Q1-Q2 2008 Morgan

Q1 asset quality mortgage -- Company recorded mortgage proprietary trading net writedowns of approximately $1.2 billion, half of which was related to U.S. subprime exposures --Company recorded writedowns of approximately $204 million related to mortgage-related securities portfolios in the Company’s domestic subsidiary banks -- Company’s primary exposure to ABS CDOs is to synthetic CDOs that hold or are referenced to collateral with ratings of BBB+, BBB or BBB- (“mezzanine CDOs”). --Total U.S. subprime (ABS CDO) net trading position 7.6 bil, net exposure (loss) 1.8 (~30% ) --Non-subprime net trading position 14.5 bil, net exposure (8.7 bil) Corporate Lending (corporate loan commitments and funded loans) Q2 08 , Q1 08, Q4 07 --IG: 54.5, 59.8 , 63.2 --HY: 22.3, 26, 30.9 --Total net hedge: 40.1, 45.2, 56.5 --For the quarters ended November 30, 2007, February 29, 2008 and May 31, 2008, the leveraged acquisition finance portfolio of pipeline commitments and closed deals was $19.6 billion, $15.9 billion and $12.7 billion, respectively CMBS --$23.5 billion Q1 08, $31.5 billion Q4 07 **Funded loans represent loans that have been drawn by the borrower and that were outstanding as of February 29, 2008 Q2 asset quality Mortgage: net exposure 10.5 bil Q1 08, 6.7 bil Q2 08 Commercial mortgage: net exposure 11.6 bil Q1 08, 6.4 bil Q2 08 Leverage loan: net exposure 15.9 bil Q1 08, 12.7 bil Q2 08 opinion --exiting risky assets ~30 bil, potential max mark down ~1 to 2 bil. earning close to Q3 last year, ~$1 per share