Mortgage-related exposures carried at fair value The following table provides a summary of the Firm’s mortgage-related exposures, including the impact of risk management activities.
These exposures include all mortgage-related securities and loans carried at fair value regardless of their classification within the fair value hierarchy, and that are carried at fair value through earnings or at the lower of cost or fair value.
The table excludes securities held in the available-for-sale portfolio, which are reported on page 170 of this Note.
## Table 0 ##
(a) Excluded at December 31, 2009 and 2008, are certain mortgages and mortgage-related assets that are carried at fair value and recorded in trading assets, such as: (i) U. S.  government agency securities that are liquid and of high credit quality of $41.7 billion and $58.9 billion, respectively; (ii) conforming mortgage loans originated with the intent to sell to U. S.  government agencies of $11.1 billion and $6.2 billion, respectively; and (iii) reverse mortgages of $4.5 billion and $4.3 billion, respectively, for which the principal risk is mortality risk.
Also excluded are MSRs, which are reported in Note 17 on pages 222–225 of this Annual Report.
(b) Excluded certain mortgage-related financing transactions, which are collateralized by mortgage-related assets, of $4.1 billion and $5.7 billion at December 31, 2009 and 2008, respectively.
These financing transactions are excluded from the table, as they are accounted for on an accrual basis of accounting.
For certain financings deemed to be impaired, impairment is measured and recognized based on the fair value of the collateral.
Of these financing transactions, $136 million and $1.2 billion were considered impaired at December 31, 2009 and 2008, respectively.
(c) Total residential mortgage exposures at December 31, 2009 and 2008, include: (i) securities of $3.4 billion and $4.0 billion, respectively; (ii) loans carried at fair value or the lower of cost or fair value of $5.0 billion and $5.9 billion, respectively; and (iii) forward purchase commitments included in derivative receivables of $358 million and $1.2 billion, respectively.
(d) Amounts reflect the effects of derivatives used to manage the credit risk of the gross exposures arising from cash-based instruments.
The amounts are presented on a bond- or loan-equivalent (notional) basis.
Derivatives are excluded from the gross exposure, as they are principally used for risk management purposes.
(e) Net gains and losses include all revenue related to the positions (i. e. , interest income, changes in fair value of the assets, changes in fair value of the related risk management positions, and interest expense related to the liabilities funding those positions).
Residential mortgages Classification and Valuation – Residential mortgage loans and MBS are classified within level 2 or level 3 of the valuation hierarchy, depending on the level of liquidity and activity in the markets for a particular product.
Level 3 assets include nonagency residential whole loans and subordinated nonagency residential MBS.
Products that continue to have reliable price transparency as evidenced by consistent market transactions, such as senior nonagency securities, as well as agency securities, are classified in level 2.
For those products classified within level 2 of the valuation hierarchy, the Firm estimates the value of such instruments using a combination of observed transaction prices, independent pricing services and relevant broker quotes.
Consideration is given to the nature of the quotes (e. g. , indicative or firm) and the relationship of recently evidenced market activity to the prices provided from independent pricing services.
When relevant market activity is not occurring or is limited, the fair value is estimated as follows: Residential mortgage loans – Fair value of residential mortgage loans is estimated by projecting the expected cash flows and discounting those cash flows at a rate reflective of current market liquidity.
To estimate the projected cash flows (inclusive of assumptions of prepayment, default rates and loss severity), specific consideration is given to both borrower-specific and other market factors, including, but not limited to: the borrower’s FICO score; the type of collateral supporting the loan; an estimate of the current value of the collateral supporting the loan; the level of documentation for the loan; and market-derived expectations for home price appreciation or depreciation in the respective geography of the borrower.
Residential mortgage-backed securities – Fair value of residential MBS is estimated considering the value of the collateral and the specific attributes of the securities held by the Firm.
The value of the collateral pool supporting the securities is analyzed using the same techniques and factors described above for residential mortgage loans, albeit in a more aggregated manner across the pool.
For example, average FICO scores, average delinquency rates, average loss severities and prepayment rates, among other metrics, may be evaluated.
In addition, as each securitization vehicle distributes cash in a manner or order that is predetermined at the inception of the vehicle, the priority in which each particular MBS is allocated cash flows, and the level of credit enhancement that is in place to support those cash flows, are key considerations in deriving the value of residential MBS.
Finally, the risk premium that investors demand for securitized products in the current market is factored into the valuation.
To benchmark its valuations, the Firm looks to transactions for similar instruments and utilizes independ-
Notes to consolidated financial statements JPMorgan Chase & Co. /2009 Annual Report 236 The following table presents the U. S.  and non-U.
S.  components of income before income tax expense/(benefit) and extraordinary gain for the years ended December 31, 2009, 2008 and 2007.
Year ended December 31,
## Table 1 ##
(a) For purposes of this table, non-U.
S.  income is defined as income generated from operations located outside the U. S.  Note 28 – Restrictions on cash and intercompany funds transfers The business of JPMorgan Chase Bank, National Association (“JPMorgan Chase Bank, N. A.
”) is subject to examination and regulation by the Office of the Comptroller of the Currency (“OCC”).
The Bank is a member of the U. S.  Federal Reserve System, and its deposits are insured by the FDIC.
The Board of Governors of the Federal Reserve System (the “Federal Reserve”) requires depository institutions to maintain cash reserves with a Federal Reserve Bank.
The average amount of reserve balances deposited by the Firm’s bank subsidiaries with various Federal Reserve Banks was approximately $821 million and $1.6 billion in 2009 and 2008, respectively.
Restrictions imposed by U. S.  federal law prohibit JPMorgan Chase and certain of its affiliates from borrowing from banking subsidiaries unless the loans are secured in specified amounts.
Such secured loans to the Firm or to other affiliates are generally limited to 10% of the banking subsidiary’s total capital, as determined by the riskbased capital guidelines; the aggregate amount of all such loans is limited to 20% of the banking subsidiary’s total capital.
The principal sources of JPMorgan Chase’s income (on a parent company–only basis) are dividends and interest from JPMorgan Chase Bank, N. A. , and the other banking and nonbanking subsidiaries of JPMorgan Chase.
In addition to dividend restrictions set forth in statutes and regulations, the Federal Reserve, the OCC and the FDIC have authority under the Financial Institutions Supervisory Act to prohibit or to limit the payment of dividends by the banking organizations they supervise, including JPMorgan Chase and its subsidiaries that are banks or bank holding companies, if, in the banking regulator’s opinion, payment of a dividend would constitute an unsafe or unsound practice in light of the financial condition of the banking organization.
At January 1, 2010 and 2009, JPMorgan Chase’s banking subsidiaries could pay, in the aggregate, $3.6 billion and $17.0 billion, respectively, in dividends to their respective bank holding companies without the prior approval of their relevant banking regulators.
The capacity to pay dividends in 2010 will be supplemented by the banking subsidiaries’ earnings during the year.
In compliance with rules and regulations established by U. S.  and non-U.
S.  regulators, as of December 31, 2009 and 2008, cash in the amount of $24.0 billion and $34.8 billion, respectively, and securities with a fair value of $10.2 billion and $23.4 billion, respectively, were segregated in special bank accounts for the benefit of securities and futures brokerage customers.
Note 29 – Capital The Federal Reserve establishes capital requirements, including well-capitalized standards for the consolidated financial holding company.
The OCC establishes similar capital requirements and standards for the Firm’s national banks, including JPMorgan Chase Bank, N. A. , and Chase Bank USA, N. A.
There are two categories of risk-based capital: Tier 1 capital and Tier 2 capital.
Tier 1 capital includes common stockholders’ equity, qualifying preferred stock and minority interest less goodwill and other adjustments.
Tier 2 capital consists of preferred stock not qualifying as Tier 1, subordinated long-term debt and other instruments qualifying as Tier 2, and the aggregate allowance for credit losses up to a certain percentage of risk-weighted assets.
Total regulatory capital is subject to deductions for investments in certain subsidiaries.
Under the risk-based capital guidelines of the Federal Reserve, JPMorgan Chase is required to maintain minimum ratios of Tier 1 and Total (Tier 1 plus Tier 2) capital to risk-weighted assets, as well as minimum leverage ratios (which are defined as Tier 1 capital to average adjusted on–balance sheet assets).
Failure to meet these minimum requirements could cause the Federal Reserve to take action.
Banking subsidiaries also are subject to these capital requirements by their respective primary regulators.
As of December 31, 2009 and 2008, JPMorgan Chase and all of its banking subsidiaries were well-capitalized and met all capital requirements to which each was subject.
CONSOLIDATED RESULTS OF OPERATIONS This following section provides a comparative discussion of JPMorgan Chase’s Consolidated Results of Operations on a reported basis for the three-year period ended December 31, 2009.
Factors that related primarily to a single business segment are discussed in more detail within that business segment.
For a discussion of the Critical Accounting Estimates Used by the Firm that affect the Consolidated Results of Operations, see pages 135–139 of this Annual Report.
Revenue Year ended December 31,
## Table 2 ##
2009 compared with 2008 Total net revenue was $100.4 billion, up by $33.2 billion, or 49%, from the prior year.
The increase was driven by higher principal transactions revenue, primarily related to improved performance across most fixed income and equity products, and the absence of net markdowns on legacy leveraged lending and mortgage positions in IB, as well as higher levels of trading gains and investment securities income in Corporate/Private Equity.
Results also benefited from the impact of the Washington Mutual transaction, which contributed to increases in net interest income, lending- and deposit-related fees, and mortgage fees and related income.
Lastly, higher investment banking fees also contributed to revenue growth.
These increases in revenue were offset partially by reduced fees and commissions from the effect of lower market levels on assets under management and custody, and the absence of proceeds from the sale of Visa shares in its initial public offering in the first quarter of 2008.
Investment banking fees increased from the prior year, due to higher equity and debt underwriting fees.
For a further discussion of investment banking fees, which are primarily recorded in IB, see IB segment results on pages 63–65 of this Annual Report.
Principal transactions revenue, which consists of revenue from trading and private equity investing activities, was significantly higher compared with the prior year.
Trading revenue increased, driven by improved performance across most fixed income and equity products; modest net gains on legacy leveraged lending and mortgage-related positions, compared with net markdowns of $10.6 billion in the prior year; and gains on trading positions in Corporate/Private Equity, compared with losses in the prior year of $1.1 billion on markdowns of Federal National Mortgage Association (“Fannie Mae”) and Federal Home Loan Mortgage Corporation (“Freddie Mac”) preferred securities.
These increases in revenue were offset partially by an aggregate loss of $2.3 billion from the tightening of the Firm’s credit spread on certain structured liabilities and derivatives, compared with gains of $2.0 billion in the prior year from widening spreads on these liabilities and derivatives.
The Firm’s private equity investments produced a slight net loss in 2009, a significant improvement from a larger net loss in 2008.
For a further discussion of principal transactions revenue, see IB and Corporate/Private Equity segment results on pages 63–65 and 82–83, respectively, and Note 3 on pages 156– 173 of this Annual Report.
Lending- and deposit-related fees rose from the prior year, predominantly reflecting the impact of the Washington Mutual transaction and organic growth in both lending- and deposit-related fees in RFS, CB, IB and TSS.
For a further discussion of lending- and depositrelated fees, which are mostly recorded in RFS, TSS and CB, see the RFS segment results on pages 66–71, the TSS segment results on pages 77–78, and the CB segment results on pages 75–76 of this Annual Report.
The decline in asset management, administration and commissions revenue compared with the prior year was largely due to lower asset management fees in AM from the effect of lower market levels.
Also contributing to the decrease were lower administration fees in TSS, driven by the effect of market depreciation on certain custody assets and lower securities lending balances; and lower brokerage commissions revenue in IB, predominantly related to lower transaction volume.
For additional information on these fees and commissions, see the segment discussions for TSS on pages 77–78, and AM on pages 79–81 of this Annual Report.
Securities gains were lower in 2009 and included credit losses related to other-than-temporary impairment and lower gains on the sale of MasterCard shares of $241 million in 2009, compared with $668 million in 2008.
These decreases were offset partially by higher gains from repositioning the Corporate investment securities portfolio in connection with managing the Firm’s structural interest rate risk.
For a further discussion of securities gains, which are mostly recorded in Corporate/Private Equity, see the Corporate/Private Equity segment discussion on pages 82–83 of this Annual Report.
Mortgage fees and related income increased slightly from the prior year, as higher net mortgage servicing revenue was largely offset by lower production revenue.
The increase in net mortgage servicing revenue was driven by growth in average third-party loans serviced as a result of the Washington Mutual transaction.
Mortgage production revenue declined from the prior year, reflecting an increase in estimated losses from the repurchase of previously-sold loans, offset partially by wider margins on new originations.
For a discussion of mortgage fees and related income, which is recorded primarily in RFS’s Consumer Lending business, see the Consumer Lending discussion on pages 68–71 of this Annual Report.
Credit card income, which includes the impact of the Washington Mutual transaction, decreased slightly compared with the prior year,
Note 26 – Income taxes JPMorgan Chase and its eligible subsidiaries file a consolidated U. S.  federal income tax return.
JPMorgan Chase uses the asset and liability method to provide income taxes on all transactions recorded in the Consolidated Financial Statements.
This method requires that income taxes reflect the expected future tax consequences of temporary differences between the carrying amounts of assets or liabilities for book and tax purposes.
Accordingly, a deferred tax asset or liability for each temporary difference is determined based on the tax rates that the Firm expects to be in effect when the underlying items of income and expense are realized.
JPMorgan Chase’s expense for income taxes includes the current and deferred portions of that expense.
A valuation allowance is established to reduce deferred tax assets to the amount the Firm expects to realize.
Due to the inherent complexities arising from the nature of the Firm’s businesses, and from conducting business and being taxed in a substantial number of jurisdictions, significant judgments and estimates are required to be made.
Agreement of tax liabilities between JPMorgan Chase and the many tax jurisdictions in which the Firm files tax returns may not be finalized for several years.
Thus, the Firm’s final tax-related assets and liabilities may ultimately be different from those currently reported.
The components of income tax expense/(benefit) included in the Consolidated Statements of Income were as follows for each of the years ended December 31, 2012, 2011, and 2010.
Income tax expense/(benefit)

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Exposure as of December 31, 2009	Exposure as of December 31, 2008	Net gains/(losses) (e)
Reported	Reported
in income –	in income –
Net of risk	Net of risk	year ended	year ended
management	management	December 31,	December 31,
(in millions)	Gross	activities(d)	Gross	activities (d)	2009	2008
U.S.Residential Mortgage:(a)(b)(c)
Prime	$3,482	$3,482	$4,612	$4,612
Alt-A	3,030	3,030	3,934	3,917
6,512	6,512	8,546	8,529	$537	$-4,093
Subprime	569	137	941	-28	-76	-369
Non-U.S. Residential(c)	1,702	1,321	1,591	951	86	-292
Commercial Mortgage:
Securities	2,337	1,898	2,836	1,438	257	-792
Loans	2,699	2,035	4,338	2,179	-333	-752

', '

Year ended December 31, (in millions)	2009	2008	2007
U.S.	$6,263	$-2,094	$13,720
Non-U.S.(a)	9,804	4,867	9,085
Income before income taxexpense/(benefit) andextraordinary gain	$16,067	$2,773	$22,805

', '

Year ended December 31, (in millions)	2009	2008	2007
Investment banking fees	$7,087	$5,526	$6,635
Principal transactions	9,796	-10,699	9,015
Lending- and deposit-related fees	7,045	5,088	3,938
Asset management, administrationand commissions	12,540	13,943	14,356
Securities gains	1,110	1,560	164
Mortgage fees and related income	3,678	3,467	2,118
Credit card income	7,110	7,419	6,911
Other income	916	2,169	1,829
Noninterest revenue	49,282	28,473	44,966
Net interest income	51,152	38,779	26,406
Total net revenue	$100,434	$67,252	$71,372

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Question: for december 31 , 2009 , what was the total value of segregated collateral for the benefit of brokerage customers in millions?
Answer: 34.2