Question-and-Answer Session
Operator
(Operator Instructions) Our first question comes from Colin Devine - Citigroup.
Colin Devine - Citigroup
I was wondering if you could provide a little more guidance on securities lending. If markets stayed locked where we are today, what would that do to your earnings next year in terms of looking at securities lending? And also tied to that can you confirm in the third quarter you made money from it, you just made less money.
William J. Wheeler
That’s right. Well, third quarter securities lending performance was actually pretty good even though obviously the end of the quarter got a little volatile. In terms of the outlook for securities lending, I think it’s safe to say we assume that the overall outstandings will probably shrink. How much it shrinks is very difficult to say.
In terms of margins, it’s funny. In some ways this is a great environment for sec lending margins and in other ways it’s difficult. It’s hard to really predict what’s going to happen to the short-term interest rate or these relative LIBOR or fed funds rates and stuff like that. Obviously we had a fed rate cut this morning. So margins on sec lending have been very good. They probably will decline some but they’ll probably still be okay. But clearly the balances I think are going to come down here for a while so that will have an impact on our earnings power next year.
Colin Devine - Citigroup
I think what everybody’s been very unsettled about is how much is this adding to Met’s earnings? What is the range that you’re generating on the sec line?
William J. Wheeler
Obviously we get asked that occasionally. We don’t disclose it. We do make good money from sec lending so it is going to have some impact on us. But I don’t think it’s dramatic and I think on the margin it’ll affect us a little bit but it won’t be significant.
Operator
Our next question comes from Andrew Kligerman - UBS.
Andrew Kligerman - UBS
I’m just thinking about this capital raise and I’ve got two thoughts and I want you to tell me which way to think about it. You started the second quarter or you ended the second quarter with $4 billion in excess capital, and that’s probably relatively the most in whole life space.
When MetLife comes out and asks for new capital, it makes me wonder if MetLife is scared because the indications were that they would be the last company that needs it. And then on the flip side of the equation, could Met be doing a deal? Could it be looking at AIG’s assets? Could it be looking at something else? And I think about J.P. Morgan when they did WaMu, they raised capital upon the announcement. Wells Fargo, same thing with Wachovia. They do the deal and they raise the capital on the announcement. So it doesn’t seem like there’s a need to rush out and raise capital before you announce the transaction.
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