From: Jeffrey Epstein <jeevacation@gmail.com>
Sent: Tuesday, March 30, 2010 8:18 PM
To: ████████████████████████████████
Subject: Re: Fw:

blather.. simply world regulations should not set up a system to play one c=untry against another, the regulators shoudl deal with it and coordinate w=th global players.

On Tue, Mar 30, 2010 =t 4:08 PM, <██████████████████████████████████████████████████████████████████████>>
wrote:

Sent from my BlackBer=y® wireless device

From: Jes Staley <████████████████████████>
Date: Tue, 30 Mar 2010 14:26:24 -0400
To: </=>Peter Mandelson████████████████████████████████████████████████████████████████████████████████████████
)████████████████████████████████████████████████████████████████████=gt;
Subject:

Peter, What follows are some brief speaking points that we would use in discussing=the Volcker plan with
Summers. We can speak to them when we talk tonight.

The Federal government's guarantee of bank deposits enhances consumer confi=ence in our financial system.

Although deposits play a lesser role as a funding source following decades of bank disintermediation, it is sensible for government (as any guarantor would want) to seek limits on how funds sourced from their guaranteed deposits are exposed to risk.

Well-managed US banks with prudent controls to protect client interests, including depositors', already do this respecting the intent of existing affil=ate restrictions and with internal procedures separating proprietary and fiduciary activities.

Updating regulation to the reality of global modern markets should not disadvantage U S institutions or create structural conflicts in relation to their Asian or European counterparts.

## Fiduciary: Asset Management

Regulations that protect client investments from other banking activities have proven successful during recent financial crises.

Commercial Banks have been managing client assets for over 100 years and this fiduciar= role has withstood both time and evolutionary change in client demand from traditional to alternative investment products.

Asset Management is a profitable business entirely suited to fiduciary bank owner=hip with limited capital needs and no risk weighted assets. Practically, there is no difference between sponsorship of hedge and private equity fund= and traditional products like mutual and money funds.

Bank owned asset managers should not be allowed to combine proprietary resources with fiduciary money in hedge funds, private equity or traditional investment vehicles.

## =A0

Prohibiting bank ownership of asset managers is unnecessary and eliminates a source of prudent diversification for client holdings and long-term profit stabili=y for regulated firms.

Proprietary: Risk Management and Discretionary Trading

Proprietary trading is a natural outgrowth of the market-making role and it is difficul= to separate these activities.

## <=>:

Proprietary trading supports management of interest rate risk, creating greater lending flexibility; it also plays a vital role for banks akin to the research and development arm of a corporation.

Prop Desks should be tightly regulated, scaled correctly, and subject to sizeable capital requirements applied consistently across all systemically relevant firms.

We are concerned that hedging trades can be misconstrued through legislatio= as proprietary because they escape simple definition and lack precise confo=mity to unique client exposures.

## <=>: (cont.)

Client transactions frequently require long duration hedges or hedges that can only approximate underlying positions. This is highly complex and best left to the regulators to oversee. A static legislative definition of proprietary trading can impair meaningfully a bank's ability to mana=e risk.

If the Volcker Rule had been in place during the financial crisis, it would no= have prevented the bank failures that occurred.

=span style="font-
size:8.0pt;color:#5F5F5F">_________________________________=____________________________________________________



Jes Staley<change><u></u></change> | Chief Executive =fficer| Investment Bank | J.P. Morgan | 270 Park Avenue, 47th Floor | T: +1

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