Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Andrew Wessel – JP Morgan
Andrew Wessel – JP Morgan
On the debt repurchases, given the amount of cash and liquidity you have, what are your thoughts on continuing that in the third quarter and fourth quarter this year?
Jack Remondi
We obviously had a great quarter repurchasing debt in the open market in a non-tendered kind of fashion, be able to achieve that kind of level at the price we did, we were very pleased with that. Obviously prices have tightened since then and we continue to focus on opportunities in the nearer term maturities, obviously 2009 is a candidate but also 2010 as well.
Andrew Wessel – JP Morgan
Looking at expenses, with Miller Bill passing yesterday in the House what are your thoughts in terms, is there any way you can ballpark what you’re expense reduction would be if that bill were to go through more or less as is and is one paid to originate or market on campuses is there a ballpark estimate you can give from an expense savings standpoint?
Al Lord
You’re asking if the legislation as constructed by the House yesterday were to pass.
Andrew Wessel – JP Morgan
Were to go through.
Al Lord
Obviously some redesign of our business would be appropriate. We are very well along in assessing that. I think it really is premature at this point to dig into those numbers. As you would expect we’re very, very much aware of what the affect of this legislation would create.
Operator
Your next question comes from Lee Cooperman – Omega
Lee Cooperman – Omega
I think you just actually declined to answer the question but it seems to me there are two approaches to valuation of Sallie Mae. One is the capitalizing of earnings and the second is sum of the parts approach where you look at the run off value, the valuation of debt collection business, the valuation of third party servicing, and then the other assets of the company.
Assuming for the moment we go into this new world of direct lending do you guys have a view of what your normalized earnings would be with a normalized CP Libor spread, normalized credit losses? You have such command of numbers; Jack goes through these numbers like it’s very impressive. I would assume somewhere within the company you guys have a view if direct lending is adopted what the earning capacity of the company is. Can you share that with us or are you unwilling to do so?
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