James Mitchell (Buckingham Research): Would it be fair to think about adding that to the comparables this year to get more of a truer comparables expense for the year, in terms of what you told out to your employees?

Sam Molinaro: You can do that. We have been off industry standard with the way that we have awarded stock compensation. The terms of many of our stock award plans are such that the accounting for those was that we expensed them at the year grant, which is not the norm. The norm is to amortize it over the vesting periods.The changes that we are making block in, in terms of the service periods that are necessary to receive the award, which, we have done in order to provide additional retention, and that will have the effect of requiring those awards to be amortized in the future. It is fair to think about as the employees might look at it, from the employee standpoint, the value of the compensation awards this year by adding that back in.

James Mitchell (Buckingham Research): You have $250 million in cost saves from the severance annually. What the amortization period will be if it is a typical three year?

Sam Molinaro: If you assume a relatively level amount of stock awards over the next three years, the $700 million that we awarded this year- a third of our vesting period will amortize in the next year. Whatever next year''s award would be, that would not start amortizing until the following year. We will likely see some headroom in the compensation numbers, as a result of the period of time it takes to ramp up the deferrals, and we expect the $250 million reduction in operating costs that start to be up in the first quarter.

James Mitchell (Buckingham Research): What size the legal expense would be?

Sam Molinaro: I believe the increase in litigation and legal expenses was about $60 million.

Michael Hecht (Banc of America): What changes have you made to the bolster risk management practices to help ensure you are more protective from a loss like this going forward?

Sam Molinaro: There is a lot of discussion about risk management practices and whether these losses were unexpected. They are unexpected and they are not acceptable the level of losses. We understood the nature of our risks. We understood the nature of the mortgage positions that we held. Candidly, we made decisions in hindsight as it related to the hedging of these books that did not turn out well. We also made decisions as it relates to the ramping of the CDO business, the CDO warehouse loans in retrospect were poorly timed and had bad decisions - and the decisions were made to do them, and they did not turn out well. We were operating in unprecedented market conditions, the declines that we have seen as a result of the level of defaults that we are experiencing in the mortgage market have been significant and it has been difficult.

Michael Hecht (Banc of America): How do you think about run rate going forward, and is the $250 million reduction all-comparable, or is there some non-comparables?

Sam Molinaro: The bulk of that number is comparables. It is direct compensation and benefit cost and some amount of ancillary, communications, bonds, market data, etc. I think that you will with taking 1400 employees out of census; that is reasonable to assume that we will start to see declines in all of the infrastructure lines, occupancy, and communication. That is not included in that 250 number, and you will see some decline in those numbers going forward. Also included in this quarter were a $100 million severance charges, which are non-recurring, and we did have an uptake in legal and litigation related cost of about $60 million.

Michael Hecht (Banc of America): A lot of people that have reports in structured equity pricing so far have seen strength in those areas. Is the weakness that you saw just a lack of customer activity or bad positioning?

Sam Molinaro: The trading results were poor. We are not well positioned for the volatility that we encountered in those books and had weak trading results, as a result coming off of record third quarter performance. Customer volumes were not materially different. Just did not have a good trading quarter. The total amount of structured note gains from the third quarter to the fourth quarter was about $400 million in the third quarter and about $200 million in the fourth quarter. That is spread across equities and fixed income, both rates and credit.

Michael Hecht (Banc of America): You made reduction in the LBO Credits from $7.6 billion down to $600 million. How did you get there - close deals versus deals that get pulled?

Sam Molinaro: The biggest deal that did not happen was our involvement with the cable vision transaction that was $4.5 billion. That deal fell out of the pipeline, the balance of the change were transaction that were closed. Because our funded balances are down, we were able to distribute much of that.

Michael Hecht (Banc of America): Could you give more color on performance across rates MBS credit and how do you think about run rate going forward for that business?

Sam Molinaro: It was a weak quarter for us across the board of fixed income, and I am not indicative of run rate levels by any stretch. In addition to the large mortgage loss as we took which effectively swamp anything else that we were doing in mortgages. The credit markets were difficult. The distressed business was good, but structured credit and flow trading areas were difficult, with volatile market conditions and generally wider credit spreads, so results there were negative; they were also relatively weak in the rates business, particularly position taking in the interest rate derivatives areas and foreign exchange in the options book lot of volatility, and that we had weak trading results there. Customer flows is good, strong, but trading results were week across the board in fixed income.

Michael Hecht (Banc of America): Investment banking revenues were $150 million for M&A; $113 million underwriting; flat or zero in merchant banking - that was like towards $263 million versus the $205 million. Is there something there?

Sam Molinaro: We have a process where we allocate because of this leverage finance business and some of the other businesses dominant fixed income where those revenues largely reside we do an allocation of revenues and costs back and forth between the businesses. Normally those are revenues, in the fourth quarter there were losses from the write-downs of loan facilities either leverage finance or mortgage products so we try to strip those out and talking about how the business flows look in the fourth quarter and those numbers that we gave for investment banking underwriting revenues are a truer a picture of the volume of activity. Equity underwriting revenues were good, fixed income was soft because high yield was down.

Michael Hecht (Banc of America): It does appear not just for you but the entire industry that the ability to hedge and use derivatives to offset risks has become a lot more challenging. How do you think about potential structural change about your ability to compete in certain businesses?

Sam Molinaro: There is nothing new here. Derivatives have been a fact of life for a long time and we had a successful derivatives franchise that has grown dramatically over the last five years. We have now crossed the board, rates, equity and credit of all enjoyed strong performance. We had a difficult operating environment this quarter. When you are running trading positions and customer facilitation books, it does not always go your way and we had a difficult quarter. I do not think the results that you saw for the quarter across those businesses are any indications of inability to compete. What is happening in the mortgage market, I also do not think has any reflection on that. A handful of firms have done it reasonably well, most have not. We have been wrong in the way that we position the books through the course of the year. I do not think that that is a risk management failure; we made judgments that proved to be inaccurate.