Ken Brause – Executive Vice President of Investor Relations. John Thain – Chairman, Chief Executive Officer Joe Leone – Chief Financial Officer

Sameer Gokhale – Keefe, Bruyette & Woods Chris Brendler – Stifel Nicolaus Henry Coffee – Stern Agee Brian Charles – RW Pressprich Kevin Star – CRT Capital [Joseph Bonmeister – Bennett Management] [Louis Kiboski – Mass Capital] Larry Vitale – Moore Capital David Richards – GoldenTree Asset Management Fred Willard – Samuel Terry Asset Management

Welcome to CIT’s first quarter 2010 earnings conference call. Participating in today’s call are John Thain, Chairman and Chief Executive Officer, Joe Leone, Chief Financial Officer, and Ken Brause, Executive Vice President of Investor Relations. (Operator Instructions) I’d now like to turn the presentation over to Ken Brause, Executive Vice President of Investor Relations.

Good morning everyone. Welcome to CIT’s first quarter 2010 earnings conference call. Our call today will be hosted by John Thain, our Chairman and CEO and Joe Leone, our Chief Financial Officer. Following our formal remarks, we will have a Q&A session. We ask that you limit yourself to one question and a follow-up and then return to the queue if you have additional questions. We’ll do our best to answer as many as possible in the time we have this morning. Elements of the call are forward-looking in nature and may involve risks, uncertainties and contingencies that may cause actual results to differ materially from those anticipated. Any forward-looking statements relate only to the time and date of this call. We disclaim any duty to update these statements based on new information, future events or otherwise. For information about risk factors relating to the business, please refer to our 2009 Form 10-K that was filed with the SEC in March. Any references to certain non-GAAP financial measures are meant to provide meaningful insight and are reconciled with GAAP in our press release. For more information on CIT please visit the investor relations section of our website at www.cit.com. With that, it’s my pleasure to turn the call over to our Chairman and CEO, John Thain.

Thank you, Ken. Good morning everyone. I’m very pleased to announce a profitable first quarter with net income of $97 million or $0.49 a share. We grew our capital base in the quarter. Our book value rose to $42.63 a share and our holding company both tier one and total capital ratios are in excess of 15%, and our cash position rose to approximately $10 billion. We’re seeing encouraging signs on credit. Delinquencies quarter over quarter improved. Charge offs were significantly lower even before Fresh Start accounting and although non-accruals were up, they were up at a much slower rate than in the past quarters. So we are encouraged by the trend we’re seeing on the credit side. We’re making good progress on our funding. We raised $667 million in equipment lease securitization at a coupon at a little bit north of 3.3%. We put in place a $1 billion vendor conduit with a similar cost and as we announced already in the press release, we intend to pay down an additional $1.5 billion of first lien debt. In terms of the businesses, on the Trade Finance side, we are adding a new business. We added about $700 million of annual factoring volume with Lee & Fung and we’re seeing clients return to us with factoring volumes of about $1.5 billion annually. We’re seeing activity gradually improving on the vendor side. We announced yesterday, we have an agreement to sell Australia and New Zealand vendor business. This sale is part of the optimization process we’re going through with our different businesses. In corporate finance, we are starting to see increased demand. Just one small example, in small business lending, applications were up 70% in terms of dollar volume. We are beginning to book corporate loans in CIT banks. We’re starting to utilize the cash in that bank. And as you also saw, we previously announced, we spun off Edgeview, which is a further attempt to reduce head count and expenses. On the Transportation side, our commercial air fleet is 100% leased. All of our 2010 deliveries have been leased. Of our 2010 expirations, we’re about 75% leased and on our 2011 deliveries, we are about half leased. So very good results on that side. In the Rail business, we’re running at about a 90% utilization rate, although we are starting to see rail car loadings improve. In terms of the priorities that I talked about on our first call, we are actively working on lowering our financing costs and you see that as a combination of new securitization, optimizing both our businesses and our loan portfolios and paying down the first lien debt. We have made progress on hiring key executives. There’s an approval process we have to go through with the Fed which is why we haven’t announced anything publicly, but of our key slots, we’re about 50% done in terms of new hires. We continue to work on our regulatory relationships. As I said on our first call, this is going to be a long process, but we are working on improving our relationships with the Fed and the FDIC and the Utah regulators. And then as I also mentioned on our first call, we will continue to focus on expenses and at least near term, as our balance sheet shrinks, we will work to keep our expenses in line with our revenue base. That’s the highlight, and then I’ll turn it over to Joe and then we’ll take questions.

Good morning everyone. Welcome. It feels real good to talk about earnings and positive business momentum again, and this morning I’d like to take a few minutes and give you some additional color on our financial results so that you can better understand the trends. Start with margin; margin was a little over 4%. Exclusive of the benefits of Fresh Start accounting, and excluding the cost of pre-pay the first lien debt of $750 million that we did in the first quarter, margin was only 65 basis points. As we talked about this at great length on the last call, of course the level is unacceptable and not viable, that’s clear. But what’s also clear is the path to get this remedied. Clearly, the expensive debt and the high cost of liquidity we’re carrying is very burdensome. I’ll give you some numbers. For every billion dollars of first lien debt we repay, we will generate margin savings of 20 to 25 basis points, so with almost $7 billion of first lien debt outstanding before the new pre-payment, margin is negatively impacted by about 150 basis points just from the first lien debt. Putting dollars to that, that’s about $600 million of pre-tax earnings. And the good news as John mentioned and we disclosed, we are taking care of $1.5 billion of that very soon. It’s obvious why pre-paying high cost debt is one of our highest priorities. Another word on margin, the whole FSA and the accretion noise or accounting, it was higher than we expected in the first quarter for several reasons. We saw accelerated pay downs on loans. Customers are paying at a brisker pace than we have expected, and we actually had liquidations of certain loans, and to the extent we had any discount on those loans that came into income. Also keep in mind, I’ve seen some of the modeling which straight lines the accretion through the year, keep in mind we use the interest method so the accretion will start higher in 2010 and will decline sequentially. John mentioned new business activities. On the new business yield side, vendor and transportation writing transactions in the 10 plus 12 area and corporate finance 6% to 8%, and if you compare that to the incremental funding costs on the securitizations John mentioned, we can make good margins there. The other element of income that’s important is non-spread revenue, and it was up considerably, and we saw great improvement as you know in financial asset prices during the quarter. In terms of the balance sheet and streamlining John mentioned, we sold $700 million of assets in total in the quarter, $400 million in vendor, $200 million in corporate finance and $100 million in transportation, and we were able to recognize gains on sales of about $62 million. Substantially offsetting these gains were losses we had from unhedged foreign exchange positions that arose during the bankruptcy when our derivatives were in effect cancelled. We are re-establishing those hedges and trading lines with major institutions, and many of those positions are closed or will be closed by the end of April. Turning to credit, I’ll spend a little more time than normal on credit because of the Fresh Start accounting impact, etc. As John said, the portfolio trends are encouraging, and I haven’t said that since the first quarter of 2007. Pre FSA, charge offs were 2.4%, and that’s the lowest level in a year. All commercial segments improved. John mentioned that non-accruals were up sequentially. In transportation finance we were up. We have good collateral coverage we feel, and in vendor finance we saw some increase in the consumer paper in the portfolio. We did promise you clarity and others who have spoken to us like the rating agencies, clarity on the impact of the Fresh Start accounting and credit reporting, so let me try this regarding the credit provisioning we made this quarter. Remember we started the year with zero, no allowance for loan losses. That was eliminated in Fresh Start accounting. We provided $187 million for credit this quarter and I think of it in four parts. Two of the parts are reserve rebuilding and the other two are for credit development in the quarter. First, the reserve building components; we built $37 million of general reserves on new originations, principally in trade finance where I believe we discussed with you due to the short term tenor of that paper, we would set up most of that reserve in Q1. We do not foresee any additional reserve rebuilding for trade this year at this time. We also rebuilt $74 million of general reserves on performing loans. As we previously disclosed, the accretable discount on performing loans was based upon risk adjusted discounting. As we accrete discount into margins, we will rebuild the FAS5 general reserves. Putting numbers to that for Q1, we accreted about $450 million of discounts and we provided about $74 million in reserves, and that will continue as we accrete earnings or accrete the discount, we will continue to build FAS5 general reserves quarterly. We expect that dollar amount to decrease sequentially with lower accretion. For credit development, the two parts are as follows; we set up $33 million of new reserves from PAD loans, $27 million of that for loans that became impaired in the quarter and $6 million for loans that were impaired beyond the Fresh Start accounting value. We also provided $42 million for charge offs in the quarter, not sufficiently covered by non accretable discounts, but more than half of that were on homogeneous loans valued in pools, principally vendor, consumer and small business. If you put that all together, the provisioning parts were $111 million for reserve rebuilding and $76 million for credit development. That resulted in an allowance at the end of the quarter of $181 million, reflecting the provisioning and the charge offs I just described plus $40 million in reserves relating to securitized assets we brought on the balance sheet. I’ll tell you more about that later. I think this disciplined and strong rebuilding of the allowance not only adds to the balance sheet strength, but I think it’s part of getting back to the normal operating mode. John mentioned operating expenses, they were $262 million this quarter. That’s about where we expected them to be. $12 million of that was for restructuring reserve and $11 million for retention awards we granted in March which for the most part are payable in a year. We should have some benefits in Q2 from the restructuring actions, but retention award expense will be higher in Q2 as that will be the first full quarter of that expense. Back to Fresh Start accounting, just to summarize where we are on the discounts that are very important to the analysis of the numbers, accretable discounts increased by $470 million plus principally because of the accretion I described, and also relating to asset sales. Non-accretable discounts declined about $190 million and that principally reflects charge offs on loans we had valued. When I look at our credit reserves, I combine two things; the non-accretable discount and our allowance for loan losses. The sum of those two is about $1.75 billion or 4.48% of receivables and the receivables I use the pre FSA balance. We did adopt the new accounting standard for securitization in the quarter. We brought $800 million of receivables on balance sheet. That also brought on balance sheet $738 million of secured debt, $40 million of loss reserves, which are netted against our retained interest so it’s not a P&L item. It was just a balance sheet re-class. And we did eliminate the retained interest and we had cash in a trust that came on balance sheet. The no P&L impact for all of this is not a big impact, and a very small equity reduction. Moving to liquidity, what a difference a year makes. $10 billion in cash, and let me give you some sources and uses. We had $1.5 billion from portfolio collections, $700 million from asset sales that I mentioned earlier and $900 million from the vendor securitization that John described. Those were the monies that came in in the quarter, and where we used them so far, is to repay the first lien debt $750 million. We made other debt pay downs of $2 billion in the quarter, vendor, rail and student loans, and we had some deposit run off with our bank. Our bank is very flush with cash as John mentioned, and we just began originating new loans there in corporate finance. I’m pleased with the forward activity we have in financing and I hope that we’ll be able to announce some financing in other secured financing in other businesses in the second quarter. We’ve been working on a trade conduit for example. So I’ve covered a great deal in a short time. Let me summarize. I think the Fresh Start accounting increases complexity somewhat, somewhat if you live with it every day, a lot if you don’t, but I hope you find our disclosures with and without the FSA helpful. We said we would show it to you that way. John told you we reported net income and book value increase and I think that’s significant. I think the stock trading on book value and to the extent we put up earnings, including the FSA, the book value will grow. So we grew a point a half to 2% of book value this quarter. The balance is as strong as it’s been in some quite time. Capital levels, reverses and a long liquidity run way, I think you can see that. And obviously with the high cash levels and the few debt maturities, we’re going to have the ability to de-leverage. We made an announcement of $1.5 billion, and we need to get our pre FSA margins as I talked about last time, back up into the 3% to 4% range. Credit not only appears to be stabilizing, we are getting more collections off the portfolio, so that’s helpful, and as John mentioned, we are successful in mending and growing new business relationships. Before I open the call for Q&A, I just want to say a few words of thank you. After 25 years at CIT, I’ll be retiring this Friday, April 30. I think you’ll relate to this. While being CIT’s CFO for these years hasn’t always been easy, I assure you it’s always been an honor. To our equity and bond investors both new to the company and long time followers, thank you for your support. To our equity analysts and bond analysts, thank you for your interest in our franchises and we have employees on the call, and I have to say thank you for your hard work and loyalty. Special thanks to the legal and finance teams who worked so tirelessly with me over the last three years. Yes, it’s been three years of very difficult work, and my finance team, accounting, IR, Treasury and tax, many of you on the call know them. I think they’re a very special team and one of the best in the business. To all, while the road is very long, John has said that, and he said it very accurately and clearly, I hope the progress you saw in three short months, or long months depending on how you measure them, progress we made in the quarter. Hopefully that gives you growing, and continued confidence in CIT’s future. Question and answer period should begin now. Thank you all. Question-and-Answer Session

(Operator Instructions) Your first question comes from Sameer Gokhale – Keefe, Bruyette & Woods. Sameer Gokhale – Keefe, Bruyette & Woods: Joe, I just want to say congratulations on a very nice long run at the company, and I know you put a lot of hard work into it and have seen the company through some pretty challenging times, so it’s been a pleasure to work with you and congratulations again as you’re moving on to new endeavors.

Thank you very much. Sameer Gokhale – Keefe, Bruyette & Woods: In terms of the results for the quarter, and again your disclosure was pretty helpful especially as you assured us that pre FSA numbers in terms of the credit losses and there were some encouraging data points. When we think about the funding picture for the company, obviously you’re working through the, trying to get the cease and desist lifted at the bank, and you’re paying down some higher cost debt, but as you and John look at the company’s funding picture, do you think that you might try to access the unsecured debt market at some point in time maybe before getting officially ratings from the rating agencies, or would you wait until you get the investment grade ratings before issuing the debt. How do you think about that, because it seems the faster you can do that, and maybe lower funding costs on your existing cost structure, the faster you can complete the refinancing of that debt. So just some commentary on that would be helpful.

First of all, we would not attempt to access unsecured funding without the ratings. We do expect to get ratings relatively shortly, so we will have ratings soon. Our strategy near term is going to be to continue what we’re doing which is securitizations, portfolio sales, sales of non strategic parts of our business and paying down first lien debt because that has the biggest short term impact. The question as to accessing the unsecured market at some point, that is something we would like to do, but I think that is considerably farther out. So near term, you will see us continue doing what we’ve been doing this quarter. Sameer Gokhale – Keefe, Bruyette & Woods: In terms of the provision, you talked about a bunch of different items, and you’d given us an explanation. The $74 million for re-establishing reserves on the performing loans, it seems like you were saying that as the accretion came in on the assets, and I guess the asset value went up. Along with that you also booked a reserve. But wouldn’t a lot of the expected embedded credit losses be accounted for in the non-accretable portion? So how do we reconcile the additional reserving with the non-accretable discount that you had taken already?

We spent a lot of time here talking, explaining and figuring it out ourselves. Excellent question. Thank you. The non-accretable discount generally relates to loans that are impaired, and impaired principally means non-accrual. If you have a performing loan, which we expect to perform along the lines of contractual terms, when we set up the discount it was all in the accretable bucket. But as we put that together with the fact that we had no allowance, it was wiped out, and over time we want to return to normal financial metrics, we felt that we should begin to rebuild the FAS5 component which has always been historical component of our historical reserves, and that’s expected future losses measured on history, updated for current expectations on loans that are performing well today. So what in effect what we’re doing is, we’re putting back in place our normal reserve building mechanism and since the loans that are performing only have accretable discounts, but their credit risk was measured in the discount rate, we felt it was logical just to explain it to you that you have to look at them as being linked. So as the accretable discount goes down, the FAS5 reserve build should decrease. That was a lot of words. I don’t if we’re clear with that, but if you have a follow up on that or others, it’s a difficult concept, not intuitive. But I think the bottom line is we want to rebuild and get back to normal. We want to rebuild our reserves so you’re looking at an allowance in determining whether it’s adequate or not for all loans, not just impaired loans.

You're next question comes from Chris Brendler – Stifel Nicolaus. Chris Brendler – Stifel Nicolaus: My question on the funding side, I think obviously the progress in the cash balance related to liquidity improving and paying down the $1.5 billion, but given how the credit markets have reacted and your own balance sheet and financial strength improved so dramatically, what are the prospects? Have you thought at all about refinancing the credit facility at any point? I would think you’d be able to get much, much lower funding costs by refinancing that $7 billion.

As I said before, we will continue to pay down the first lien debt from portfolio sales, cash generation and disposition of parts of our business. We will certainly explore what other alternatives there might be in the capital markets. And you’re absolutely right, both the receptivity of the market and credit spreads, both are improving. So we will continue to explore other options, but at least near term, we’re going to continue the trend we’re on.

I would just add that it’s clearly something John has had us review for the last several months, clearly something high on Glen [Botech’s] priority list, and as we look at it, there are exit fees in the current facility and the proposals we’ve seen have exit fees in the new facility. So we’ve been doing the overall economic view, and it’s been better economics for us to do it the way that John described, and we’re doing it asset class by asset class, at least for now. So we’re stepping through that and at the same time, keeping an eye on the bigger picture of a bigger refinancing. But you’ll see us use other classes as I mentioned; trade and maybe some rail assets in the second half of the year if not vendor assets. Chris Brendler – Stifel Nicolaus: It’s my understanding that a lot of the assets are still encumbered by the credit facility. In your analysis, I assume you’re talking into account the ability to do additional secured financing or securitization if you were to be able to refi the credit facility, you’d be able to get a much lower, or much higher advance rate, much lower encumbrance of the assets backing that facility. And then on the loss rate, the $42 million of losses this quarter, I was under the impression that losses would be a lot lower than that. Is that a good run rate going forward basically or is there anything special this quarter that caused you to have losses even after Fresh Start accounting?

We think that $22 million is modest. I gave you two pieces to it. One piece is that a little bit more than half of it relates to loans that we valued homogeneously in pools. So I’ll just give you an example. Let’s say it’s a vendor finance asset that we valued. The whole pool at $0.90. Clearly when one of them goes bad, we don’t get $0.90 and not all of them goes bad so we get $1.00. So they’re all valued at $0.90 so that the loans that went bad this quarter, and let’s say we got $0.50 on a dollar recovery, we had to provide a charge off for that $0.40. So it’s a function of how they were valued more so than how they perform. And the good news on that so to speak, is the back end could be better because you can’t take the back end profits in until you’ve got them all flushed through the system. So that’s one reason why those charge offs may be were a little higher than your expectation, but in line with the overall methodology. In terms of the advance rates on the secured financing, I’ll try this answer, and I don’t know if it’s right on point. To the extent we do secured financing separately like we did the vendor finance and the vendor finance securitization, and/or some others, those advance rates are very good and we were able to free up that collateral out of the facility. And of course, we have to use those proceeds to pay down debt, which is what we would want to do anyway. But I think we get to that answer anyway if I heard your question correctly. Chris Brendler – Stifel Nicolaus: I’m wondering is there an ability to do additional secured financing like that transaction you did at the end of March without refinancing the facility. If that’s the case, I think the prospects for re-financing the facility, the economics aren’t as compelling. I was under the impression that you had very limited ability in terms of the assets that were available to do additional deals.

I think we have ability.

We definitely have the ability to do more secured transactions and you should expect that we will.

You're next question comes from Henry Coffee – Stern Agee. Henry Coffee – Stern Agee: This is along the line of Chris’ questions, but I’m just trying to sort this out. We’re all trying to get the speed at which you pay down your high cost debt. It’s obviously, that is what you should do. You’ve already figured it out. When you set up a new secured financing, does it have to have special terms that then allow you to use the X dollars of cash to pay down other debt?

The simple answer is no, it doesn’t. Henry Coffee – Stern Agee: So if you do a $500 million something financing target at a certain loan class, you could then take that $500 million and pay it down against existing debt?

Yes, and that’s almost certainly what we would do. Henry Coffee – Stern Agee: You’re sitting on now $5 billion of cash. Is that just waiting or is there a trigger point at which you would start using that cash to pay down existing debt?

We’re being I would say quite cautious about managing our liquidity and I think that’s prudent given that liquidity is how financial institutions generally get into trouble, and so that level of cash, I wouldn’t say we would necessarily keep that level of cash longer term, but we are being I would say quite prudent and careful about our liquidity position. We could in fact use more of that to pay down long-term debt if we wanted to. Henry Coffee – Stern Agee: Looking at your deposit costs, the fee book came down nicely from where they were last year. Should we expect more of that as the old book rolls off?

It depends a little bit where the rates go and when we turn that portfolio. Our deposit costs are really driven by the market so you can kind of track where the market is and get a sense of that. Henry Coffee – Stern Agee: The corporate finance loans that you financed in the bank, were those SBA loans or were those traditional corporate finance loans?

They were traditional. Just a comment to Chris Brendler’s question earlier on charge offs that just struck me, those charge offs that we show as charge offs are gross. We did have recoveries in the quarter and they get reflected elsewhere because of the anomalies of Fresh Start, so the net charge off number is significantly lower than $43 million. Hopefully that’s help to in reconciling expectations.

You're next question comes from Brian Charles – RW Pressprich. Brian Charles – RW Pressprich: If you don’t mind giving a little bit of color about the overall strategy or the evolution of CIT bank going forward. I know you’re in communication with your regulators, but have you, can you give some guidance on the size of the bank as you expect to grow that over the next year or two years and perhaps what total capital ratio that you might be targeting even though you’ve discussed minimum capital ratios you need to maintain. It seems the capital continues to improve there and I wonder if leverage might approach the 20% or greater level over the next year or so.

I can answer that in part. At least over the next year, we have about $1.5 billion of cash in the bank and we will continue over the course of the next year to originate new loans in the bank to try to utilize that cash and also obviously improve the earnings and therefore the capital of the bank. Longer term, and this is one of the strategic questions that we don’t have an answer to yet, is we want to grow the deposit base of the bank. We will not be able to grow that only using broker deposits. So we need to develop a strategy for the bank that will allow it to grow deposits whether from our commercial customers, which is certainly an opportunity, or potentially from the internet or potentially from bricks and mortar banking system. So the strategy for that bank longer term is something that we still have to develop, but we definitely want to be able to grow the deposit base because that’s going to be a source of funding for a significant portion of our businesses. Brian Charles – RW Pressprich: Have you had any specific conversations with the regulators as to what would be required if you wanted to acquire a retail branch network or a series of branches?

We haven’t spoken to them specifically about that, but my view would be before we were able to do that, we have to significantly deal with both the Fed written agreement issues at the parent company and with the cease and desist, although the cease and desist really just covers deposits, broker deposits, but we would still need to deal with the FDIC and with the Utah regulators. So developing the strategy for the bank and ultimately being able to expand it will go hand in hand with dealing with the regulatory issues we have with our different regulators.

You're next question comes from Kevin Star – CRT Capital. Kevin Star – CRT Capital: On the last call you referenced an economic margin of about 1%. I’m wondering if that remains the case and how that might trend going forward.

We’re using 1% sort of illustrative and I gave you the components for the first quarter where right now it’s 65 basis points before FSA, so if that’s what you meant by economic, that’s where we are today. This pre-payment of debt will get us close to the, and above the 1% area. The other thing I look at is, on the commercial side, the margins are running a bit higher. We have some dilution from the consumer side that we need to deal with and that’s why selling some of the consumer assets makes sense to us right now. But I think we’re in that ballpark. We’re in the 65 to 100 basis point area as we speak with this debt re-payment. Kevin Star – CRT Capital: You didn’t give a purchase price for the Australian assets. I’m assuming you’re not willing to do that, but could you give a sense of how much cash net of debt pay down comes into the holding company from that sale?

That hasn’t been disclosed but there is debt on the subsidiary of several hundred million, I’ll tell you that, that we will pay off.

You're next question comes from [Joseph Bonmeister – Bennett Management] [Joseph Bonmeister – Bennett Management]: The margin in the first quarter was 60 basis points before Fresh Start, is that correct?

65 [Joseph Bonmeister – Bennett Management]: What is the volume you expect to generate from originating corporate finance loans at the bank? Can you give us an order of magnitude sense of things?

I think the answer is we don’t really want to give that, because that’s it a type of forward projection that I don’t think we’re really comfortable making. The only thing I would say in that we do anticipate that the amount of originations in corporate finance in the bank to grow over the course of the year. We are seeing a significant amount of demand. We’re being very rigorous in terms of the credit process to make sure that anything that does in fact get originated in the bank has very good credit attributes. So I don’t really want to predict the volume that’s going to be in there other than tell you that there’s a lot of interest and I would expect it to grow over the course of the year. [Joseph Bonmeister – Bennett Management]: In the past credit balance of factoring clients was a significant balance sheet item I think. At one point it was over $3 billion. The current balance is less than $900 million. I assume that you have that liability is now off balance sheet. Could you explain exactly how this works? I know that you have some sort of put option or derivative contract that you’re using to provide the same service. Is it expected to be a significant source of cash when you go back to the old approach to handling these clients?

The change in the numbers reflects the change in the business during the ’09 period as we were going through the liquidity and bankruptcy issues. The change in the business model was that we used to legally have a contract where we bought the receivables, and therefore we had to gross up our balance sheet because those receivables were our risk. Now we do not have that form of legal arrangement, but we have the obligation to collect the money and when collected, to pass it along to our customers. Clearly, we do still take the credit risk in between as well. We have seen some return to the former way of doing business, but like anything else in this world that happened over the last three years, some changes will stick. The business has been very cash positive over the first quarter, and I’ll just say that the business is also one of the businesses that has the most liquidity in terms of short tenure of receivables as well as the highest amount of non-spread revenues. So hopefully that’s responsive, but I don’t think we’re going to go back to the $6 billion of receivables and $3 billion of client credit balance model because the nature of the business has changed, and the business is a little smaller than it was. You’ve got to factor size into that. I think when we had the $6 billion and the $3 billion, we were probably doing $40 billion of factoring volume and you can probably see from the numbers we’re going to average somewhere in the high 20’s this year. You’ve got to factor that into your analysis. [Joseph Bonmeister – Bennett Management]: Is it expected to be a source or a use of cash in the future?

The factoring business is very seasonal, and I would expect that you’ll see some ups and downs. And what you’ll see is a growth in the cash out in the third quarter particularly, as we retailers begin to build inventory, and you’ll see that build a little bit in the early part of the fourth quarter, but you would hope to see, and I’m sure after all the years we’ve done it, have always seen it come down in the fourth quarter with collections in November and December and January from the holiday season. You’re going to see ups and downs and as I said before, we provided a loss reserve at the receivable level that we see today, and I think that will be a relatively constant or average number for the year, and that’s why I don’t think we’ll be building the reserve anymore for growth this year.

You're next question comes from [Louis Kiboski – Mass Capital] [Louis Kiboski – Mass Capital]: Just a quick question on the Australia transaction. I was just wondering where those bonds are going to be taken out? Are they at par or is there a different take out price that you are assuming in that transaction?

I can’t answer that right now.

You're next question comes from Larry Vitale – Moore Capital. Larry Vitale – Moore Capital: I had a question about the accretable discounts. I guess some other firms are calling it accretable yield. You said that the income contribution was $470 million and it looks to me that takes into account the accretable discount that was taken in income on the long term borrowings as well, is that correct because if you just do the math on the asset side, it’s more than that. And then, what average life of the assets are you assuming and can we impute anything from the pace at which you’re taking the accretable yield into income.

The interest earned component was about $450 million of yield. The rent, which also goes into the revenue line, are about $30 million. So that’s the $480 million. The interest expense accretion is $100 million, and that’s in a different line. That’s in the interest expense line. So when you net those three together, the margin was improved by $385 million as a result of all of those. Larry Vitale – Moore Capital: So there’s other stuff involved and if I just look at what’s going on in the asset side.

Yes. The 7% second lien debt for example, we’re accreting that to up by 100 or so, and if you look at, I think it’s one of the tables we have in the press release, on Page 9, you’ll see the details by line item that I just articulated. Larry Vitale – Moore Capital: What’s the tenor on the assets that you’re assuming or the life over which you’re going to be taking the accretable discount and can we impute anything about the life of the assets from that?

It depends on asset class by asset class. Factoring is done with such short-lived assets. The corporate finance and the vendor finance portfolios are in the areas of two to three years. The transportation portfolio is a lot longer than that in terms of appreciation benefit. And then the student loan portfolio is also a lot longer than that because of contractual life. I think when you put the whole portfolio together we’re probably in the three to five year average period.

You're next question comes from Henry Coffee – Stern Agee. Henry Coffee – Stern Agee: I was wondering if you could give us any additional detail particularly on the weakness on the transportation finance as well as some comments on what ultimately you’re going to do with your student loan portfolio.

I’ll answer the student loan portfolio. Our goal is to sell it. On the transportation portfolio, the more color I’ll give is that it’s collateralized. It’s been valued in FSA and the combination of those two facts make us comfortable that we don’t have a large risk exposure there. Having said that, we felt that we should put certain things on non-accrual when there’s some concern that we might not get all the payments in the near term that we would expect. But the collateral value is very good and the valuation that we set up in FSA looks strong.

You're next question comes from [Joseph Bonmeister – Bennett Management] [Joseph Bonmeister – Bennett Management]: On the impact of Fresh Start, it looks like the net of $421 million of net accretion, which I guess, is non-cash. Can you just confirm that compares to about $590 million of net interest income, so on a cash basis before operating expenses and the credit provision, looks like it’s more than $170 million?

The net interest revenue after Fresh Start is approximately $200 million including – [Joseph Bonmeister – Bennett Management]: You mean before Fresh Start.

Before Fresh Start our margin is positive, but it’s increased by about $400 million by the Fresh Start accounting adjustment. So as a result, we have $450 million or so of net margin and the way I’m looking at that is, you’ve got to take the depreciation from the operating leases and move that up. So let me just put it back together. The way we look at margin in our analysis and our dialogue is after the depreciation and operating leases. Otherwise you’ve got the rental income in there and you don’t have some of the expense. So we’ve got positive, pre FSA is positive. It’s positive by less than $100 million, and the FSA adds about $380 million to it. But I also think though, it’s not correct to say that the entire amount of FSA is non-cash because the loan pay downs generate cash as well as generate accretion. [Joseph Bonmeister – Bennett Management]: For example, the income statement reports rental income of $418 million. It looks like $33.8 million of that is amortization, so on a cash basis, that’s $452 million. Am I looking at that correctly?

Absolutely. You’ll get more detail on this when we file our 10-Q, and you see the statement of cash flow and the cash flow from operations. But if you flush out all the FSA, and then have some of the knowledge that John referred to that not all the FSA is non-cash, you’ll see that the earnings for the quarter are positive from a cash perspective of some magnitude, if that’s where you were going. [Joseph Bonmeister – Bennett Management]: That’s exactly where I’m going. Are you including operating expenses in that?

Yes. Look for our 10-Q.

You're next question comes from David Richards – GoldenTree Asset Management. David Richards – GoldenTree Asset Management: You said the student loan portfolio is something that’s for sale. Can you just remind me how you’re funding student loans, and then you referenced the $3.5 billion isn’t the cash number you run with necessarily on a go forward basis. Can you talk about what you think the right normalized level of cash balance is for the company?

There’s two pieces of student loans. One is at the holding company, which is securitized, so the securitization funds the student loans. The other piece of the student loans is in the bank, so it’s being funded by deposits in the bank. Those are the two pieces, and it’s split about 50/50 between those two places. In terms of the cash that we would steady state require, I think that’s something that we’re still working on, so I’m not going to really give you an answer to that other than we want to make sure we have sufficient excess cash for the near term and as we get more comfortable with the growth in the portfolio and as we deal with some of the financing that we’re working on, you’ll see us pay down the first tier debt. But I’m not going to give you a set number at least right yet because we’re really not ready yet to say here’s where we think we need to run on a steady state basis.

You're next question comes from Fred Willard – Samuel Terry Asset Management. Fred Willard – Samuel Terry Asset Management: Can you talk a bit more about the increase in the non-accrual lines, which I must admit from my point of view, was the one negative I read in today’s announcement. Secondly, can you tell us when you expect to publish the 10-Q announcement?

On the publishing of the 10-Q, the filing date is May 10, so a couple of weeks from now. In terms of the non-accrual, the color we’ve given is that you can see the increase in transportation which is about $150 million and that is all secured lending where we’re very comfortable with the combination of our carrying value and the collateral we have behind it. The other increase was in vendor finance where we saw some deterioration in the performance of certain consumer pool, and then I think the rest of the portfolio was basically flat, up a little bit in corporate finance. The bigger increase was in transportation finance where we feel we have good collateral values and not a lot of risk exposure.

You're next question comes from Kevin Star – CRT Capital Kevin Star – CRT Capital: If you do sell the student loan portfolio, the portion of it at the bank, the proceeds of that sale, could they then be redeployed pretty much in total for corporate finance lending or some other use?

Yes they would be available to fund corporate finance loans. [Kevin Star – CRT Capital] You’re not under any restrictions from Utah regulators.

No. So let me just close the call by saying I know everyone else has already said this, but say to Joe, thank you. I obviously wasn’t here for very much of this, but many, many years of service and it’s great to see you go out on a positive quarter and I just want to say thank you for the short period of time that I’ve been here that it’s been great to work with you. We look forward to talking to all of you and any other further questions you have, please refer back to Ken. Thank you all.