David Viniar: Those marks are done with the same level of diligence and vigilance as everything else is marked and as things moved it was marked down. What I mentioned in my script was that the net losses on commercial were not material and that is because we had offsetting gain on hedges. When you hedge commercial real estate loans which are largely single-name loans with induscies which is the best way to hedge it, you are introducing basis risk which we did. We had basis risk but over the course of the quarter, the inducies and the single-names kind of moved in tandem and so they largely offset. We had some losses but they were small. It is something that we watch carefully and we will always get it right but on that basis we did in the course of the first quarter.

Guy Moszkowski (Merrill Lynch): Lehman mentioned in terms of Alt-A hedging, sort of a natural hedge from servicing. You have added servicing capabilities during the quarter. Do you see that as a way of hedging your exposures?

David Viniar: First of all we have just gotten that servicing platform so we are looking at it. The Alt-A is the hardest section to hedge.

Guy Moszkowski (Merrill Lynch): Are you seeing growth in the prime brokerage and clearance business that you can tie directly to what happened to Bear, to what extent are you able to accommodate incremental financing needs that are going to come to you at this point from clients who are sort of displaced?

David Viniar: Our prime brokerage business has grown and continues to grow and that is not necessarily related to what is happening with our competitors. That is more because our business is good and our clients like the service we give them. We get balances both from new hedge funds and from current hedge funds all the time. Those balances have grown and continue to grow. As they grow, we think that is good for us and yes, we can handle what our clients need. We are careful on the financing terms. We have the appropriate margin in place and over the course of the years our losses there have been extremely small.

Guy Moszkowski (Merrill Lynch): Are you seeing any significant securities inventory growth due to seizure of prime brokerage collateral or how quickly are you finding that you are able to liquidate collateral when you seize it?

David Viniar: I would say it has been minimal. It is not that often that we have to seize assets and when we do we are generally able to liquidate them quickly.

Roger Freeman (Lehman Brothers): How significant of a benefit is the PDCF facility and specifically do you look at this more as a funding facility to help you in terms of your repo financing or in terms of helping finance, liquefy?

David Viniar: I would answer those two things as yes and yes. The purpose of doing it was to help the market get more liquid. We think it should have that benefit. One of the benefits to us is diversification of financing. It gives us another source of financing for assets. We were okay without out. We were fine without it but with it is just that much better and it is another source both for our own assets and if a client wants us to help fund them, it gives us another source of financing to turn around to. One of the things that had been going on in the market was that part of the lack of liquidity we think, and I think the Fed and the Treasury thought was because of a lack of funding that was available and this makes funding available to broker dealers like us to (a) buy assets and (b) fund others who want to buy assets.

Roger Freeman (Lehman Brothers): This facility helps in terms of short term funding. What is you sense in terms of longer term balance sheet risk, do you think that the Fed ultimately is going to have to essentially buy up the liquid assets off a broker and balance sheet?

David Viniar: I know that they are very hesitant to do that. It is going to depend on how the well unfolds.

Roger Freeman (Lehman Brothers): What else do you think facilitates or what is a catalyst for the transfer of some of these risky assets?

David Viniar: We made $4 billion of new commitments in the loan markets so that is a commitment of capital. We make markets in everything. The mortgage industry, we have been buying and selling, if we see opportunities. I would tell you we have not seen that many opportunities yet and we are going to wait for the ones that we think are the most appropriate and then we will try and take advantage of them.

Roger Freeman (Lehman Brothers): Is there a target leverage ratio that you are shooting for and does that limits your ability to buy where you see opportunity?

David Viniar: We are always looking at risk and rewards. You have heard me say in the past that we think that looking at a gross leverage level does not tell you much. It depends on liquidity of the assets. It does not tell you anything about the risk. It does not tell you about what is hedged on the other side. It does not tell you about derivative exposure. We think that is a minimal benefit. One of the things that we look carefully at is our capital ratios. Those are tied much to risk and liquidity. We make sure that those are always strong and in deciding in what we are going to purchase, we look at what our capital ratios are. We look at our liquidity and we make our decisions based on that.

Roger Freeman (Lehman Brothers): Are you looking to strengthen the balance sheet going forward here?

David Viniar: It depends on what the world unfolds to date. I think given where we are right now, our capital is adequate. Our liquidity is adequate. If there were things that we thought were not earning appropriate return we would sell them. If there were things that we thought that we could make a lot of money from, we would buy them. We have no need as we sit here right now to shrink our business.

Prashant Bhatia (Citigroup): The fixed income revenue pulling out the write-downs is strong. Can you talk about some of the drivers there and how much was driven by higher activity versus the bid ask spreads being wider?

David Viniar: The activity levels across our macro businesses and some of the core franchised businesses of the firm were strong. We mentioned that we had records in our interest rate products business, in our currency business. We had near record results in our commodities business. Those businesses performed extremely well. That was part of what drove the success.

Prashant Bhatia (Citigroup): Is the Fed’s facility something that you would like to see or could envision end up being something more permanent, considering some positive and negative consequences of that?