Credit Analysis of Financial Institutes as of 03 31 08

Based on 2007 10-k and 8-k 2008 financial statements Bear Stearns (total liability 383.6 bil, asset 395 bil, 143 bil financial instrments) 1.repo financing 102 bil, 26.6% of liabilities 2.long term 68.5 bil, 17.85% of liabilities 3.unencumbered collateral asset: 16.3 bil w a borrowing value of $14 bil (3.6%) 3.a unregulated unencumbered collateral asset: $5.1 bil (1%) 4.mortgage and abs exposure 46 bil + 30 bil(VIE), 11.6% of total, 32% of financial instruements --> cash + unregulated unencumbered collateral asset = 17 bil + 5 bil = 22 bil (5.7%) Lehman (liab 668.6 bil, asset 691 bil, financial instrument 393 bil) 1.repo financing 181.7 bil, 27% 2.long term 123 bil,k 18.4% 3.unencumbered collateral asset: 193.6 bil (29%) 3.a unregulated unencumbered collater asset: $98.1 bil (14.7%) (including cash equivalent) no change until Feb 29th 2008 Exposure to Toxic Assets mortgage exposure 89 bil, out of assets 691 bil 13%, 22% of financial instrmenet in Q1. US mortgage exposure is $22 bil, CMBS $36.1 bil ($17 bil US) Appropriate Hedging: FI gross writedown in Q1 $4.7 bil ($3 residential mortgage, 1.1 CMBs, 0.7 bil leveraged loan), net write-down $1.8 bil (0.8 net RMBS, $0.7 bil CMBS, $0.3 leverage loan) (60% hedged) writedown forecast Morgage: 3 bil, CMBS 1.7 bil, Leveraged Loan 0.7 : net $2 bil captial: the company is planning to raise 3.7 bil convertible preferred stock. Together with eligible collater and liqudity pool (98 bil), it is well positioned. ---> cash + unregulated unencumbered collateral asset = 98.1 bil (14.7%) Comments: --Bear Stearns has far more liquidity issue than Lehman --Leh should weather the storm. But it will have further stumbles. The best time to buy Leh credit is the end of Q2.