mr. moynihan, you have any >> mr. d a tradition in paying with stock. the next clawback begins with compensation. it is part of our scheme. paying stock has been part of our scheme. >> my questions go to the issue of incentives. things that are intended to shape or direct our behavior. i am interested in all of the underlying incentives. mr. mack, you say that you closely linked compensation to performance. what are the primary elements of performance? >> the first criteria is clearly profitability. . ity. as you go from profitability, you going to the sales and trading areas, which is where most of these questions are focused on. how much of the risk they take to have that profitable performance? how much interface they have with other senior members of the sales and trading operation to make sure communication is what it should be. it should be. we also look at the interface that we and our traders have with our clients. and most important, one of the things that we look at is, how do our risk managers -- and these a

mr. moynihan? >> i think much like my colleagues we have an independent risk management function. we thought we missed i think is similar to what mr. dimon said, which is if you think about it, as we support the broad economy and what we do so yes, we have investment banking, a large one now, but the mistakes we made, the most loss in credit cards and mortgages, that was just where we kept originating prime, prime assets in too deep in the economy and we didn't do the kind of testing saying what if housing goes down 40% and test what your thought would be, be respective of the probability of just how you protect your from. i think that's probably the best lesson we've learned out of this crisis and we will apply it. when you look at on the commercial lending side, we either saw that and 89, 91, and we practiced that. we didn't have those kind of practices. i will say we will continue to intimate that. >> so you have stress test a look at commercial real estate and the concerns that are out there now? >> we have. but as you said earlier, the work that was done last year about this t

mr. moynihan. >> much like my colleagues, if u.s. said. yes, we have the investment banking, but mistakes were made and the losses had been on credit cards and mortgages, and we kept originating prime into the economy and we did not do the testing saying what if housing goes down 40%. i think that is probably the best lesson that we have learned out of this crisis and we will apply. when you look at the commercial side, we had a practice that but on the consumer side we did not have those kind of practices. that is what we have implemented and we will make sure we're diligent about it. >> you have stress tests for commercial assets and picking up your exposures. >> we've always had view of commercial real estate through the hard knocks taken in the late 1980's to be very diligent about what happened. i don't think the consumer side is ever seen this kind of -- has ever seen this kind of recession. >> i want to pick up on your testimony, mr. blankfein, were you said that almost all the losses that financial institutions sustained over

mr. moynihan. >> much like my colleagues, if u.s. we thought we miss, it would be similar to what mr. dimon said. yes, we have the investment banking, but mistakes were made and the losses had been on credit cards and mortgages, and we kept originating prime into the economy and we did not do the testing saying what if housing goes down 40%. i think that is probably the best lesson that we have learned out of this crisis and we will apply. when you look at the commercial side, we had a practice that but on the consumer side we did not have those kind of practices. that is what we have implemented and we will make sure we're diligent about it. >> you have stress tests for commercial assets and picking up your exposures. >> we've always had view of commercial real estate through the hard knocks taken in the late 1980's to be very diligent about what happened. i don't think the consumer side is ever seen this kind of -- has ever seen this kind of recession. >> i want to pick up on your testimony, mr. blankfein, were you said that almost

mr. moynihan. >> i think the point about the counterparty risk, everybody in our firm did a lot of work on that, and the regulators have looked at it very carefully. that risk built up in a way that people did not anticipate. that is where we spent a lot of our time. not only the core economics, but on the credit risks and transactions. >> mr. dimon. >> other than being more vigilant, i think not a lot. but i would make one exception. we spent a lot of time looking at our exposure to other large financial companies so we would be prepared if they had company since we have a lot of contracts with other companies. >> i'll like another minute to ask one follow-up question. a question that commissioner wallace and said. i would very much appreciated if each of you could submit to the commission information on your proprietary trading over the last four years, that is, that kind of trading that you are engaged in, whether it was speculative, the degree to which it was hedging your risk, and the revenues and profits for each of the last four years. thank you. >> ok, thank you, commissioner born.

mr. moynihan. >> i think the point about the counterparty risk, everybody in our firm did a lot of work ont, and the regulators have looked at it very carefully. that risk built up in a way that people did not anticipate. that is where we spent a lot of our time. not only the core economics, but on the credit risks and transactions. >> mr. dimon. >> other than being more vigilant, i think not a lot. but i would make one exception. we spent a lot of time looking at our exposure to other large financial companies so we would be prepared if they had company since we have a lot of contracts with other companies. >> i'll like another minute to ask one follow-up question. a question that commissioner wallace and said. i would very much appreciated if each of you could submit to the commission information on your proprietary trading over the last four years, that is, that kind of trading that you are engaged in, whether it was speculative, the degree to which it was hedging your risk, and the revenues and profits for each of the last four years. thank you. >> ok, thank you, commissioner born. mr.

mr. moynihan whose testimony walk through the monoline institutions that failed during the crisis and made argument that it was in fact a large and diversified institutions that survived better, which seems to stand in contrast to a lot of the thrust of your argument about post gramm-leach-bliley activities. >> i think that is not a bad point. it is clear that the more diversified firms did survive. and, that is why i don't pin the blame on gramm-leach-bliley. that is why i said it was just one, that was my response, so i think-- i don't-- i am not sure anything is clear incidently. >> we need to figure this out, right? >> that is why do you were there. to take you out with the clarity is because all the things things happen and they all happen simultaneously but the point the chairman made, i believe the vice chairman is the board cost from outside. they were calls from inside the institutions and that is the point to have got to continue to probe glahn. and i think we all agree on that. so i think brian is right on that point. it is just management. it is how you set the standards, how y