State Street: Conference call summary (18.91 -17.45) -Update : On call co repeats that Tier 1 Capital stands at 20.49% and Tier 1 leverage ratio stands at 7.74%; despite the two strong ratios, understand that many of their investors are concerned about the mark-to-market impact of conduit consolidation on tangible common ratio; says they had considered raising additional equity capital. Based on their discussions, and given strong regulatory ratios, outlook for 2009 and the strength of business, they determined not to raise equity capital. Co says marks on investment portfolio have improved over the past two weeks, and they think they're likely going to see additional government initiatives to stimulate a more normal financial market... They think the customer flight to quality will become a bigger wave as time goes on and will manifest itself in later quarters and later year revenue. Says this should benefit trading as there will be fewer secure firms with which to trade... Discussing the securities lending program, co notes that they act as agent, not as principal. Says securities lending provides a vital source of liquidity to equity, bond and money markets, as well as reduces the cost of trading and settlement, thereby benefiting all market participants. Co's securities lending funds continue to perform well, despite illiquid and fixed income markets, a dramatic deleveraging of the markets generally, and a reduction in the demand of borrowed securities. The investment funds underlying the program are invested conservatively. They have seen increased withdrawal activity from the collateral pools due to the general deleveraging in the marketplace, but have been able to manage these outflows in a manner that protects customers. While securities lending industry is facing challenges, their securities lending program remains strong... Says in 2008 over $8 bln of structured securities in the investment portfolio paid down. All did so at par, despite the fact that they were priced on average at 7.8% discount to book value... They say conduit marks which have improved a bit in early January and unrealized marks at least for the first two weeks of this year have improved. Says Moody's has reviewed assets. They consider the ultimate loss on portfolio to likely be low on a held for maturity basis... As of last Friday, 1/16, the aftertax unrealized loss in the investment portfolio had improved by $400 mln to $5.9 bln, compared to 12/31. Notes the securities lending business transacts at $1 while the net asset values of the underlying funds float over time; average current market value of the unregistered funds was approximately 93.9 cents. During the quarter they moved $78 mln over to other than temporary impairments and for all of 2008 they recorded $122 mln or about 0.2% of the average portfolio for the year... State Street's holdings have an average credit enhancement of 9.1%. 84% of holdings are rated AAA or AA.