Bear Stearns Q3 2007

Overall Credit Metric retained interest as of Q3 2007: non agency Mortgage and Asseted backed securites: 6.7 bil agency Mortgage and Asseted backed securites: 2.9 bil (8 bil investment grade, 6.2 bil are AAA) --> nearly 4 bil non AAA retained interset, apply 25% write-down ratio $1 bil VIE CDO: 2.5 bil, max loss 0.44 bil mortgage securitizations: 37.3 bil, max loss 1.27 bil total inventory --50 bil mortgage and Asset backed inventory, --subprime mortage loans of $1.4 bil reprenting 2007 vintage production, and .7 bil investment grade subprime securities and .33 bil below investment grade retained interest FI segment data Q3 07 revenue : 117 mil Q2 06 revenue : 1 bil companied claimed to write-down net $700 mil related to mortgage inventory and leveraged finance (250 mil net writedown for leveraged loan). -> only 450 mil net write-down for mortgage and CDOs. --Q2 derivatives $11.27 bil where $10.375 bil represents "derivative financial instruments" (swaps, futures, options), credit derivative is around 0.9 bil --Q3 derivatives $14.206 where $12.094 bil "derivative financial instruments" --cash flow in finance is puny, so we arrive credit derivative value increasd from 0.9 bil to 2.1 bil --> credit derivative contributed 1.2 bil --so we arrive that gross write-down is around 1.65 bil pipeline of leveraged loan 7.6 bil, down from 20.8 bil Q2, marked down 250 mil, 3% Hedging *** --14.2 bil derivative/ 400 bil asset , 141 bil financial instruments others information --level 3 derivative gain (realized and unrealized) is 450 mil Comments: --high hedging ratio compared to Merrill Lynch