourth quarter, you saw some of the non-US markets were affected as much as the US markets. Markets in Asia were down quite a bit over the course of November. You did certainly see that affecting the markets overseas as much as they affected the US. When we look out though, the trajectory remains the same, and that we expect our business to grow faster outside the US, especially in Asia, especially in some of the brick countries and you have Korea and the Middle East for that, than we do in the US. We expect the US will grow as well. There is no change in the trajectory at all.

Jeff Harte (Sandler O''Neill): Looking at 2008, can you talk about your budgeting process?