Christopher O’Meara: The company is encouraged by the investments that it has been making and the opportunities overseas, and it is also encouraged by how quickly some of these opportunities are paying off. For example, the pretax margins which the company does not disclose region by region, all of them were over 30% in terms of the pretax margins. All three regions were over 30% and that is an encouraging sign, particularly for Asia where Lehman Brothers has been making significant investments and many of those investments are paying off quickly.

William Tanona (Goldman Sachs): Do you expect that the investment spend will continue for another couple of years, quarters, or when would you expect that to start slowing down?

Christopher O’Meara: The company does expect the investment spend to continue. Around the non-comp expenses the company has had a significant increase which it talked about last quarter as being a higher level of expenses on the margin, just because it was getting into new places and new businesses, which requires a higher level of non-personnel expenses to actually get into new space and new countries, et cetera. It would expect the rate of growth of the non-personnel expenses to diminish significantly as it moves forward.

As Lehman Brothers is making continued investments around the non-personnel side, the rate of growth will come down, but a big portion of that growth is business activity driven, and so that is a variable factor. The company has targeted a 49.3% comparison to revenue ratio, and is satisfied that it is living within that and still making significant investments in its people around the world, so it would expect that to be the case as it continues to make investments to live within that 49.3%.

Guy Moszkowski (Merrill Lynch): To what extent was the decline in fixed income that you saw versus first quarter due to meaningful marks that you might have made in residual positions in subprime or Alt A securitizations?

Christopher O’Meara: The company had a bigger movement in the first quarter, but it had effective hedges in the first quarter and in general that held true through the second quarter. While these positions are moving around and being marked on a day-to-day basis, the company does have hedging strategies that are in place and have proven to be effective.

Guy Moszkowski (Merrill Lynch): Most of the reduction in revenue in the quarter in mortgages was from some combination of reduction in new product flow or secondary trading and spreads. Is that correct?

Christopher O’Meara: The spreads piece is part of it and that was particularly acute in this period. Toward the end of the period Lehman Brothers saw that getting into better condition, particularly for the new originations of sub-prime assets. This is turning out to be a vintage challenge here where the 2006 vintage is one that is particularly challenged but the newer originations, which are being originated to a higher credit quality, are the subject of great investor demand at this point. Some amount of marks were taken in the period and this fee compression was particularly acute in this period and limited to the second quarter and that had to do with a number of factors that were taking place in the quarter.

Guy Moszkowski (Merrill Lynch): What decline did you see in mortgage origination versus the first quarter and versus the year-ago and could you break that up into sub-prime Alt-A on the one hand versus more agency stuff on the other?

Christopher O''Meara: Lehman Brothers originated in the period, $17 billion, and that is up from the $15 billion and change that it originated actually in both benchmark periods. For example in the first quarter, on sub-prime the company originated about just under $4 billion and had the same in the second quarter. Sub-prime origination volume was about the same. Alt-A is the bigger component of what it issues, or what it originates, so the combination of Alt-A and outside the U.S. was the remainder but with the lion’s share of it in Alt-A.

Guy Moszkowski (Merrill Lynch): How CNBS revenue trend shaped up versus the benchmark periods and what was going on in terms of originations versus spread?

Christopher O''Meara: In Lehman Brothers’ overall real estate business, it did have strong results. In the commercial mortgage-backed securitization business, it did about $5 billion of securitizations and is replenishing that with a significant amount of originations. The company does not have that number in front but that business remains active. The business was strong, the revenue generation was strong but the company also saw in the period some fee compression around securitizations that was limited to the second quarter as well.

Guy Moszkowski (Merrill Lynch): You had since the end of the quarter some significant turmoil in the rate environment. How is that affecting your business and how would you expect it to affect your business?

Christopher O''Meara: The company would expect that additional volatility. This recent flare has increased volatility and has had a significant change in risk-free rates. The company would like to see volatility be in place in the market because it leads to more activity by clients. Nothing fundamentally changed for that particular business the company will benefit from more volatility in interest rates.

Guy Moszkowski (Merrill Lynch): Your leverage ratio was higher both gross and net, although the net was not up too much. What changes in the business mix might be driving this and how much of it is driven by growth in prime brokerage services?

Christopher O''Meara: As the company continues to build out its businesses around the globe and adds all those people that are new when it gets into new markets, the net leverage ratio of 15.5 times is right in line with the 15.4 times it had at the end of the first quarter and it is a combination of everything. Looking across the businesses, they are all growing across all regions. It is not limited to a particular thing. The prime brokerage is a component of that but so are the various other businesses particularly outside the U.S.

Guy Moszkowski (Merrill Lynch): Your diluted shares were down about 2.5% versus the year-ago. Half of that reduction took place in the quarter that just ended. Is there any change in your capital management and share repurchase policy here?

Christopher O''Meara: No, there is no change. That reduction is driven by just the share price under the treasury stock method of accounting for diluted shares. The company would expect the diluted share count to go up going forward.

Glenn Schorr (UBS): You are at different earnings level in your equities business. Is that fair enough?

Christopher O''Meara: The company can not count on every quarter to be a record quarter. There are some things at play. The market was favorable in this period. There was some amount of seasonality, particularly in Europe prime services around financing, where there is a seasonal positive that is at play around dividend season when stocks become harder to borrow and the company gets paid more to facilitate that activity. In general that statement around the different earnings level in the equities business is right-on point.