Jamie Dimon – Chairman and CEO Mike Cavanagh – Treasury & Securities Services

Guy Moszkowski – Banc of America/Merrill Lynch Matt O’Connor – Deutsche Bank John McDonald – Sanford Bernstein Betsy Graseck – Morgan Stanley Meredith Whitney – Meredith Whitney Advisory Mike Mayo – CLSA Jason Goldberg – Barclays Capital Chris Kotowski – Oppenheimer & Co. Jim Mitchell – Buckingham Research David Konrad – KBW Ed Najarian – ISI Group Moshe Orenbuch – Credit Suisse Ron Mandel – GIC Matt Burnell – Wells Fargo & Company Carole Berger – Soleil Group Gerard Cassidy – RBC

Good morning, ladies and gentlemen. Welcome to the JPMorgan Chase's second quarter 2010 earnings call. This call is being recorded. Your line will be muted for the duration of the call. We will now go live to the presentation. Please standby. At this time, I would like to turn the call over to JPMorgan Chase’s Chairman and CEO, Jamie Dimon; Chief Financial Officer, Doug Braunstein; and Mike Cavanagh, CEO of Treasury & Securities Services. Mr. Dimon, please go ahead.

Great. Thank you very much and folks, thank you for getting up at this early hour to spend a little time with us. I just wanted to open real quickly to tell you that this is Mike Cavanagh's last turn doing the Investor Relations call. So it's kind of his swansong, but I want you all to know what a great job we think he has done in a large financial company, in a very tough time, earning respect, getting the numbers, making sure we try to do things right, accurately disclosing things, maintaining good relationship with all of you. So my congratulations out to Mike, I'm excited about his new challenge and you will still be hearing from him in the future, just not on this call. And also to welcome Doug Braunstein. I don't know how many of you know him, but you will have plenty of time to get to know him in the future. Previously, he had been running the Investment Banking USA division including the Bankers and Equity, Debt, Derivative, Capital Markets and extraordinary – extraordinarily talented individual and he is obviously – he's been through this process with us last two weeks. So he is sitting here to listen to have a go, but I know he looks forward to seeing you and I know he will be a great CFO of JPMorgan Chase. So I'm going to hand the call back over to Mike and when he is done, we will be taking some questions.

Thanks, Jamie. And I just want to thanks to the entire finance team at JPMorgan Chase. They are going to do – they did great for me and they are going to do a great job for Doug, and welcome Doug and congrats from me as well. So I'm going to start and go through the usual slide deck that we've got here. So if you start on page one here, second quarter highlights. As you see, we earned $4.8 billion after tax, earnings per share of $1.09 on revenues of about $26 billion in the quarter. We flagged for you a – the two big significant items and most of the rest of the stuff we'll get into washing itself out throughout the rest of the numbers. But two big items, reduction to loan loss allowance of about $1.5 billion or $0.36 after tax. I'll cover this upfront and once. It's really coming in three places throughout the firm. First is in the Investment Bank where we had about $350 million pretax reserve release. That's really the same reason in the last quarter of loan paydowns and loan sales freeing up reserves. On – in the credit card business then, you will see the lower current losses leading to lower estimates for future losses and that leads to a reduction in reserves of about $1.5 billion there. And then finally in our commercial bank, about $400 million pretax of reserve release, which is just related to the periodic, but normal refinements to our credit loss estimates in that business. So those three places are what's driving the reduction to loan loss allowance. We still ended the quarter with $37 billion of loan loss reserves and more than 5% loan loss coverage. So we feel very good – in very good shape on that score. The other items, the U.K. bonus tax, we booked about $550 million after tax, mostly running through the comp line – all running through the compensation line mostly in our Investment Bank. Those two items together, about $0.22 worth of net positive earnings, so about $0.87 away from that. Broad characterization of those results is that most of our businesses performed pretty solidly as you'll see when we go through the numbers. And of particular note is the decline in levels of actual charge-off losses in our consumer businesses, both retail and credit card, from prior quarters. Capital strength continues to be very strong, strong balance sheet continues and we'll get to that towards the end. So now flipping on slide two, I'm just going to skip, it's everything I just said. And now let's go to the Investment Bank on slide three. So there, you see a circled number, profits of $1.4 billion in the Investment Bank. I've already commented on the credit cost line, which was driven by the reserve release. So starting with revenues, you see total revenues of $6.3 billion in the quarter for the Investment Bank. So starting with investment banking fees, as you can see and read for yourself, we continue to be number one ranked year-to-date in investment banking fee revenue and that amounts to $1.4 billion for the quarter, which is down from a very strong and capital issuance-heavy quarter in the prior year. Moving to the markets businesses, I'd say generally speaking that we are back to sort of pre-crisis levels for spreads. And that combined with lower levels of client activities is – as a general matter throughout the quarter on average, it is the broad backdrop. But specifically, fixed income markets, you see we had revenues of $3.6 billion, down from last quarter and last year and that's – the main areas for those declines from prior periods was in credit markets businesses, rates and commodities areas. Included in the fixed income revenue is a $3.6 billion, about $400 million positive of – benefit from DVA or credit spread tightening on structured notes. Next, in equity markets, $1 billion of revenue and that included $200 million of DVA. Not much more to really highlight there, nor in credit portfolio revenues. Just on expenses, $4.5 billion. Remember, that includes the U.K. bonus tax. When you back that out, the comp to revenue ratio in the quarter was about 37%. So that's it for the Investment Bank. Moving on now to retail, page four gives what drives the P&L that we are going to see on the next slide. I'll just say, retail banking top half of the – top portion of the page, the deposit-taking business, retail branches, you can read these through yourself, but you continue to see healthy underlying trends in the growth of the business, whether it's stabilization in growth in deposits. Remember, we've been running of high-cost deposits. So the net growth here, we feel good about and continued growth in underlying – other underlying trends. Middle of the page, other consumer lending and mortgage banking originations, a total of about $38 billion worth of loan originations in the quarter. That's part of $156 billion of loan originations across the whole business including middle market, small business in the broader company. So we continue to be originating credits for our clients at very good levels. Now, I'll talk about real estate portfolios at the bottom in a second. If you flip to slide five, you have the P&L for the retail business. I'll walk you down the circled numbers on the left. So in total, retail, the sum of all of this division made $1.042 billion of net income in the quarter. Moving down to the next circled box, you see the retail banking side, which I just commented on in the prior page, earned $914 million in the quarter. I'll let you read the commentary in the press release and to the right here, it's pretty straightforward of what's going on in the business, and healthy trends there. The next piece is the ongoing production origination of mortgage loans and other consumer lending including auto. And there you see we had profits circled of $364 million. Again, I'll let you read what's going on there and just point out that the $2 billion of revenues in that space continues to have a drag on it of – loan repurchase reserve level – expense and reserving, that's a contra revenue there. That's a little higher than it was last quarter, flattish to where we were in the fourth quarter of last year, but continues to be in our level of expectations, but obviously, continued uncertainty as to how that continues to progress. And then finally at the bottom, you have the real estate portfolio balances. Obviously, this is driven heavily by our actual credit costs and prior period reserving. No reserving at all in this quarter to the positive or negative, just lower credit cards that I'll cover. And so let's go to that. That was a loss in aggregate of $236 million. So if you flip the slide to slide six, you pick up the circled numbers on the left and the commentary then in the upper right is that you see the decline – substantial decline in the second quarter versus last quarter and a year ago in actual current quarter charge-offs. And that is on the back of the improved delinquency, early bucket delinquencies that we have been commenting on for the past several quarters, continuing to roll through, as well as moderating levels of losses, where we do have default. So lesser levels or moderating levels of loss severity. What we would say is that those trends appear to be stable from beginning of quarter to end of quarter. So it is not clear that we can count on continued improvement from these levels, but in terms of our outlook, at these levels of delinquency and loss severity if we hold where we are we would expect to see our quarterly losses run at the end of levels that you see in the outlook box in the middle of the right-hand side. So at or below a billion dollars for home equity, $400 million for prime mortgage, and $400 million or so per quarter for subprime mortgage. And so that is obviously a change from the outlook that we had previously given, which you could think of we used to guide towards where we could see losses progressing upward towards in prior quarters. As we talked about this guidance, now we have sort of given you more of an outlook based upon a static level of delinquencies and loss severities, running at these kinds of numbers from here. So clearly an improved underlying loss picture here, but we are still cautious and again no changes in our reserve levels in that business. Moving on to card services on slide seven, here you see we had profits, circled number on the left, profits of $343 million. Credit cost being the big story. So I have already mentioned the $1.5 billion pretax reduction in loan loss reserves, so let us just focus on the actual charge-offs in the quarter, which you see circled number on the left again, the 9.02% charge-off rate in the quarter for the Chase portfolios as the ex-WaMu, an improvement from last quarter. You see the printed number last quarter was 10.54%, but recall that was inflated due to a payment holiday that I won’t go into, but on a real basis we dropped about 90 basis points in losses quarter-over-quarter, and as you will see when we get to the outlook, we could see that improving again by maybe another 50 basis points to 8.5% charge-off rate plus or minus for the Chase portfolios, as we look into next quarter would be our best guess given the level of trends we’re seeing. On the revenue side, $4.2 billion of revenue that is down year-over-year and quarter-over-quarter, and very similar trends to dynamics [ph] that we have talked about in the past. So you have got lower outstandings on lower sales, higher level of – the level of charge offs we have experienced, less balance transfer activity, as well as that is running off the Washington mutual portfolio, and now we are starting to get some impact of the CARD Act legislation, which is probably about 25% of it in our run rate in this quarter on the revenue side. The next three businesses, commercial bank, TSS, and asset management, I will cover pretty quickly. They are – the dynamics in these businesses is very similar to what they have been in the past. So I will just flip through these quickly, but hit a few items. So, on the commercial bank it is $693 million that includes the $400 million of reserve release. Ex that that is $450 million or so after-tax. That is based upon the 1.5 billion level of revenues; you see here which continues to be strong. The dynamic, I would guess, I would point out if you look at the key statistics, you see end of period loans and leases, the circled number of $96 billion of loans and leases, flattish to where we were last quarter, and down from a year ago. So we continue to see maybe some signs of activity on the horizon, but not yet translating into actual increase in loan demand and continued low level of utilization in the low 30%, you know, 30%, 32% utilization rates against the committed lines we have to our clients in this space. Our next business, treasury and security services, profits of $292 million in the quarter. Again, general environment of low rates putting pressure on revenues here, but in the second quarter we actually get a seasonal benefit embedded in it and you can see it in the security services side from securities lending, particularly coming out of Europe in the second quarter of the year. Finally on the business side, asset management on slide 10, $391 million of net income, strong assets under management and revenues related to that on continued strong investment performance, which you can read on the right-hand side. The one thing I would point out is you can see from the commentary on flows in the middle of the right-hand side that we are seeing outflows in sort of low spread, low risk, low return liquidity products, 29 billion and 126 billion for the last quarter and last year. And that is partially offset on the flow side, which flows back into longer term bond and equity type of funds. Slide 11, corporate and private equity, you see private equity very modest activity in the quarter, $75 million of revenues translating into $11 million of after-tax profits. So the big item being the corporate segment itself. You see $642 million of profits in the quarter. I will just jump to where I think that is going. That for a host of reasons think of that as a number that in future quarters, coming quarters could trend towards more like $300 million plus or minus, but obviously there is lumpy items that occur any one quarter to the next. So in this particular quarter, we have a level of securities gains coming out of our investment portfolio of about $900 million, and then in the expense side we had some higher litigation expenses booked in the quarter. So those numbers are washing [ph] through together with just over the quarter higher level than normal of – than what we will see on an ongoing basis of portfolio size thrown off net interest income. So moving to capital on slide 12, you see Tier 1 capital and Tier 1 common capital grew in the quarter 131 to 137 and 104 to 108, helping drive flattish risk-weighted assets and total assets, little bit of a decline. You see Tier 1 capital ratios and Tier 1 common very, very, very strong at 12.1% and 9.6%. I already commented on the very strong level of credit reserves, and I will just point out that at the tail end of last quarter, carrying through through yesterday, we bought back about $500 million worth of stock in the past several weeks. So finally on the quarter outlook, looking ahead on page 13, I think I covered well everything related to the home lending guidance on the left-hand side, so I will skip that. I will just give you an update in terms of where we’re on the overdraft piece in retail. You see that we are just updating our estimates there of the net income impact, previously on an after-tax basis $500 million plus or minus. Now a little bit higher $700 million plus or minus is our best current estimate of what the full impact when it ramps in will be. Only half of that is currently running through our numbers. On the credit card side, I commented on the declining balances for a host of reasons, then you can see and read for yourself that we expect that to continue for the same reasons that we are currently seeing including the run off of the WaMu portfolio and some legacy low yield balances in our outstandings. Credit losses, I already commented on the 8.5% plus or minus charge off rate for Chase. And then on the CARD Act side, the total impact that we are expecting to see would be about 750 million plus or minus. That now includes our view of what the final piece of legislation, which was around what defines reasonable and proportionate fees. It is a new item, but I think all in we’re at 750 plus or minus. We used to be at 500 to 750 without that item, but now with that in I think about it as being at 750 million plus or minus. And I already commented on the level of expected profits in corporate. So I guess the final thing I will comment on is the regulatory reform on slide 14. We are not going to say too much about this today other than these comments given that we are getting the vote today, and there is still even past this voting, a lot to be defined by regulators and many uncertainties that makes it difficult to talk about this with precision. But let me just run through what is on this page, which is that we do recognize and we have talked a lot about the many positive aspects that are going to be coming as part of the pending regulation. We’re happy to see and always ran ourselves this way, higher capital and liquidity requirement across the financial sector is a good thing. A resolution authority, we lived through Bear Sterns, and ourselves saw the problems of not having power to resolve institutions more broadly than just the traditional powers over commercial banks. So we welcome that, and we think it is a very good idea to have system wide risk oversight. So those are clearly some pluses that we look forward to benefiting from on the other side of regulation. Definitely I have to point out though that there are some challenges that come along with where we sit, which is obviously what I already said that those many uncertainties remain. So while we expect to get this legislation today, there remain hundreds of rules to be written and ongoing interpretations that will really define what this looks like. There is a need to get global coordination obviously for this to be well executed and that is still to be done. And then of course, with anything of this kind of magnitude with the ongoing interpretations that are going to come, none of us really know what unknown consequences are going to come for our business activities and our clients. So that is on the challenges side. But I would sum up that it is going to have a significant impact on many of our businesses. We are spending a lot of time thinking about this and particularly about how it is going to affect our clients, because as you know we’re a very client focused set of businesses. So a lot of energy is going into making sure we understand clearly what it is going to mean for those clients. And going back to my first point, very hard here to – with any kind of real certainty speak to you about what the impact could be here, because the first point is that this is all going to phase in over time. So it is not like the potential financial impacts are going to be here tomorrow. This will gradually affect our results to whatever degree it does. What effect it does have is clearly going to be a result of how clients respond in terms of what they choose to – what services they avail themselves of and at what volume levels. So that is a little bit of guesswork at this stage. And of course, whatever impacts there are going to be is going to be in part mitigated at least through adjustments to business models or pricing of products and services, and in many cases in our businesses, the benefit that our shareholders will get back by having capital released as a result of some of the changes in this legislation. So, more to come as we understand more, we will be as clear as we can be. I will just remind everybody that for JP Morgan Chase in particular, we have always thought about running ourselves as a client focused business, not heavily dependent on proprietary activities, which is the main thrust of the ideas behind the legislation; we are not at all disturbed by. In our client businesses, investing for our clients we have always had a clear separation between what we do as a fiduciary for our clients and where we run a risk with the firm’s own capital. So that is another thought in the legislation that we are very comfortable with. Clearly, you all know, this is being highly focused on running a strong balance sheet with extremely strong liquidity and strong capital base, and again finally this is the strength of the fundamentals of the various businesses which choose to compete in, and the diversified earnings power and margins that we get out of the businesses by running them well is part of what allowed us to really run. We’re on our way through the crisis, and never have a losing quarter. So that is how we think about it is from here we’re just going to continue to do what we have always done, which is commit ourselves to implementing this regulation in an way that protects our clients and protects the competitiveness of the US financial system and JP Morgan Chase in doing that. And I will speak for us that we have got hundreds of work streams around this place already engaged deeply in understanding and looking to implement this legislation in a thoughtful way that I just described. So not to say, we will have plenty more to discuss as time goes by on legislation once we have finer points and better details to provide, but these are our thoughts for today on that scope. So with that why don’t we go to questions?

Your first question comes from the line of Guy Moszkowski with Banc of America/Merrill Lynch. Guy Moszkowski – Banc of America/Merrill Lynch: Good morning.

Hi Guy. Guy Moszkowski – Banc of America/Merrill Lynch: First of all, I just wanted to say Mike, obviously, Jamie said it all, but you have done such a terrific job for all of us. I just want to thank you for that over many years at this point.

Thanks Guy. Guy Moszkowski – Banc of America/Merrill Lynch: There is no doubt that the decline in losses in delinquencies and the much lower expected loss guidance on the home mortgage side are a really big positive, but we know also that foreclosures have been slowed by various modification programs and forbearance programs, and anecdotally we still hear about people who are pretty delinquent who have yet to receive a foreclosure notice. Is this not something that you’re worried about given the decline in that mortgage loss guidance? How should we think about all that?

I mean, I would say Guy, as we’ve talked about before, we do worry about those thoughts, but make sure that when we actually take account of our current period charge-offs and our expectations for future losses, we’re trying to be very cognizant of delays in courtroom filings and backlogs in courts and so forth to make sure that we are keeping current in our losses and our forecast of losses that best we can. So we’re consciously concerned and try to reflect it in what we do.

Let me reiterate. We take the charge-offs on things that are delayed in foreclosure, and we do believe there is a little bit of a backlog due to foreclosures. We don’t think it is (inaudible). We think it’s already been in a high level. It came down a little bit. We do believe this is going to go up a little bit, but it is not going to be you know, two times what we’ve been experiencing. Guy Moszkowski – Banc of America/Merrill Lynch: Okay, that’s helpful. Thanks for that. Can I just ask on the rest of warranties issue, you did talk about repurchases affecting the quarter a little bit? Can I just ask if you received the subpoena from FHFA and if you can give us a sense for your stance at this point on these issues, I remember that last quarter you added over $2 billion to a reserve. Can we assume that that was built on an already significant reserve?

Yes, so we did get a subpoena for information, which I believe went to all the major broker-dealers. They’re not going to be regularly reporting on subpoena and stuff like that, and we do try to take account and repurchase reserves. They’re still running kind of high. So we have a reserve. We have expenses, and we think with all reasons, I think it might start coming down by early next year, because if you look at the vintages and the ages and the timings you know, this may be a little bit lag too, but if they could very well come down. Guy Moszkowski – Banc of America/Merrill Lynch: And the final question I have for you is regarding the revised guidance on the CARD Act and OD stuff, the overdraft [ph]. Obviously, the changes in the regulation mean that the few, who are no longer subsidizing a lot of products by pre-checking and the like for everybody else, and you have given us an assessment of the impact, but should we assume that those are still static analyses and that you haven’t factored in there some of the repricing that you might do the kind of spread the cost of services more?

Yes. Guy Moszkowski – Banc of America/Merrill Lynch: So over time there is probably some mitigation to those numbers?

Yes. Guy Moszkowski – Banc of America/Merrill Lynch: Okay, thanks very much.

Your next question comes from the line of Matt O’Connor with Deutsche Bank. Matt O’Connor – Deutsche Bank: Good morning.

Hi Matt. Matt O’Connor – Deutsche Bank: I think you guys have been more upfront than some banks about the non-interest income pressure out there from running off loans, reducing to carry trade, but I think it’s fair to say the 2Q maybe came in a little bit lower than expected, just lower than what I’ve had. So I was wondering if you could talk a bit about what drove this decline, and what do you think the outlook is on non-interest income dollars?

You know, I think Matt it’s in part I got to hold the side what goes on in the trading businesses. So holding that aside, the level of spread, you know, was down, just a touch and product comes down, a touch again. So it’s really the volume declines across the consumer portfolios that will put, you know, a little bit of continued downward pressure on NIM [ph] dollars looking ahead. Matt O’Connor – Deutsche Bank: Okay, much more modest than the billion dollar decline we saw this quarter?

Yes, I think some of that was changed in the investment portfolio as well. Matt O’Connor – Deutsche Bank: Okay, and that’s largely behind you?

No, it’s going to continue in that corporate line that Mike said is going to come down to $300 million. That’s coming – a big chunk of that is NIM coming down a little bit as we re-position the portfolio.

That’s right. The run rate at the end of the quarter is lower as a result of those sales that generated the billion or so $900 million of gains, because I was just pulling forward some of that NIM. Matt O’Connor – Deutsche Bank: Okay, so the corporate net write-down, obviously the investment banks are always dependent on what’s driving trading and then ex those areas more modest pressure than we saw this quarter.

Right, well credit cards balances have come down and they still run off mostly in the mortgage related areas in WaMu and J.P. Morgan Chase, and we gave you those numbers before. You can just build them right into your calculations. Matt O’Connor – Deutsche Bank: Okay.

But remember that also frees up capital. So there is a flipside to that. Matt O’Connor – Deutsche Bank: Right. That was actually where I was going to go next. I mean, with the balance sheet coming down and as the revenue environment is tough, you’ve already got a lot of capital. It’s going to build. You bought back some stock. I think on a net basis the shares were unchanged. Is there opportunity to bring down the share count on a net basis or is that more?

Listen – look, I think it’s significant that we started to buy back some stock and you know, which means we are value investors. So, think first that we’re making a couple of statements here, and obviously it is one way to manage the capital base and reinvest money on behalf of our shareholders. Matt O’Connor – Deutsche Bank: Okay. This is not like regulatory – I mean, you bought back stock, but the net share count didn’t decline.

That is right. Matt O’Connor – Deutsche Bank: (inaudible) to actually net buyback stock.

Yes, we might. We like – there is a discipline to buyback we issue. Remember a lot of reissue is restricted stock to employees, which sets over time. So, every quarter, mortgage shows up in share count. So a lot of things affect share count, but we as a discipline like to buy back at least what we issue. Matt O’Connor – Deutsche Bank: Okay, all right. Thank you.

Your next question comes from the line of John McDonald with Sanford Bernstein. John McDonald – Sanford Bernstein: Hi Mike. Wondering if you could give any color on what changed on the NSF OD impact of your estimate there?

Certainly just refinements as we’re getting further down the road of opting levels. You know, it is the main driver, little bit less than we had originally forecast opting in and that’s driving the numbers for impact a little higher. John McDonald – Sanford Bernstein: Okay. Just to follow up on the NIM, and in the card business the NIM was down. Are the changes in the CARD Act reflected in the card NIM might be a lack of ability to reprice that kind of in there or could there be more NIM pressure in card from that?

There will be more pressure in aggregate on the results in card, because we are only about 25% of the way. I got to come back John how much that will be through NIM versus other portions of the revenue. John McDonald – Sanford Bernstein: Okay. But that impact the –

But, there are probably more to come, but it is the split of where it will sit NIM versus other revenues. We can come back and give you better clarity. John McDonald – Sanford Bernstein: Okay, but that’s embedded in the outlook gave?

Yes. John McDonald – Sanford Bernstein: Okay. And then any comments about potential improvement, and line utilization is just the precursor to any improvement in loan demand?

Seeing activities again, same as last quarter strengthened what’s going on in small business lending unit, double the level that we originated last year, middle market and commercial is, you know, I’d say it’s similar to what we said before. Plenty of dialogue going on between our clients and our bankers as folks get themselves ready to take some actions, but just not yet really manifesting itself in draw downs on lines or you know, loans going up just yet. Hopeful we get some –

(inaudible) probably significant. So wholesale loans actually showed fairly healthy credit. I mean, 23 basis points of loss from the investment bank and 73 basis points of charge-off in middle market. That’s a sign of healthy companies and middle market loans, just take the middle market section, I mean, for the first time in years stopped going down. I look at it as a good sign too. John McDonald – Sanford Bernstein: Okay. Last quick question on reserves, in card you’ve been releasing reserves for a quarter or two now in RFS, you didn’t add or release reserves. If the current delinquencies continue and your new laws outlook plays out would you start to release reserves in RFS. Do you think this year, if that plays out the way you think it is?

Yes. The first thing about loan losses is you should assume that we don’t like to release loan loss reserves. So it isn’t like you should be saying, well, this company want to do it, to report its earnings, we don’t consider earnings. I’ve always called that income paper. It means nothing, okay, and we like to protect ourselves. So in credit card we have some pretty good insight into the quarter forward, even two quarters forward. But as you all pointed out there is far more uncertainty in mortgage lending, and we are extremely cautious and careful on it. And you know, if we have to take down reserves, put it this way, we’ll take them down only if we have to. John McDonald – Sanford Bernstein: Okay, thank you.

Your next question comes from the line of Betsy Graseck with Morgan Stanley. Betsy Graseck – Morgan Stanley: Thanks. Hi good morning. A couple of questions, one is just on how some of the, you know, concerns are around the industry overall, and you know, this weighs on your stock as well from time to time. You know, the market is concerned about credit; you seem to be showing a significant improvement in credit this quarter. Capital management and frankly I walked in this morning not thinking we were going to get anything and was positively surprised by the buyback. So you seem to be saying that that can happen. Two questions I have. One is on FinReg. In the past, you've indicated on the derivates side that if certain things happened and you did nothing, the hit to derivatives revenues could be in the $2 billion to $3 billion range. Are you changing that assessment at this stage, given what we know about FinReg at this point in time?

So – we are comparing apples to oranges. A while back when you were talking about derivatives, we were talking about if it all went to an exchange what could that mean. That's what that number was. This is completely different than that and has far more complexities to clients, global competition and it will phase in overtime and we don't really know the effect. But I guess what we really look at is we are going to be able – we want to make sure we can service our clients and we think we will be able to and that's probably the most important thing. Now, we will have some effect on the revenues and margins and volumes, yes, probably. Betsy Graseck – Morgan Stanley: And Mike talked about capital release.

Yes. So – I mean, obviously when we talked about the revenue impact, if derivatives going to exchanges in the extreme cases Jamie said, we never then really tried to quantify, just pointed out that that's a capital reducing event as well. So that's the point and some of these activities, there will be capital freed up as the business models adjust. Betsy Graseck – Morgan Stanley: And then –

– also makes it very hard to put numbers on. The totality of the effects when you take into account timing, first blush issues that change and then capital release and business model change. Betsy Graseck – Morgan Stanley: As your estimates kind of firm up, you will be sharing them with us?

Yes. Betsy Graseck – Morgan Stanley: The last kind of big concern over the group is deflation. Could you just give us your thoughts as to how you are thinking about that and how you are trying to manage in an environment which obviously – clearly is slower growth, but could have some potential deflationary elements to it?

I'm – I – I'm not sitting here terrified over deflation to tell you the truth. And what we see in the economy is that maybe growth slowed down a little bit in June, but you still have fairly good underlying numbers in manufacturing and servicing confidence, China, India and so – we try to protect our company and we really do – we look at exposure to kind of all the fat tails. So that's kind of one of the fat tails that I think we worry about, but we are not going to run the business guessing that there might be deflation. Betsy Graseck – Morgan Stanley: Okay. And then lastly on capital, you did the buyback to eliminate the pressure that you would have had from issuance. Is – can you share with us what your thoughts are on capital levels that you think you would be able to manage to going forward or is it too early to say?

Well, I would just maybe saying – I think we have tons of capital and tons of liquidity. But we don't determine regulatory requirements and as you know, Basel III is out there and we think even under any reasonable type of Basel III, we will be fine and we would adjust – if – we would adjust the balance sheet in a way that makes sense. A lot of things in Basel III which would probably dramatically change your business models and we would obviously adjust to that. So we think we are in a great shape. We'd like to see a little more certainty around Basel III and we think there is going to be more guidance coming out in September and then November and our Basel III will be applied. Betsy Graseck – Morgan Stanley: Great. Okay, thanks.

Your next question comes from the line of Meredith Whitney with Meredith Whitney Advisory.

Hi, Meredith. Meredith Whitney – Meredith Whitney Advisory: Oh, sorry. I was on mute, sorry. Good morning. I have three quick questions. One is on the general impact of wholesale sales to – wholesale loan sales – whole loan sales to third-party servicers and how that impacted results on a relative basis to last quarter, last year and your outlook on that on a go-forward basis. And then I'll wait to have my follow-up question, please.

You are talking about wholesale commercial loans? Meredith Whitney – Meredith Whitney Advisory: Wholesale mortgage loans – whole loan mortgage loans, packages of mortgage loans, because it – if I just sort of try to strip out the charge-offs from the loan balance decline and run-off, it looks like there were some loan sales in the quarter.

There was – there was –

None on the residential mortgage side, yes.

Other than normal production and then sales to Fannie Mae and Freddie Mac in the warehouse.

Had some on the Investment Bank – Meredith Whitney – Meredith Whitney Advisory: Okay. So no impact on credit from – I'm sorry? There is no impact from credit on loan sales to third party servicers?

No. Meredith Whitney – Meredith Whitney Advisory: Okay. And then the second question is have you updated your outlook for home prices peak to trough?

Yes, we look at – obviously, we look at what you do and a lot of the people and embed it in some of our reserving and stuff like that. It is a – where we expect home price to go down a little bit more. But we also look at – we also look at how it would be under much more adverse circumstances and we are in pretty good shape. We don't know what's going to happen to home prices. Meredith Whitney – Meredith Whitney Advisory: Okay.

And we don't think anyone knows – we don't think anyone actually knows what's going to happen to home prices. Meredith Whitney – Meredith Whitney Advisory: Okay. And then my final question is last week, a couple of weeks ago, BIS came out with statements on – general statements on bank dividends. I don't know if you had a chance to look at it and offer your comments on this.

I didn't see.

I didn't see them either, Meredith. Meredith Whitney – Meredith Whitney Advisory: It basically said that they wanted to make sure – I mean, I'm absolutely paraphrasing here, that when banks did re-implement dividends, there will be no risk of them cutting dividends again. So it just seemed like they were pushing out the whole dialogue on reinstating dividends to the banks.

I think that's part and parcel of the thoughts around Basel III that we need more clarity on kind of default.

That's a policy statement, which I would generally agree with. But there is a judgment call there and – Meredith Whitney – Meredith Whitney Advisory: Okay. All right, thank you.

Thanks, Meredith.

Your next question comes from the line of Mike Mayo with CLSA. Mike Mayo – CLSA: Hi, good morning.

Hi, Mike. Mike Mayo – CLSA: I guess I'm not clear where you guys stand on the dividend. Now, there is some article saying you are not going to increase the dividend this year. Yet now, you are buying back stock. How do you think about the dividend?

Just – so just before I talk, I think our business units are much closer to being best in class than you obviously think. The dividend – we have said three things, okay. We want to see the economy get better in terms of employment getting better, we want to see a significant improvement not for a month or two or even a quarter and charge-offs and delinquencies and we need more capital certainty. The first two seem to be getting better; the third, it doesn't. This capital certainty, Basel, et cetera. There – they are all starting to come inside in formation. Hopefully, we will have all of that clearly understood by the end of the year and we would like to reinstate the dividend, we think our shareholders want it. We just want to check off all those boxes so that we don't have to cut the dividend again. And buying back stock is just no way of, in my opinion, both capital management and doing very smart thing for shareholders. In fact, if I had a – my – our preference now would be the stock buyback. When – and a lot of the stock was bought at slightly lower prices than 40, and so that is I think a very good thing to do. Mike Mayo – CLSA: And what was the average price of the buyback?

I don't remember. My memory says 37 or 38. Mike Mayo – CLSA: Okay. And then second question, I guess you are not quantifying the impact of the Dodd-Frank Act on the derivatives business, but can you just say how it could impact the revenues, margin, volumes, and capital, just so we can try to size a little bit better?

I guess, one of the issues – first of all, there is timing. So when you say size it better, I don't think a lot of you do forecast to go out three years. So you are talking about several years before it phases in. And as Mike said, there are capital effects, there are margin effects, there are volume effects and when you put them all together, we don't really know. So I – it would be less accurate of us to take a guess at that and to tell you we don't know. Mike Mayo – CLSA: I mean, your guess is better than us. Is it 1%, 5%, 10%, 20%, some people have estimated 25%, 30%.

Let them estimate whatever they want. Mike Mayo – CLSA: Okay, that's fine. And then last question, I guess, does go to best in class. This is the first conference call since you made some big management changes, talking about the need for more non-U.S. expansion. Where do you see the end game in terms of the non-U.S. franchise of JPMorgan and now that you have so much more management and resources targeted for that, what are some of the milestones?

Yes. So I think our investment banking and emerging markets platform is just as good as Goldman Sachs, for example. But you referred to – remember that – investment banking, asset management, TSS are very global businesses, they've been global for a long time. So we are talking about augmenting and accelerating some of that. And if you think about it in terms of locations for TSS, we will be adding locations to serve clients in custody and cash management. If you think of it in terms of asset management, we are always adding product and we are adding bankers. If you think of it in terms of investment banking, more bankers, more countries, more coverage, more research. That's not just in the bricks; it's also going to be in other countries around the world. Mike Mayo – CLSA: All right. And just a last follow-up since we are bringing up peer analysis – I mean, Investment Bank division this quarter had a decline of almost one-half in EMEA and I was wondering if there is noise related to that.

Yes. So investment – I think the Investment Bank had a great performance, but it is true and we lost a little bit of share in a couple of areas. I think I told you last time that – I told we had a little artificial increase in share, because we were still strong in doing business, one of the people had pulled back a lot. So the competition is back. I think that's a good thing. We are going to have to fight for it inch by inch, foot by foot, yard by yard, mile by mile, and any number in any quarter, it can easily jump around a point or two or three, as you know. So we – the way we look at it is more bankers, better bankers, more products, more services, more coverage of clients and we will earn share. So over the years, I expect the share to go up and not in any one quarter. Mike Mayo – CLSA: All right. Thank you.

Your next question comes from the line of Mike – I'm sorry – from Jason Goldberg with Barclays Capital. Jason Goldberg – Barclays Capital: Thank you. Just maybe – following up on that, can you just maybe expand a bit what you saw in fixed income trading during the quarter? Maybe a bit more granular than what was in the release and just – and it was hard to predict, but kind of what your expectations are at least first couple of weeks you are seeing for Q3.

Yes. So I think Mike said, credit wasn't as good this quarter, rates wasn't as good this quarter and there was an article in the Wall Street Journal about commodities, so we lost a little bit of money in call. So that's – there is nothing mystical, okay? Spreads and volumes are still good. Spreads are back to where they were before the crisis and volumes are still pretty healthy in our mind and I don't know what the whole quarter is going to look like any better than you do. Jason Goldberg – Barclays Capital: Fair enough. And then you noted in the release, in the commercial bank – all your losses tied to commercial real estate. Could you maybe kind of give us an update in terms of what you are seeing in that segment?

Yes. So the 73 basis points includes commercial real estate. And when we say that, it's – we have – it's not bad – these are not bad numbers, we have very little – we don't have a lot of commercial real estate that's risky. Actually, we make disclosures – I think they are still in the back of this presentation that show you by category. It's just that 60% to 70% [ph] of losses are coming out of the total real estate category. That's all it is.

And that's between – true commercial real estate and the multi-family lending, both of those running higher than that average. And so middle market – commercial and industrial ex that would be a little bit lower than the 75-ish basis points, which goes back to Jamie's point about the health of corporate America. Jason Goldberg – Barclays Capital: Great. Thank you.

Your next question comes from the line of Chris Kotowski with Oppenheimer & Co. Chris Kotowski – Oppenheimer & Co.: Yes. Standing back and looking big picture, I guess, given the revenue environment, the total revenues came in right about where we were looking for, but expenses were about – if you back out the U.K. bonus tax and back out the $2.3 billion charge last quarter, I mean it was – the expenses were – was off a bit and if I look at it, again sort of linked-quarter revenues are down 9%, but excluding the two special items, linked-quarter expenses are up about 2%. So I'm curious, do you have a – is there a reason for that? Is that investing in future growth? Is that the drag of higher credit costs currently or –?

Paul, I think Mike mentioned this. It was higher litigation costs this quarter. We are in a litigious society and a litigious time. So that was – that will be one number. I think expenses are generally in some of the businesses as we are adding some people and adding branches and things like that. And then – but of course we continue to run higher costs in default and higher costs in foreclosed assets. I don't know the year-over-year on that, managing foreclosed assets. So it's a variety of factors. Chris Kotowski – Oppenheimer & Co.: Okay. And any outlook or this – we should – this is the expect – level of expense we should expect for –?

I think the only – I think we kind of give it business by business. So –

Yes –

If you go to corporate, that $300 million after tax is kind of NII and corporate overhead on the allocated, unallocated. That's probably the best – I think that by the number that is affecting that the most. Chris Kotowski – Oppenheimer & Co.: Okay. And then on the capital management/return to shareholders question, I mean, I guess – you know, I understand the political sensitivities, it's an election year and no one likes bankers and all that. But even with the 500 million in repurchase, I mean, you are at close to $5 billion in earnings and your tangible common ratio is building up at a tune of about 50 basis points a quarter. I mean, is there some point at which the regulators just say uncle and just go ahead and do what you need to do?

Well, we bought back some – I mean, buying back stock has just started. So that doesn't have to necessarily end and we – as you know, we don't tell you what we are going to do with buying back the stock, but – but we agree with you, we just think – I think we are trying to be clear. There are a lot of uncertainties around capital. As those uncertainties are resolved and which I think when they do, we will have plenty of capital and that capital number is going to grow even faster over time, not slower as reserves come down, et cetera. We agree with you, we are getting capital heavy, we are using – we are buying back a little bit of stock. When we start the dividend, we want to be permanent. And if we are – if – I've said it and I'll say it again, if we are lucky, sometime by the end of this year and hopefully sometime – if not that, hopefully early next year. Chris Kotowski – Oppenheimer & Co.: And then I guess just going back to Guy's question a little bit, I mean when the – as the Card Act was making its way through Congress, we could kind of see the revenue – the offsetting revenues come into the income statement for most of the card issuers and the revenue margins started going up. And I'm just curious to the – with the NSF fees and the potential limits on interchange fees and all that, can you give us an idea of what kind of tests and experiments on the revenue offset side you are doing?

Well, in retail banking – I mean, I guess the big issue with both those things is how much of that will eventually be repriced into the business. If you a restaurant and you can't charge for the soda, you are going to charge more for the burger. And so I just – and my guess is over time, it will all be repriced into the business and we really – it may change the model a little bit, it may change pricing a little bit, it may change how many customers you can serve, it may change the products you roll out, but eventually all will be repriced in the business. And in retail banking, it will probably be – and you see the budget banks do it already, adding monthly fees or something like that. And in credit card, it will be possibly adding higher fees on credit card and a slightly higher going-in rates. Chris Kotowski – Oppenheimer & Co.: Okay. All right. Thank you.

Your next question comes from the line of Jim Mitchell with Buckingham Research.

Hi, Jim. Jim Mitchell – Buckingham Research: Good morning, Mike. One quick question on – was there any material DVA?

Yes, I mentioned it – I thought I mentioned it. In fixed income, we had about $400 million of DVA and in equity markets, we had about $200 million of DVA. Jim Mitchell – Buckingham Research: Okay. And then maybe more broadly in the credit side again – sorry, I keep hammering away on the mortgage side, but your guidance on the home mortgage side is higher than – materially higher I guess in the run rate we saw this quarter. Is that just conservatism on your part, are you building in some expectation of higher losses, was there something unusual this quarter or as home mods come in, is that expecting to kind of drive those losses a little higher?

I think that we are extremely cautious on mortgage and we are going to be cautious until this is done, okay? It's – there are a lot of factors that play here, there is a lot more uncertainty in it because of higher foreclosures, home prices, and we just by nature are going be cautious about it. And that is more of a kind of a static look about what it could be like the next couple of quarters, obviously hope it improves. Jim Mitchell – Buckingham Research: Right.

And Mike mentioned that the early indicators like front-end delinquencies and a bunch other things kind of leveled off a little bit in June. Jim Mitchell – Buckingham Research: Right.

– as opposed to continuing to get better. So we are just trying to be cautious here. Jim Mitchell – Buckingham Research: Any more – any specific comments on home equity? There has been a lot of discussion about what the impact could be if there is some principal reduction on the first mortgage and what that could do to loss rates. I know we've talked about this before, Mike, but –

So it – yes, we've done a lot of work in this too, okay? First remember, some of those mortgages are first liens. Jim Mitchell – Buckingham Research: Right.

Some of them are second liens with low LTV, okay? A lot of them are fine. But if you were in a HAMP program, we generally take a big hit like the first mortgage does. Think of it that way. Jim Mitchell – Buckingham Research: Right.

When a first mortgage defaults at a high LTV, eventually the home equity is written off. That is already in the ongoing charge-off numbers. Though, I do believe it delays the loss a little bit. But we try to – Jim Mitchell – Buckingham Research: Right.

But we try to recognize that in our reserving, okay? Jim Mitchell – Buckingham Research: Right. And as they go –

The right – the hit is being taken after the first is written down. That's what happens. Jim Mitchell – Buckingham Research: And after 150 days past due, right, you mark to realizable value anyway and that's included in that assumption, correct?

Yes. I just think about – but I think the whole thing gets a little delayed. What happens in the seconds, they are – your current – the current later, then the first are current?

Delayed effect in the seconds which we acknowledge, and we try to account for that. Jim Mitchell – Buckingham Research: Okay.

It is a shocking number, I don’t remember it exactly, but something like half of all – in half of the cases where the first is in default. The home equity is still paying. Remember the home equity is a loan secured by real estate. It is supposed to pay. You are not supposed to walk away from a loan because the collateral is worth less. Jim Mitchell – Buckingham Research: Right.

And lot of people who want to meet their obligations, we think is a good thing in life not a bad thing. Jim Mitchell – Buckingham Research: Okay, great. Thanks.

Your next question comes from the line of David Konrad with KBW. David Konrad – KBW: Good morning. A couple of quick ones, one, thanks for giving the DVA [ph] number, but I was wondering given the widening of credit spreads in Europe if there is a CVA adjustment in the trading line?

In those numbers, it is pretty much a wash [ph]. Our credit portfolio revenue line has a whole bunch of things going on in it, but not worth. They wash themselves out and fixed income equity markets deviate CVAs pretty much the numbers I just gave 400 and 200.

We are hoping the new accounting rules get rid of DVA by the way, because we… David Konrad – KBW: I want to…

… wiser things that was ever done in accounting. David Konrad – KBW: The second question, I know the risk in the market is kind of perceived financial stability of the local markets, and I think at least last quarter your exposure to state municipalities in terms of credit commitments was around 5% of your portfolio, just why don’t you give some thoughts on how you feel about the risk is in that portfolio and your strategy there?

Yes, think of it is we think we are fine. We do think there is some exposures, and I think to some municipalities more than some of the states. We do provide credit and will continue to provide credit to states, municipalities, hospitals, state plans, state utilities and you know, it is part of our job. We’re just trying to be cautious in terms of credit. We’re not worried about it anymore than other stuff. I think we have always been very tight on it. David Konrad – KBW: Okay. Thank you.

Your next question comes from the line of Ed Najarian with ISI Group. Ed Najarian – ISI Group: Hi, good morning.

Hi, Ed. Ed Najarian – ISI Group: I think most of my questions have been answered, but I just had two quick ones. First, in terms of reserve recapture I know you probably don’t want to make too many definitive statements on the home mortgage side, but when we think about it ongoing on the credit card side, is there any way to think about the magnitude of reserve recapture relative to the improvement in the charge off ratio or delinquency trends, you talked about sort of the charge-off ratio potentially going down another 50 basis points in 3Q, potentially delinquencies continuing to get better. Is there any way to sort of equate that pace with the magnitude of reserve recapture in the card business?

Yes, I’ll give you a really simplistic way to do that. If you think your 12-month-old charge off is going to be 8%, you are going to have 8% of reserves. If you think the normalized rate is going to be 5%, eventually your reserves will come down to 5% of outstanding. That is what will happen. This will happen over time. You know, we don’t know exactly what quarter, but eventually, and that is true for a lot of these reserves by the way and that is why a lot of things about reserving is a pro cyclical thing. You put them up in the worst of times, and then you take them down when things are getting better and so, of the $36 billion that Mike mentioned, a lot of that will eventually come back into income.

But that is another place where we look to see the accounting rules get away from that pro cyclicality before this cycle is fully over. Ed Najarian – ISI Group: Okay. Thanks that is helpful and then Jim, could you make any comments on investment banking pipeline or your view in terms of when and if investment banking revenue will start to pick up?

You know, investment banking is doing fine and the pipeline is fine, but I always point out to you that the pipeline is notorious. It can bounce up or down based upon the environment and animal spurts [ph] a whole bunch of things, but we see a lot of activity in the corporate world. And you know when they start – people start doing more M&A or something, I saw a couple of deals were announced this morning. So we will see. Ed Najarian – ISI Group: I mean, would you expect to pick up in the second half versus the first half or do you think that is more of a 2011 event?

I think that your guess is as good as ours. Ed Najarian – ISI Group: Okay. Thanks.

Your next question comes from the line of Moshe Orenbuch with Credit Suisse. Moshe Orenbuch – Credit Suisse: Thanks.

Hi Moshe. Moshe Orenbuch – Credit Suisse: I was wondering if you could kind of maybe describe a little bit how much capital you have allocated to the stock buyback program, like how should we think about you know, obviously 500 million is kind of probably less than where you would have thought the dividend might go on a quarterly basis, but how much is left there if any?

The 500 million have started, and I think Mike.

We got a couple of billion dollars. Think if there is a couple of billion dollars worth of buyback in a yearly period just to keep net shares flat going back to another question. So, I would have that in mind over a full year’s time, and $2 billion to $3 billion is the kind of level for that. Whether we push through that is a separate issue.

: Moshe Orenbuch – Credit Suisse: Great. Okay, and as far as kind of a separate question, you know, there were a couple of questions relating to checking account pricing related to the kind of overdraft fees, and debit card fees, why do you think it is that you know we had the card related repricings in the industry kind of happen so much faster than checking accounts. We have kind of seen very few announcements of changes in checking account pricing?

Okay, I just want to comment on stock buyback because it is really important, unlike – we don’t believe that buying back stock is returning cash to shareholders. So we buy back stock when we think it is a great deal for the ongoing shareholders, not the shareholders we bought the stock back from. So, it is just a little different than other people look at stock buyback and I think that people are still estimating the effect of all the fees, and how it is going to function. And I think that some things have announced are changes in products and platforms, and some things have made changes in deposit rates and some of that. So, it is a little bit lagged. And remember in credit card, in general the credit card companies were already losing a lot of money when some of the stuff got put in. Moshe Orenbuch – Credit Suisse: Right. Fair enough.

A lot of them on a stand-alone basis wouldn’t have made it, if they weren’t part of bigger companies. Moshe Orenbuch – Credit Suisse: Okay. Fair enough.

It had to do – people had to do things to save their lives. Moshe Orenbuch – Credit Suisse: Got it. Last question is, it has been suggested that you wouldn’t really see corporate loan demand return until corporations have started reducing some of the cash they have on deposited banks, and you kind of referenced the decline of deposits primarily being kind of WaMu related high cost deposits. Was there any kind of runoff of corporate liquidity that might be kind of a precursor to loan growth on the corporate side?

No. If you look in the businesses, there you will see pretty stable wholesale deposit liability balances. Moshe Orenbuch – Credit Suisse: Great, thanks.

I think a lot of corporations are prefunded more than normal their future needs, and the bond markets when the bond markets opened up. So, you know, most people are kind of just looking at all the cash on the corporate balance sheets and say there is a lot, and the way to start spending it. When you start to see you know, plants being built and M&A deals, then you’ll see more real corporate lending. Moshe Orenbuch – Credit Suisse: Great, thanks.

Even middle market, look at our middle market business, look at the numbers exactly, but 18 months ago we had 100 billion of loans and 100 billion of deposits. Now we have like 90 billion of loans or something and 130 billion of deposits from middle market clients. So, you could see that starts to show they are pretty flush too and huge unused lines. Moshe Orenbuch – Credit Suisse: Thank you.

Your next question comes from the line of Ron Mandel with GIC. Ron Mandel – GIC: Hi thanks. Two questions, one is in regard to the repurchase program. You know, if I’m reading this right, it looks like about two thirds of it or one third of it was actually in the quarter, and then the other two thirds of the $500 million was in the current quarter, you know, since the end of June.

That’s right, that’s right. It started towards the tail end and continued through yesterday. Ron Mandel – GIC: Yes. So you know, the – so it seems like the average shares could actually you know, decline, you know, this quarter and if you continue the program decline going forward compared to the average in the second quarter because you know, so much of the repurchase program has been voted into this quarter.

Yes, but going back to what Jamie said the pace will depend on where the price is. Ron Mandel – GIC: Right, and then separately I have a question about loan loss provision, and you know, the provision relative to average loans is about 190 basis points, and the, you know, your normal charge off level is hard to say what it was and it was just over 100 basis points, you know, in ’06 and ’07, 200 in ’08 and then of course way higher in prices, but I guess I would be looking for the provisions to be matching to normal charge-offs at some point and with this 190 and normal who knows what may be 125 or 150. It seems like we are pretty far – they are getting provisions back to normal if the provision is going to match charge-offs in some normalized world.

I think you’re making two points. One is we would agree that in the businesses, particularly the consumer side, charge-offs are running still even though they have improved at historically high levels and versus what I’ve showed you at Investor Day back in February. There is still room to go for charge-off levels to get back to what we would consider to be the appropriate level for the risk we are taking and the way we are building our business models. So that’s fair enough. Then reserving, we spent plenty of time talking about, Ron, you get that side of it as well. Ron Mandel – GIC: Yes, yes. So – but I’m really separating the reserve releases. Eventually the reserve is going to reflect the actual level of charge-offs and – but the provisions – then you will get there with the provision that is based on normal charge-offs. Then I guess my – I think the question I’m asking is that we are probably not actually – the actual level of provision in the current quarter is not that far from what a normal provision might be.

Oh, including the reserve takedown? Ron Mandel – GIC: Yes, including –

When you look at aggregate, it’s really hard if you do it by business. I understand your point, and you may actually be right in total sometime down the road. Ron Mandel – GIC: Yes. Okay. I guess my question is, based on this provision, you’re not that far away from some level of normal.

Right. But we do it the other way, look at what normal charge-offs would be with no provisioning down the road and what would that mean for a total provision. So you may be right. We just haven’t done that calculation like that. Ron Mandel – GIC: Okay. Okay. That was my other question. Thank you.

Your next question comes from the line of Matt Burnell with Wells Fargo & Company. Matt Burnell – Wells Fargo & Company: Good morning. Just a specific question on the card services business. There has been some recent media attention focused on the growing level of solicitations across the credit card industry. JP Morgan has been named in a number of those articles as being among the more aggressive in terms of the amount of solicitations. I’m just wondering if you can provide a little bit of color surrounding what your thoughts are in terms of growing loan portfolio balances perhaps in 2011 with the solicitations you are doing now.

Okay. So solicitations – so remember, we rolled out three new products; Ink; small business cards, a whole bunch of those; Sapphire, more upscale – actually four products, but – and then Blueprint, which is how people can manage the finances. We pull on the marketing muscle behind it because that’s why we are here to do, stuff like that. Mike – put that aside from the balances. I think we mentioned the balances are going to run off more. Like you said, it was like (inaudible). And that will continue into mid – probably mid-2011. The reason for that is we got – we have good spend, but we are running off the WaMu portfolio, we are running off some subprime, we are running off some – we don’t do many of these teaser rates anymore and things like that. So there is a whole bunch of that, which is kind of running off. That run-off will end by 2011. You will start to see better underlying growth. And maybe we should break out in the future a little bit of those numbers for you. You can see the book business growing. Book business is growing off. Matt Burnell – Wells Fargo & Company: I think that would be helpful. And then one just administrative question, in terms of the $550 million bank tax, how much of that was appropriated into the investment bank? I know you said most of it, but could you provide some –?

90 some – call it plus or minus 90%. Matt Burnell – Wells Fargo & Company: Okay. Thanks very much.

Your next question comes from the line of Carole Berger with Soleil Group. Carole Berger – Soleil Group: Yes, thank you. My question is – well, I have two questions. First one, the mark-to-market accounting proposals also have the proposals to let – make loan loss reserving less pro-cyclical. Is there a risk that in changing from – once these rules change that you will have to recapture too much reserves and will have to then build them again?

No. We are not worried about that, and we are not worried about the fair value accounting at all. We’ll figure it out, we’ll continue to grow our client businesses. And we’ll try to be very conservative on reserves and it will be what it is. And usually those accounting adjustments are made it prospectively, not – and maybe one-time adjustments, which people understand. Carole Berger – Soleil Group: Okay. And on – my other question, Jamie, was you were quite sanguine about being able to pass through fees and other charges to offset whatever the impact of the new legislation is. And my question is, if you are in the Consumer Protection Agency, what are the issues that you would deal with and by raising fees as the industry waving a red flag at the Consumer Protection Agency?

I think what I said is that all these things will eventually get priced into the business, okay? And that it’s not that we are raising fees. You try to price your product to make a fair profit and treat the customer great. That’s the goal of any business. So I’m a great believer in treating the customer great. And my example was if you can’t charge for the soda, you’re going to charge more for the burger. That’s not a raise in the fee. That’s just adjusting your business model a little bit to do something like that. So we are deeply in favor of good consumer products. We actually acknowledge that some of the changes enable good changes. The overdraft stuff in certain businesses had gotten to be too much and they are too punitive and – so we believe in that. So I – we hope the Consumer Protection Agency does good job of doing things. But you can’t run a business if you can’t earn a fair profit. The important thing you have to remember – take banking, okay? To offer a credit checking account, it costs us $300 a year. For that, you get ATMs, branches, debit cards, access to cash; you get anti-money laundering, which you may not care about, we have to do; you get Bank Secrecy Act; you get online alerts; you get online bill pay; you get a check book; you get all these things. And you got to charge this somehow for that. Right now, you charge at some NII and some fees. It’s just the balance of how that works out. The winners in the marketplace are the people who give the best products, the best services at the best cost to the clients. That’s business. That’s how business has always been. That’s not going to change. And if someone is doing something wrong or inappropriate, we think if they see it, they should go after them. Carole Berger – Soleil Group: Thank you.

Your final question comes from the line of Gerard Cassidy with RBC. Gerard Cassidy – RBC: Can you guys share with us what you are seeing in the loan underwriting standards? It seems like the Senior Loan Officer Survey showing on the C&I side that standards are easing. Are you guys seeing that when you are out there pitching new business in the middle market, as well as the large corporate area?

Generally, yes. Gerard Cassidy – RBC: Is it more than just pricing? Is it other types of weakening in the standards or is it primarily pricing?

: : Gerard Cassidy – RBC: Are you seeing it in other lines of business? There was a story I think in yesterday's Wall Street Journal talking about credit cards, cards being issued to people that had filed bankruptcy recently and I was wondering if there is more subprime-type lending going on. Are you guys seeing any of that in the other lines of businesses?

: When that kind of thing happens, you tend to see competition step up and try to compete for business. So I think you could see more of that. That’s what you want. And so you will see standards. And obviously, a good bank has to try to maintain standards and give it a reasonable return. We saw what happens when they don’t. Gerard Cassidy – RBC: And my last question, if you guys look out over the next six to 12 months, if you could identify maybe one of the best opportunities for JPMorgan and then also what are the biggest challenges that you are expecting to see over that time period?

In challenges, clearly just dealing with the change we have and some of the remaining uncertainties we talked about, and it’s hard to pick any one particular opportunity, but it’s just the strength of all of our businesses that each have places where we are putting lots of resources into, doing more for our clients in expanding the capabilities we have for the long term of this place. Jamie hit on some of the international stuff, products and credit card. I can go on and on.

In my Chairman's letter this year, I wrote about what we are doing to grow every business. So there is six sections in there about every business. Every business has growth plans. And I could say, well, it’s a little more international than U.S. and that’s true and – but every business has growth plans. Gerard Cassidy – RBC: Thank you.

Thanks.

That’s it. Thank you, everybody.

Thank you.

This concludes today’s call. You may now disconnect.