Question-and-Answer Session
Operator
Thank you, Mr. Cavanagh. (Operator Instructions) We’ll take our first question. Caller, your line is open.
Anthony Sung – Point Marketing
Hi guys. This is Anthony [Sung] from [Point Marketing.] Quick question. Will Bear still be in business, going through with existing deals? For instance, I ask this because my existing firm was thinking to purchase maybe $1-$2 billion worth of prime and alt-A products and I was just wondering with the transition will Bear still be able to go ahead and execute?
Bill Winters
Bear Stearns is absolutely open for business. That is the purpose of the guarantee that we’ve put in place that should give ever body in the market complete comfort that when dealing with Bear Stearns you are backed by the full facing credit of JP Morgan. So Bear is open for business today with all the credit backing that we can provide and intends to remain completely in the market up to and through the day when we complete the acquisition and obviously then afterwards as a part of JP Morgan.
Anthony Sung – Point Marketing
Okay. And?
Michael Cavanagh
Can we limit it to one question at a shot please?
Anthony Sung – Point Marketing
Sure. Thanks guys.
Operator
Next caller your line is open.
Mitch [Northern – Q Investments]
Just wanted to confirm. It said that JP Morgan is immediately guaranteeing trading obligations. If the shareholders do not approve the transaction what happens to that guarantee? Also the slide had mentioned costs of de-leveraging. If you can expand on what that means?
Michael Cavanagh
The cost of de-leveraging is as I said we intend to reduce the balance sheet as time goes by between now and the closing and then beyond the closing. So obviously we have provided for in the $5-$6 billion estimate for a variety of things which includes the impact of some of the reductions in size of the balance sheet.
Steve Black
Let me be clear on this. Part of the reason we structured the transaction the way we did with the $30 billion in non-recourse financing from the FED was to avoid the need for any kind of a fire sale of assets. JP Morgan is perfectly comfortable with the assets we are acquiring effectively via the guarantee, but Mike has pointed out that over time in a very orderly way we will look to rebalance our balance sheet as we were doing in any case inside JP Morgan and as Bear was doing in any case. But with the benefit of the combination and the liquidity and the financing support from the FED that can be a very orderly process that we don’t expect to have any material impact on the market.
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