Douglas Sipkin (Wachovia Securities): Could you shed color on headcount growth expectations for the remainder of the year going forward?

Christopher O''Meara: The company would expect headcount growth to continue to increase. It is up about 9% in terms of headcount growth through the half-year point versus the beginning of the year. The company still has the classes of undergrad and business school folks coming in the third quarter, so it would expect that the headcount growth will continue. It would expect another 3% to 6% actually over the back-half so one can think about Lehman Brothers as growing headcount in this year, full year of somewhere between 12% and 15%.

James Mitchell (Buckingham Research): Could you talk about the progress on the commodities build-out and how much of an impact will the acquisition of Eagle Energy provide?

Christopher O''Meara: The company is making progress. It does have capability now, particularly in natural gas and power and oil, in each of its three regions but it still is a relatively new business for Lehman Brothers, so it is a small contributor in terms of revenues but it is growing.
With adding Eagle adds, in addition to some seasoned operators who have good relationships, it adds client contacts and business know-how around intermediation in the physical space where these people are marketing service providers and the company is comfortable about adding them into the platform in terms of what it is going to be, the lift that it will be able to create for the rest of the business. Lehman Brothers couples that with an excellent investment banking business that it has.

James Mitchell (Buckingham Research): Do you expect that to turn meaningfully profitable at some point next year?

Christopher O''Meara: Lehman Brothers does expect it to turn meaningfully profitable. It does take time to build up capability in this business and so revenue generation is to come. It looks at it as a client-related business that is like any major client-related business, takes time to grow and develop. The company has capability and has some excellent operators. It is going to take more time but that is one of the builds for the future which will give the company lift into the coming years.

James Mitchell (Buckingham Research): Do you worry about the impact of potentially further negative impact on loss rates on the NBS business or delinquencies?

Christopher O''Meara: Lehman Brothers does worry about it because it is never good in a situation where people can not afford to stay in their homes. The company thinks that from a market perspective that that has been baked in. There has been a lot of thoughtful research pieces that have been put out in the market that have explained this situation and what is likely to happen. The market understands it well, different than how the market understood some other things leading up to it but at this point, the market understands the rate increases that are coming up from the 2-and-28s that were originated a couple of years ago that are going to be resetting here in the back-half of the of 2007 and into 2008.

Michael Hecht (Banc of America): Could you talk about the contribution from private equity gains this quarter?

Christopher O''Meara: The private equity was $87 million for the quarter. That is the same as last quarter. The company does put some amount of investment into its own private equity funds alongside of its clients and this is a return from that. It has been reasonably consistent over a four quarter rolling average.

Michael Hecht (Banc of America): Do you think the increase in risk appetite is helping to drive some of the higher revenues either across proprietary trading or principally oriented trades, and could you tie into that where your equity ended the quarter, relative to a quarter ago?

Christopher O''Meara: Lehman Brothers is in the risk business and as the evolving equity markets continue to change and the company plays in that in service and client flow, it serves as a principal and risk taker around client flow and its objective is to try to intermediate that and take out small spreads out of lots of transactions. It is a risk business and the increase in var is reflective of the growth of the firm, including getting into new markets outside the U.S.

Michael Hecht (Banc of America): Alt-A activity was flattish sequentially versus what has been decent declines in the industry. Could you talk about the drivers and trends you are seeing there?

Christopher O''Meara: The company has a leading Alt-A origination franchise, one of the top ones in the country. It had good performance on the origination side around the Alt-A business. It originated, a higher level than the company had in each of the two benchmark periods. Lehman Brothers will continue to invest in this business. It has been through cycles before and is looking forward to what the future holds around the business.