Steve Lackey Robert Kelly – CEO Todd Gibbons – CFO Gerald Hassell – President Karen Peetz – CEO – Issuer, Treasury & Broker-Dealer Services James Palermo – Vice Chairman

Michael Mayo – Deutsche Bank Nancy Bush – NAB Research Glen Schorr – UBS Thomas McCrohan – Janney Montgomery Scott Kenneth Usdin – Banc of America Securities Betsy Graseck – Morgan Stanley

Good afternoon and welcome to the fourth quarter 2008 earnings conference call hosted by The Bank of New York Mellon Corporation. (Operator Instructions) I will now turn the call over to Steve Lackey.

Good afternoon everyone and thanks for joining us on relatively short notice to review the fourth quarter financial results for The Bank of New York Mellon Corporation. Before we begin, let me remind you that our remarks may include statements about future expectations, plans, and prospects which are forward-looking statements. The actual results may differ materially from those indicated or implied by the forward-looking statements as a result of various important factors including those identified in our 2007 10-K, our most recent 10-Q and other documents filed with the SEC that are available on our website at www.bnymellon.com. Forward-looking statements in this call speak only as of today, January 20, 2009. We will not update the forward-looking statements to reflect facts, assumptions, circumstances, or events which have changed after they were made. This afternoon’s press release focuses on the results for The Bank of New York Mellon. We have also included a supplemental document, the quarterly earnings review, available on our home page which provides a five-quarter view of the total company on our six business sectors. We will use this document as a discussion, as Todd reviews the results with you shortly. This afternoon’s call will include comments from Robert Kelly, Chief Executive Officer and Todd Gibbons, Chief Financial Officer. In addition, there are several members of our executive management team to address your questions about the performance of our businesses during the quarter. Now, I would like to turn the call over to Robert Kelly, CEO of The Bank of New York Mellon.

Thanks Steve and good afternoon everyone and thank you all for joining us on such short notice. Frankly its pretty good to see 2008 in the rear view mirror now. We generate a profit every quarter including in the fourth quarter. We had record levels of revenue in our institutional servicing businesses in Q4. We had outstanding results in foreign exchange and net interest income. We enjoyed a flight to quality in deposits, wide spreads in net interest income and we enjoyed volatility in the foreign exchange markets which really helped those revenues. We continued with strong deposit levels from our securities servicing clients. In fact we gained market share in virtually every business this year. In asset management we’re continuing to gain share in Europe and in money market funds. In wealth management we had record net inflows. We added almost $2 billion in new client assets. In asset servicing we had great new wins including an outsourcing mandate for an asset manager. In broker dealer services we continue to gain share. Now we have well over 50% share of the US government clearing market. In corporate trust and asset servicing we of course won the TARP administration and also the mandate to act as the infrastructure agent for most of the programs in the United States and on a related note, we have won similar mandates abroad. We’re also continuing to win new business in clearing and in treasury services. When you get past the revenue line we’re successful in controlling expenses. You’ll note that they are actually down 7% year-over-year and down 2% sequentially and Todd will take you through that. You’ll note we had significant positive operating leverage in the fourth quarter. The issues with the economy were reflected in our bottom line as we posted only a modest profit after taxes for essentially three reasons. We recorded a securities write-down due to weak markets and an extraordinarily illiquidity discounts in the mortgage-backed securities market. On a loan equivalent basis our expected loss is much smaller and Todd will speak to that as well. Over time we would hope to earn back a substantial portion of these losses. Secondly we took a restructuring charge related to our workforce reduction that we talked about a month ago. And we also took some expenses relating to our existing capital support agreements and in our view that is almost all behind us now. Overall full year revenue growth was 9% versus 2007 which is something we’re pretty proud of. We outperformed on the merger and integration goals. We had top ranked client service globally and I don’t know if you saw it, but we were just named last week the number one global custodian and number one custodian in Asia, in the most recent client survey. If you think about life now from a client retention standpoint, our client retention in the 18 months that our companies have been merged in the custody business has been over 98% and I think we’re going to officially declare a victory now from a client perspective. Clearly we have demonstrated that we do not lose clients as a result of the merger and Jim and Tim and all the people in the custody business and in our other businesses have done just a terrific job of ensuring that we not only deliver great client service, we actually continued to improve it throughout the merger. So our business model is working. We remain incredibly liquid. Our capital ratios are better then most and Todd will go through a new schedule for you which is in your deck where we actually stress test Tier 1 capital and TCE by showing you various levels of what if analysis on OTTI and OCI which I hope you find useful. And finally we’re feeling strategically well positioned and I think we’re going to weather this challenging year ahead as we did in 2008. So at this point before we get into questions, I’d like Todd to take you through a lot more detail of what the quarter actually looked like.

Thanks Robert, before I take you through the highlights of the quarter, note that for comparative purposes I will exclude the impact of security losses from fee revenue but our operating EPS does include the impact of those losses and I’ll exclude the support agreements and restructuring charges from non-interest expense. If you look at our results our bottom line does not reflect the strength of the underlying performance. In a recessionary environment we had a record operating performance from virtually all of our institutional services businesses. The drivers of operating performance were strong client deposit flows. We saw an increased market share, continued market volatility, and very well controlled operating expenses. Client deposits, particularly those of the non-interest bearing type were very strong throughout the quarter. Custody, broker dealers, services, corporate trust, and treasury services all generated record client deposits which resulted in a record quarterly level of net interest revenue. Volatility was also a key driver for us. We gauge volatility based on a basket of the 30 major currencies and during the quarter exchange rates were extremely volatile and combined with increased market share we enjoyed a record quarter for our foreign exchange business. We really held the line on expenses also which helped us again achieve high levels of positive operating leverage and all of our regulatory capital ratios strengthened considerably. We closed the quarter with a Tier 1 capital ratio of 13.1%. Our tangible common equity ratio was stable at 3.8%, a reflection of our strong capital generation from our diversified business mix and a smaller balance sheet. Now let’s get into the numbers, my comments will follow the quarterly earnings review report beginning on page three. Our continuing EPS was $0.05. If you round the numbers it was reduced by a total of $0.88 including $0.65 per share or $752 million from securities write-downs reflecting significant market illiquidity and these securities have an expected incurred loss for us of only about $0.10 or $208 million. There were $0.22 per share from the following; a restructuring expense relating to the 4% workforce reduction which we previously announced, and which that comes to $0.09, and $0.08 associated with the existing support agreements, and there was $0.05 of M&I costs. In an environment that challenged most of our core businesses, our total company revenue increased by 3% year-over-year and 6% sequentially. For the full year revenue on an operating basis increased 9%. Factoring out the expense items I mentioned we reduced expenses by 7% year-over-year and 2% sequentially. This strong expense control resulted in 1,000 basis points of positive operating leverage year-over-year and 800 basis points sequentially. Turning to page five of the earnings review you can see that both assets under custody and assets under management held up relatively well given the impact of sharply lower market values and the stronger US dollar, both continue to benefit from new business. Turning to page six of the earnings review which details fee growth, security-servicing fees were down 7% year-over-year but if you adjust for the sale of the B and G-Trade businesses in the first quarter fees were down 3%. Sequentially they were down 5%. Let’s look at the component of security servicing, asset servicing fees were down 4% year-over-year and 3% sequentially due primarily to lower market levels and the strength of the US dollar which offset the impact of net new business, higher securities lending revenue and the impact of the December, 2007 acquisition of the remaining 50% of the joint venture with ABN AMRO. Over the past 12 months we have generated $1.9 trillion of new business including $690 billion in the fourth quarter. In December the global custodian survey named BK as the top global custodian for the second year in a row, quite an achievement and valued recognition of the success of our merger. Securities lending fees were up $20 million year-over-year and $32 million sequentially. Both increases reflect favorable spreads in the short-term credit markets, offset by decreases in volumes which was driven by lower market valuations and the overall deleveraging in the financial markets. Issuer services fees were down 11% year-over-year resulting from lower depositary receipt fees which was due primarily to the timing of corporate action related fees and lower corporate trust fee revenue as a result of lower levels of fixed income issuances globally. During the fourth quarter we were awarded the mandate from the US Treasury to serve as the administrator/custodian/back office for the TARP program. This win is a reflection of our unique strength and the capabilities as the largest custodian and trustee in the world. We continue to see similar opportunities both domestically and internationally. Clearing fees decreased 8% over the prior year but here if you were to adjust for the sale of the B-Trade and G-Trade execution businesses, fees increased 11% principally due to growth in trading activity, continued growth in mutual funds, and our success in gaining market share from the disruptions in the market. Asset and wealth management fees were off 26% but that’s compared to a 38% decline in the US equity market and a 45% decline in the global market, as we continue to benefit from additional net money market inflows. Wealth management continued to see record new sales in the fourth quarter benefiting from strong investor performance at a time when several of our competitors are losing market share. We are pleased with the performance fees of $44 million. This was driven by two of our international [boutiques]. It is down from $62 million in the year ago period but up from $3 million in the third quarter. The decline from the year ago period was primarily due to a lower level of fee generated from certain equity and alternative strategy. FX and other trading revenue jumped 67% over the year and 32% sequentially where we capitalized on strong client flows and market volatility. And investment income was off $25 million compared to the fourth quarter of 2007 but increased $10 million sequentially. Turning to NIR which is detailed on page seven of the earnings review, net interest revenue increased 42% year-over-year and 31% sequentially. Both increases reflect a higher level of interest earning assets and wider spreads. Average client deposits increased significantly led by non-interest bearing deposits increasing 84% year-over-year and 56% quarter over quarter, as I noted earlier with our institutional servicing clients continuing to place significant deposits with us. Our net interest margin was 2.34%, that was an increase of 18 basis points year-over-year and seven basis points sequentially if you exclude SILO/LILO charges in the third quarter. The gain was largely attributable to the increase in free deposits. Turning to page eight you can see we managed to reduce operating expenses. Excluding the items mentioned earlier non-interest expenses were down 7% year-over-year and 2% sequentially. The 7% year-over-year decrease was driven by a 15% decline in total staff expenses which reflects the ongoing benefit of merger related expense synergies and lower incentives. Partially offsetting these declines were the impact of the fourth quarter of 2007 acquisition of the remaining 50% of the custody JV with ABN AMRO, higher professional, legal, and purchase service fees, and a $7 million additional FDIC expense related to our participation in the FDIC temporary liquidity guarantee program. Our participation is expected to result in $50 million of additional expense in 2009. As I noted up front we took a $181 million restructuring charge related to our global workforce reduction program. The goals of this program are to reduce expense growth beyond the benefits of our merger synergies and further improve the efficiency of our organization. We expect to reduce our workforce by 4% or 1,800 positions in 2009 which will create an annualized savings of $160 million to $170 million. We also expect to record an additional pre-tax charge of $20 million to $25 million for restructuring in the first half of 2009. Page nine of the earnings review shows the investment securities in our portfolio. We have again given you details of the asset categories, ratings, and fair values for each of these investment categories as well as the other then temporary impairment write-downs that we incurred during the quarter. At the time of purchase virtually all of the securities were rated AAA. Over the past year we have seen a continued migration in the ratings and market value of fixed income securities particularly the mortgage-backed ones. As of December 31 the ratings continued to be strong with 87% rated either AAA or AA and I should note that we continue to have the ability and the intent to hold these securities until their prices recover or until maturity. I would remind you that changes to OCI or other comprehensive income, impact our tangible common equity ratio only while other then temporary impairment impacts our Tier 1 ratio. We have included for you a new watch list designation to approximately 35% of the portfolio. These securities are under more credit stress and are generating the majority of the negative marks and impairments. The unrealized net of tax loss of our total securities for sale portfolio was $4.1 billion at December 31, and that is an increase of approximately $1.3 billion compared to the prior quarter. This primarily reflects the underlying performance and wider credit spreads. Obviously the housing market indicators and the broader economy have deteriorated since the end of the third quarter. In addition securities prices have declined significantly after it appeared the TARP program would not be used to purchase securities. So in the fourth quarter we adjusted our modeling assumptions on all residential mortgage-backed securities with the primary changes being on the default and severity rates. We increased projected default rates, we increased the projected severity of loss in the event of a default, and as a result of these adjustments we reported an impairment charge and wrote down to current market value certain securities resulting in a $1.2 billion pre-tax securities loss. At December 31 if we look at the expected loss for example from the Alt-A securities it is estimated to be $124 million. This is our estimate of the potential loss of principal if we held those securities to maturity. However the impairment charge reflects the additional market discount in today’s environment and as you might expect the market is using a very high discount rate. On page 10 you’ll note we voluntarily called the first loss notes of Old Slip Funding making us the primary beneficiary and therefore triggering the consolidation of Old Slip which had approximately $125 million in assets. The consolidation resulted in the recognition of an extraordinary loss of $26 million after-tax or $0.02 per share representing the current mark-to-market discount from par associated with spread widening for the assets held in Old Slip. We are pleased to say we have no more conduits. On October 28 we issued $3 billion of securities to the Department of the Treasury as part of the TARP. It was comprised of nearly $2.8 billion Series B preferred stock as well as common stock warrants with an estimated fair value of $220 million. Since receiving the investment from the Treasury we put the $3 billion to work in several ways. We used most of the capital to purchase mortgage-backed securities and debentures issued by US government sponsored agencies to support efforts to increase the amount of funds available to borrowers in the residential housing market. We also purchased securities of other financial institutions which helps increase the amount of funds available to lend to consumers and businesses. And we also continue to make loans to other financial institutions through the interbank lending market. All of these efforts directly address the need to improve the liquidity in the financial system and are consistent with our business model as the bank that primarily serves institutional clients. I will emphasize that we will not use the funds to pay dividends, bonuses, or incentive compensation of any kind. Prior to this investment we were already well capitalized. With this investment and the lower level of risk-adjusted assets, our Tier 1 capital ratio is now 13.1%. At period end our tangible common equity ratio was 3.8%. I will note here that certain rating agencies include a portion of the Series B preferred stock and trust preferred securities when assessing our capital strength. Using the lowest allocation permitted by the four agencies, our TCE was 450 at period end. On page 12 we’ve included a new disclosure which gives you a window into the stress testing we routinely perform on the adequacy of our capital base. We have modeled the impact to our Tier 1 capital and tangible capital ratios for increasing levels of impairments and unrealized losses related to our investment securities portfolio. Please note that impairment charges impact Tier 1 only and unrealized losses impact other comprehensive income which only impacts tangible common equity. As you can see if we took another $5 billion of impairment charges, we would have a strong pro forma Tier 1 ratio at the end of 2009. So we continue to be comfortable with our capital levels. Now turning to our loan portfolio during the quarter we raised the provision for credit losses to $60 million, charge-offs were less then the provision at $25 million and nonperforming assets increased by $25 million to $292 million. I should add that we’ve had great success in reducing our total loan exposure over the last couple of years. At the time of our merger we had set a goal of reducing our total exposure by $4 billion. By year-end we had reduced it by $10 billion and we’ve now set a target of further reducing it by an additional $4 billion. Our results include an income tax benefit of $135 million. If we were to exclude the impact of the securities write-downs, the restructuring charge, the support agreement charges, and M&I, the effective tax rate was 32.6%. Turning to the integration front which we’ve got outlined for you on page 14, we remain in excellent shape in all of our key milestones. We achieved $258 million in revenue synergies against our full year target of $180 million. We reached $157 million in expense synergies during the quarter which is $13 million higher then the third quarter. For the full year we realized $550 million in expense synergies, well ahead of our target and we continued to exceed our client retention goals in asset servicing. Quality remains very strong and in the global custodian survey results just released we ranked number one among all global custodians. In summary we have a fairly conservative view of things for 2009, a view that we’ve been articulating consistently over the past few months. Realizing that there will be challenges to the top line we are more committed then ever to controlling expenses and driving through the synergies from the merger. We are fortunate we are positioned to continue to benefit from disruptions through market share gains across all of our businesses. And with that let me turn it back to Robert.

Thanks Todd, I hope you found that to be a useful review. Why don’t we go right to questions at this time.

(Operator Instructions) Your first question comes from the line of Michael Mayo – Deutsche Bank Michael Mayo – Deutsche Bank: On capital you’re at 3.8% annual common equity, its still below your 5% target, does your 5% target still hold and how do you think about that ratio.

I would say we deemphasized the 5% last quarter given the global government emphasis on Tier 1 and the 3.8% you also have to think about it in terms of how rating agencies think about it and as detailed in the numbers the S&P and Moody’s think about it as including some of the TARP money as well so the rating agencies would think of it as something north of 4%. Michael Mayo – Deutsche Bank: Your non-interest bearing deposits up one-half, where does that come from, why does it go to you and how sticky are you with those deposits.

Its really coming from all of our businesses. We saw a fair amount when you saw interest rate cuts and the yield in treasury funds decline pretty dramatically we saw a fair amount of clients just parking those funds with us. So I think this is part of the flight to quality where you seen funds come into either money market funds, treasury funds, or sitting on our balance sheet. But its really across the board, its no one single business. We’re seeing it in corporate trust, we’re seeing it in custody, we’re seeing it in our broker dealer services business, we’re seeing it in our treasury services businesses. Its all client money.

In terms of its stickiness we continue to operate at pretty high levels of interest free deposits even though the markets up until today had calmed down a little bit. Michael Mayo – Deutsche Bank: [inaudible] where is it coming from, which type of [inaudible]

Just specific to corporate trust which is a big driver, a lot of it relates to, its bondholder money waiting to be paid out and so save haven and safe harbor is particularly important so that’s a big driver in the issuer services sector.

We don’t expect it to stay here forever that’s for sure and that’s why we’ve got it in such incredibly liquid, and a lot of it just sitting in the account at the Fed. Some of it may come for example with redemptions. We may see a decline in the first few quarters here. Michael Mayo – Deutsche Bank: As it relates to new mergers, what is your appetite, clearly some competitors are more in the [back] then you are at the moment, would you try to act opportunistically.

As I said earlier in my opening remarks, we’re gaining share through organic growth in just about every business we have. We’re going to continue to do that. The number one priority for us is to deliver fantastic client service and we’ve been saying for numerous quarters here that we haven’t really been interested in acquisition opportunities and frankly I just never speak directly about merger or acquisition opportunities. We’ll see how the year plays out, its clearly a difficult environment and we feel we’re well positioned here.

Your next question comes from the line of Nancy Bush – NAB Research Nancy Bush – NAB Research: A question on your accounting [inaudible] for the new business part, my understanding is that accounting is to be formalized, has there been goals or targets set down for you and I guess my question is how far can you stretch $3 billion in TARP funds.

Well first of all we don’t have any leverage, we’re not out buying wholesale funds so the TARP isn’t something that we would lever. So when we receive the funds we, as we would with any situation, we sat down with our [ALCO] and we said what would, how should we invest this, we do have a $3 [million] larger balance sheet, how should we invest this in the spirit of the purpose for which we received it and also within our business model which is obviously we’re not a consumer lender and we didn’t expect that the regulators would expect us to change our stripes. So we came up with a program to help the interbank market. It was at a time when the interbank market was really struggling so we put a fair amount of it into the interbank market and we put it out for a little longer terms with institutions that we felt comfortable with and we also invested in the government sponsored entity, the agency mortgage-backed securities as well as their straight debentures and I think that certainly served the purpose. We’ve also had ongoing discussions with our regulators as well as the Treasury and we’ve reflected exactly what it is that we’ve been doing with those funds to them and they seem supportive. Nancy Bush – NAB Research: Could you speak to NIM trends?

The net interest margin is primarily driven by the very high level of free deposits. We do expect to continue to see a pretty high level of free deposits. We would expect them to normalize a little bit. There are a couple of things that have benefited us here. Number one the very wide interbank spreads is a real positive so we can enjoy quite a bit of spread on those deposits. We would expect that to compress, it has compressed somewhat, actually significantly. We would expect that to continue to compress. Also the overall level of interest rates have come down so those free deposits are going to have less value to us so kind of the windfall from this should be compressed because obviously we can’t think long-term. We don’t think these are going to be here forever. So the windfall that we enjoyed in the late third quarter and the fourth quarter we wouldn’t expect to move forward. We do however expect that LIBOR spreads will continue to be wider, not wider then they were in 2008 but certainly in 2006 and 2007 so that’s a positive.

And frankly we would like to see these spreads come back to more normal levels because that implies the financial system is getting back on its feet again.

Your next question comes from the line of Glen Schorr – UBS Glen Schorr – UBS: In the assets that got moved over to held for maturity last quarter could you just give us a bit of a breakdown of what got moved in and if you they were not moved in, I’m just curious what the unrealized loss component would have been on that piece of the portfolio.

We moved about $7 billion in securities, about half of them were floating rate notes and about, and I don’t have it right here, and about half of those were residential mortgage-backed securities. We moved them on September 12 and it was right around the time of the Lehman collapse because frankly we thought there was a pretty high probability that asset prices would further decline as a result of that. Had we not moved them, the impact to our other comprehensive income we’d estimate would have been a little over $500 million that’s after tax, after tax effect. Glen Schorr – UBS: On [sec] lending portfolio, especially on the comingle side, just curious on your thoughts of it all the industries, comingle funds, just have that same kind of under $1 NAV just because spreads have widened and assets have gone down if you’re experiencing similar type of customer issues that we’ve seen around the industry.

We’ve got about 12 different funds that support our securities lending activity. We have a weighted average on those funds of about just under 97.5 and they range from about $0.93 up to $1 but we are able to operate all of those funds by carefully managing the liquidity levels. We’ve been operating them on a $1 in, $1 out basis. We’ve been able to honor all the trading activity that occurs on a daily basis and then for any unusual activity that may occur from a given client, if they were to look to exit they go out in the form of a vertical slice. Glen Schorr – UBS: Meaning some cash and some assets in kind.

That’s right, they go out in kind.

Your next question comes from the line of Thomas McCrohan – Janney Montgomery Scott Thomas McCrohan – Janney Montgomery Scott: There is a pretty significant echo that I’m hearing on my end just so you know. Can you just remind us what was the total dollar amount is of the comingle funds that are unregistered within your various programs.

We’re also losing you there. We’re also losing you. The unregistered piece is about $34 billion. Thomas McCrohan – Janney Montgomery Scott: And what is the NAV on those right now?

They range anywhere from 96.8 up to 1 even. Thomas McCrohan – Janney Montgomery Scott: Are the capital support agreements or any of the existing support agreements contractually obligate The Bank of New York to support that $34 billion?

Not that I’m aware of.

And of all of our capital support agreements, what do we have left at this point Todd?

In this quarter we took a charge under a capital support agreement of a little over $160 million and that was a reflection of the value of the underlying assets for the most part and if the worst-case scenario that we’ve estimated is that it could be $150 million of additional.

Your next question comes from the line of Kenneth Usdin – Banc of America Securities Kenneth Usdin – Banc of America Securities: I’m just wondering on the TCE ratio can you just walk us through again the ins and outs of that, just trying to understand what the balance sheet [size] is that goes into that calculation.

We lost you as well, but I think your question was what’s going on in the TCE ratio, there’s really obviously two aspects to it and the numerator it declined, this isn’t adjusting it, this is the standard calculation, we did lose about $1.6 billion in tangible common equity largely due to the valuation adjustments in the portfolio. And the balance sheet came down quite a bit in size as well, risk weighted assets but as well as total size so the denominator came down probably over $35 to $40 billion and the combination of the two held if fairly constant. What we did exclude in calculating the denominator we did exclude the very large deposit that we’re leaving at the Fed and its obviously a zero risk and its just to the unusual nature of those free deposits that are coming with us.

And that’s consistent with last quarter as well.

Its consistent with what we did at 9/30. Kenneth Usdin – Banc of America Securities: That’s the $50 billion?

Right. What I should add to that is we had pretty strong earnings and the earnings basically offset the impairment and the impairment reduced the unrealized loss in the portfolio.

I would encourage you to look at page 12 again and just, that does really provide you with great what if scenarios that are pretty brutal on the OTTI side and given all the write-downs we’ve taken on the OCI standpoint we’ve really stress test that as well so in just about any scenario that you could paint for this year I think you can pretty easily see that we have capital levels that will meet the test here. Kenneth Usdin – Banc of America Securities: With regard to the $1.2 billion of OTTI impairments, there’s a portion of it that’s expected loss and then there’s the portion of it that’s not, can you help us understand over what time period would you expect to re-accrete assuming everything did mature at par?

The way we calculate it is we take what we think are conservative estimates of defaults and severities, we do a roll rate analysis on a security by security basis and we conclude that yes the security might lose let’s say 10% of the principal and we think we’ve been reasonably conservative relative to the market in how we’re doing this. So if we’re losing 10% of the principal we then look at the market value of the security and let’s say its $0.50. We’ve been able to ascertain that the market is discounting securities at about a 20% rate. Its actually in the vicinity of 15% to 25% so they’re doing a cash flow analysis, they’re discounting it at 15% to 25%, we’ve typically got a coupon of something like 5% so you can do the arithmetic if you’ve got a few years of duration, the market price is going to be a significant discount to the expected loss.

The way I just kind of think of it is the difference between what you take through the income statement and the expected loss is only the discount rate. All the other assumptions are the same. So the expected loss is discounted like a loan. This makes it, the expected loss is a loan equivalent basis and that is the pitch that the major accounting firms were proposing last quarter that why don’t you treat securities much like loans and again the only difference is the discount rate, something like the expected loss rate might 5% or 6% and on the mark-to-market it might be at 20% to 25% annual yield.

So that might end up with a situation where you think you’re going to lose $0.10, the market is at $0.50, so what happens to that $0.40 differential. Right now you’ve got to figure out what you think the duration of these assets are and its pretty hard to estimate but we think they have extended significantly so what might have been a three or four year security might be a five or six year security. So it would be over a relatively long time period that we’d estimate that we’d accrete that back and the methodology for doing that, we frankly have not worked out at this point. Kenneth Usdin – Banc of America Securities: But it could a couple hundred million a year type thing, back in the envelope [inaudible]?

That would probably be the high end of it.

Your next question comes from the line of Betsy Graseck – Morgan Stanley Betsy Graseck – Morgan Stanley: You did a very nice summary on the stress test on the [inaudible] on the Tier 1, why didn’t you use the stress test every [inaudible]?

It was pretty straight forward actually, we already took, if you go back to the securities schedule, we already took over $7.5 billion worth of mark-to-market write-downs through OCI already last year that most of that occurred of course in 2008 and the watch list securities are now down to $0.60 on the $1 so in just about any reasonable scenario by taking another $3 billion that’s another very material write-down in 2009 from 2008 and that would take you for the watch list well below $0.50 on the $1. But having said all that if you want to take it further you can obviously and you can see on a relative basis per billion what it would be. But from a management perspective we just didn’t realistically see it going beyond that particularly if we expect to see something this year, we’re starting a course on the weekend, starting to see more and more talk of whether or not the TARP asset repurchase program will be started up again or whether or not a bad bank would be created or other types of vehicles would be created. Since OTTI is new, we made it a much bigger number and since OCI was in something that’s been around for a while, we just went with a slightly smaller number but still a very material one.

And the assumptions in these prices are already pretty darn Draconian. Whose not to say you couldn’t see more $3 billion but that’s, its basically saying everybody defaults and you have severe losses on even on those defaults, so we think given just how Draconian the assumptions were that’s probably a good place to stop it. You could certainly push it more if you like. Betsy Graseck – Morgan Stanley: [severe echo, question inaudible]

No, that was not the implication.

It was just reasonable stress levels in a really tough environment being assumed in 2009. Betsy Graseck – Morgan Stanley: Could you just give us an update on how you’re thinking about the dividend [inaudible]?

Well just looking at those stress levels you would have to conclude that we feel pretty comfortable with the dividend levels because that assumes the balance sheet size of what we have today as well as the existing dividend level, I guess we could look at it every quarter but those numbers, if you backed out some portion of the dividend, you’ll see that the impact is not really that material. It does provide some level of basis points but its not too material so we concluded we should feel comfortable about the dividend.

Your next question is a follow-up from the line of Michael Mayo – Deutsche Bank Michael Mayo – Deutsche Bank:

That’s correct, there are two aspects of it, first of all we did have a significant decline in the value of the portfolio. Our earnings offset about half of that decline. And we took it through earnings.

And of course we had an incredibly unusual ballooning of the balance sheet in the third quarter.

Right, we had a very high spike in the balance sheet so our earnings, and I want to make sure I get the pre-tax and the after-tax impact here, we took $1.2 billion pre-tax charge through our earnings, so that’s $752 million after-tax, that ate into what would have otherwise gone against the TCE ratio because otherwise we would have had a bigger valuation adjustment. We then had a significant valuation adjustment even after that which was offset primarily just as you pointed by a smaller balance sheet, but we had a very unusual balance sheet on September 30. We still have an usually large balance sheet today.

And its not that we managed it, it was what our clients wanted to do and I would think that ultimately if the markets continue to stabilize our balance sheet could get smaller. Michael Mayo – Deutsche Bank: So what is your outlook for 2009, one thought is if you continue to downsize the balance sheet if that’s what [inaudible] then you might much less NII or could you verify that, what’s your general outlook for 2009.

What I really want to point out is that there was a spike in the balance sheet and I’d call this a little bit of what you saw in the third quarter and the fourth quarter a windfall. And a lot of the revenue, the NIR revenue was driven by placements and we don’t expect that to be an ongoing feature. I would go back to more of the levels we were looking at in the first and the second quarter of last year.

At this point we’re going to wrap it up. We don’t have any more questions. Really appreciate everyone getting on the call and asking the good questions as always. We’re going to work hard for you and we look forward to filling you in with more details when we talk to the IR folks and wish you all the best. I know this is an extraordinarily difficult and tiring time right now and thank you for dialing in. All the best.