Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from the line of Guy Moszkowski - BAS-ML
Guy Moszkowski - BAS-ML
First one very factual question, what was your risk weighted assets at the end of the quarter.
David Viniar
Our risk weighted assets were on a Basel I basis about $409 billion, and on a Basel II basis about $382 billion.
Guy Moszkowski - BAS-ML
So based on a sort of flat to smaller average balance sheet I guess relative to the prior quarter and improved FICC and equity trading revenues, it would seem that your bid offer spreads on average seemed to have actually improved based on, compared to the first quarter, is that fair.
David Viniar
I would say they were kind of flattish and that what really drove it were activity levels which kind of didn’t result in a whole lot of assets on our balance sheet because the velocity of assets was quite high.
Guy Moszkowski - BAS-ML
And you alluded in your comments to the fact that a lot of the focus really is on very liquid and kind of plain vanilla stuff, and when I met with you and your team a few weeks ago there was even some discussion of distressed and the fact that you really weren’t seeing good risk adjusted returns on a lot of the distressed deal flow that you were seeing so you weren’t doing much there, is that still fair.
David Viniar
Hasn’t changed at all.
Guy Moszkowski - BAS-ML
So then I guess the follow-up question to all of that is, if your core excess is around $170 billion and I think your Tier 1 comment to RWA is something approaching 11%, and I think the government’s hurdle for exiting TARP sounds like based on some other firms that it must have been around 6%, 6.5%, how do you think about deploying what looks like pretty significant excess liquid capital over time and I guess the corollary to that would be do the results of the first half which were obviously very encouraging, do they encourage you to raise your targeted ROE from the 20% kind of return on tangible goal that you’ve talked about.
David Viniar
Well let me answer that question first, no. Our target as you know has not changed since we went public and I don’t think it’s going to change for now. That’s what we say over the cycle and there are good parts of the cycle and bad parts of the cycle and I think that’s a fair target for over the cycle.
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