The Firm records a loan securitization as a sale when the accounting criteria for a sale are met.
Those criteria are: (1) the transferred assets are legally isolated from the Firm’s creditors; (2) the entity can pledge or exchange the financial assets or, if the entity is a QSPE, its investors can pledge or exchange their interests; and (3) the Firm does not maintain effective control to repurchase the transferred assets before their maturity or have the ability to unilaterally cause the holder to return the transferred assets.
For loan securitizations that meet the accounting sales criteria, the gains or losses recorded depend, in part, on the carrying amount of the loans sold and are allocated between the loans sold and the retained interests, based upon their relative fair values at the date of sale.
Gains on securitizations are reported in Noninterest revenue.
When quoted market prices for the retained interests are not available, the Firm estimates the fair value for these retained interests by determining the present value of future expected cash flows using modeling techniques.
Such models incorporate management’s best estimates of key variables, such as expected credit losses, prepayment speeds and the discount rates appropriate for the risks involved.
Interests in the securitized loans may be retained by the Firm in the form of senior or subordinated interest-only strips, senior and subordinated tranches and escrow accounts.
The classification of retained interests is dependent upon several factors, including the type of interest (e. g. , whether the retained interest is represented by a secu rity certificate) and when it was retained, due to the adoption of SFAS 155.
The Firm has elected to fair value all interests in securitized loans retained after December 31, 2005, that have an embedded derivative required to be bifurcated under SFAS 155; these retained interests are classified primarily as Trading assets.
Retained interests related to wholesale securitization activities are classified as Trading assets.
Prior to the adoption of SFAS 155, for consumer activities, senior and subordinated retained interests represented by a security certificate were classified as AFS; retained interests not represented by a security certificate were classified in Other assets.
For those retained interests that are subject to prepayment risk (such that JPMorgan Chase may not recover substantially all of its investment) but are not required to be bifurcated under SFAS 155, the retained interests are recorded at fair value; subsequent adjustments are reflected in earnings or in Other comprehensive income (loss).
Retained interests classified as AFS are subject to the impairment provisions of EITF 99-20.  Credit card securitization trusts require the Firm to maintain a minimum undivided interest in the trusts, representing the Firm’s interests in the receivables transferred to the trust that have not been securitized.
These seller’s interests are not represented by security certificates.
The Firm’s undivided interests are carried at historical cost and are classified in Loans.2007, 2006 and 2005 Securitization activity The following tables summarize new securitization transactions that were completed during 2007, 2006 and 2005; the resulting gains arising from such securitizations; certain cash flows received from such securitizations; and the key economic assumptions used in measuring the retained interests (if any) other than residential MSRs (for a discussion of residential MSRs, see Note 18 on pages 154–157 of this Annual Report), as of the dates of such sales.
## Table 0 ##
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JPMorgan Chase & Co.  Expected loss modeling In 2006, the Firm restructured four multi-seller conduits that it administers.
The restructurings included enhancing the Firm’s expected loss model.
In determining the primary beneficiary of the conduits it administers, the Firm uses a Monte Carlo–based model to estimate the expected losses of each of the conduits and considers the relative rights and obligations of each of the variable interest holders.
The variability to be considered in the modeling of expected losses is based on the design of the entity.
The Firm’s traditional multi-seller conduits are designed to pass credit risk, not liquidity risk, to its variable interest holders, as the assets are intended to be held in the conduit for the longer term.
Under FIN 46R, the Firm is required to run the Monte Carlo-based expected loss model each time a reconsideration event occurs.
In applying this guidance to the conduits, the following events are considered to be reconsideration events as they could affect the determination of the primary beneficiary of the conduits: ?
New deals, including the issuance of new or additional variable interests (credit support, liquidity facilities, etc); ?
Changes in usage, including the change in the level of outstanding variable interests (credit support, liquidity facilities, etc); ?
Modifications of asset purchase agreements; and ?
Sales of interests held by the primary beneficiary.
From an operational perspective, the Firm does not run its Monte Carlo-based expected loss model every time there is a reconsideration event due to the frequency of their occurrence.
Instead, the Firm runs its expected loss model each quarter and includes a growth assumption for each conduit to ensure that a sufficient amount of ELNs exists for each conduit at any point during the quarter.
As part of its normal quarterly model review, the Firm reassesses the underlying assumptions and inputs of the expected loss model.
During the second half of 2007, certain assumptions used in the model were adjusted to reflect the then current market conditions.
Specifically, risk ratings and loss given default assumptions relating to residential subprime mortgage exposures were modified.
For other nonmortgage-related asset classes, the Firm determined that the assumptions in the model required little adjustment.
As a result of the updates to the model, during the fourth quarter of 2007 the terms of the ELNs were renegotiated to increase the level of commitment and funded amounts to be provided by the ELN holders.
The total amount of expected loss notes outstanding at December 31, 2007 and 2006, were $130 million and $54 million, respectively.
Management concluded that the model assumptions used were reflective of market participant’s assumptions and appropriately considered the probability of a recurrence of recent market events.
Qualitative considerations The multi-seller conduits are primarily designed to provide an efficient means for clients to access the commercial paper market.
The Firm believes the conduits effectively disperse risk among all parties and that the preponderance of economic risk in the Firm’s multi-seller conduits is not held by JPMorgan Chase.
The percentage of assets in the multi-seller conduits that the Firm views as client-related represent 99% and 98% of the total conduits’ holdings at December 31, 2007 and 2006, respectively.
Consolidated sensitivity analysis on capital It is possible that the Firm could be required to consolidate a VIE if it were determined that the Firm became the primary beneficiary of the VIE under the provisions of FIN 46R.
The factors involved in making the determination of whether or not a VIE should be consolidated are discussed above and in Note 1 on page 108 of this Annual Report.
The table below shows the impact on the Firm’s reported assets, liabilities, Net income, Tier 1 capital ratio and Tier 1 leverage ratio if the Firm were required to consolidate all of the multi-seller conduits that it administers.
## Table 1 ##
The Firm could fund purchases of assets from VIEs should it become necessary.
Investor intermediation As a financial intermediary, the Firm creates certain types of VIEs and also structures transactions, typically derivative structures, with these VIEs to meet investor needs.
The Firm may also provide liquidity and other support.
The risks inherent in the derivative instruments or liquidity commitments are managed similarly to other credit, market or liquidity risks to which the Firm is exposed.
The principal types of VIEs for which the Firm is engaged in these structuring activities are municipal bond vehicles, credit-linked note vehicles and collateralized debt obligation vehicles.
Municipal bond vehicles The Firm has created a series of secondary market trusts that provide short-term investors with qualifying tax-exempt investments, and that allow investors in tax-exempt securities to finance their investments at short-term tax-exempt rates.
In a typical transaction, the vehicle purchases fixed-rate longer-term highly rated municipal bonds and funds the purchase by issuing two types of securities: (1) putable floatingrate certificates and (2) inverse floating-rate residual interests (“residual interests”).
The maturity of each of the putable floating-rate certificates and the residual interests is equal to the life of the vehicle, while the maturity of the underlying municipal bonds is longer.
Holders of the putable floating-rate certificates may “put”, or tender, the certificates if the remarketing agent cannot successfully remarket the floating-rate certificates to another investor.
A liquidity facility conditionally obligates the liquidity provider to fund the purchase of the tendered floating-rate certificates.
Upon termination of the vehicle, if the proceeds from the sale of the underlying municipal bonds are not sufficient to repay the liquidity facility, the liquidity provider has recourse either to excess collateralization in the vehicle or the residual interest holders for reimbursement.
The third-party holders of the residual interests in these vehicles could experience losses if the face amount of the putable floating-rate certificates exceeds the market value of the municipal bonds upon termination of the vehicle.
Certain vehicles require a smaller initial investment by the residual interest holders and thus do not result in excess collateralization.
For these vehicles there exists a reimbursement obli-
MANAGEMENT’S DISCUSSION AND ANALYSIS JPMorgan Chase & Co.  EXECUTIVE OVERVIEW This overview of management’s discussion and analysis highlights selected information and may not contain all of the information that is important to readers of this Annual Report.
For a more complete understanding of events, trends and uncertainties, as well as the capital, liquidity, credit and market risks, and the Critical accounting estimates, affecting the Firm and its various lines of business, this Annual Report should be read in its entirety.
Financial performance of JPMorgan Chase
## Table 2 ##
Business overview JPMorgan Chase reported record Net income and record Total net revenue in 2007, exceeding the record levels achieved in 2006.
Net income in 2007 was $15.4 billion, or $4.38 per share, and Total net revenue was $71.4 billion, compared with Net income of $14.4 billion, or $4.04 per share, and Total net revenue of $62.0 billion for 2006.
The return on common equity was 13% in both years.
Reported results in 2006 included $795 million of income from discontinued operations related to the exchange of selected corporate trust businesses for the consumer, business banking and middle-market banking businesses of The Bank of New York.
Income from continuing operations in 2006 was $13.6 billion, or $3.82 per share.
For a detailed discussion of the Firm’s consolidated results of operations, see pages 31–35 of this Annual Report.
The Firm’s results over the past several years have benefited from growth in the global economy and, most importantly, from the management team’s focus on driving organic revenue growth and improving operating margins by investing in each line of business, reducing waste, efficiently using the Firm’s balance sheet and successfully completing the integration plan for the merger of Bank One Corporation with and into JPMorgan Chase on July 1, 2004 (“the Merger”).
The success in executing on this agenda in 2007 is reflected in the strong organic growth experienced by all of our businesses including: record levels of advisory fees, equity underwriting fees and equity markets revenue; double-digit revenue growth in Retail Financial Services, Treasury & Securities Services and Asset Management; and improved operating margins in most businesses.
This improved performance was driven by growth in key business metrics including: double-digit growth in deposit and loan balances; 127 new branches and 680 additional ATMs; 15% growth in assets under custody; $115 billion of net assets under management inflows; 16 million new credit card accounts with 1.4 million sold in branches; and nearly doubling real estate mortgage origination market share to 11% during the fourth quarter of 2007.
At the same time the Firm increased loan loss reserve levels, and maintained strong capital ratios and ample levels of liquidity as part of its commitment to maintaining a strong balance sheet.
During 2007, the Firm also continued to create a stronger infrastructure.
The Firm successfully completed the in-sourcing of its credit card processing platform, which will allow for faster introduction of new and enhanced products and services.
In addition, with the successful completion of the systems conversion and rebranding for 339 former Bank of New York branches and the conversion of the wholesale deposit system (the last significant Merger event which affected more than $180 billion in customer balances), the Firm’s consumer and wholesale customers throughout the U. S.  now have access to over 3,100 branches and 9,100 ATMs in 17 states, all of which are on common computer systems.
With Merger integration activity completed by the end of 2007, the Firm fully realized its established merger-related expense savings target of $3.0 billion.
To achieve these merger-related savings, the Firm expensed Merger costs of $209 million during 2007, bringing the total cumulative amount expensed since the Merger announcement to approximately $3.6 billion (including costs associated with the Bank of New York transaction and capitalized costs).
With the completion of all Merger integration activity, no further Merger costs will be incurred.
In 2007, the global economy continued to expand and inflation remained well-contained despite ongoing price pressures on energy and agricultural commodities.
Developing economies maintained strong momentum throughout the year, but the industrial economies slowed in the second half of the year in response to weak housing conditions, monetary tightening by several central banks, rising petroleum prices and tightening credit conditions.
The U. S.  housing market for the first time in decades experienced a decline in average home prices with some specific markets declining by double-digit percentages.
Despite the slowdown in the industrial economies, labor markets remained relatively healthy, supporting ongoing solid, though slowing consumer spending.
Substantial financial losses related to U. S.  subprime mortgage loans triggered a flight to quality in global financial markets late in the summer.
In addition, during the second half of the year, pressures in interbank funding markets increased, credit spreads widened significantly and credit was difficult to obtain for some less creditworthy wholesale and consumer borrowers.
Central banks took a number of actions to counter pressures in funding markets, including reducing interest rates and suspending further tightening actions.
Capital markets activity increased significantly in the first half of 2007, but declined over the second half of the year amid difficult mortgage and credit market conditions.
Despite the volatility in capital markets activity, U. S.  and international equity markets performance was strong, with the U. S.  stock market reaching an all-time record in October; however, the stock market pulled back from the record level by the end of the year.
The S&P 500 and international indices were up, on average, approximately 8% during 2007.
The Firm’s improved performance in 2007 benefited both from the investments made in each business and the overall global economic environment.
The continued overall expansion of the U. S.  and global economies, overall increased level of capital markets activity and positive performance in equity markets helped to drive new business volume and organic growth within each of the Firm’s businesses.
These

Tables referenced above, in order (Table 0 first):
<table><tr><td> Year ended December 31, 2007</td><td colspan="6">Consumer activities</td><td colspan="5">Wholesale activities</td><td></td></tr><tr><td>(in millions, except rates and where</td><td></td><td></td><td colspan="3">Residential mortgage</td><td>Education</td><td colspan="3">Residential mortgage</td><td></td><td>Commercial</td><td></td></tr><tr><td>otherwise noted)</td><td>Credit card</td><td>Auto</td><td>Prime<sup>(c)</sup></td><td></td><td>Subprime<sup>(f)</sup></td><td>loans</td><td>Prime<sup>(c)</sup></td><td></td><td>Subprime</td><td></td><td>and other</td><td></td></tr><tr><td>Principal securitized</td><td>$21,160</td><td> $ —</td><td>$22,778</td><td> </td><td> $ 6,150</td><td>$ 1,168</td><td> $ 9,306</td><td> </td><td>$613</td><td> </td><td> $ 12,797</td><td> </td></tr><tr><td>Pretax gains</td><td>177</td><td> —</td><td>26</td><td> <sup>(d)</sup></td><td> 43</td><td>51</td><td> 2<sup></sup><sup> </sup> </td><td> <sup></sup><sup>(d) </sup> </td><td>—</td><td> </td><td> —</td><td> </td></tr><tr><td> Cash flow information:</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Proceeds from securitizations</td><td>$21,160</td><td> $ —</td><td>$22,572</td><td> </td><td> $ 6,236</td><td>$ 1,168</td><td> $ 9,219</td><td> </td><td>$608</td><td> </td><td> $ 13,038</td><td> </td></tr><tr><td>Servicing fees collected</td><td>179</td><td> —</td><td>36</td><td> </td><td> 17</td><td>2</td><td> —</td><td> </td><td>—</td><td> </td><td> 7</td><td> </td></tr><tr><td>Other cash flows received</td><td>935</td><td> —</td><td>—</td><td> </td><td> —</td><td>—</td><td> —</td><td> </td><td>—</td><td> </td><td> —</td><td> </td></tr><tr><td>Proceeds from collections reinvested in revolving securitizations</td><td>148,946</td><td> —</td><td>—</td><td> </td><td> —</td><td>—</td><td> —</td><td> </td><td>—</td><td> </td><td> —</td><td> </td></tr><tr><td> Key assumptions (rates per annum):</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Prepayment rate<sup>(a)</sup></td><td>20.4%</td><td></td><td>14.8-24.2</td><td> %</td><td></td><td>1.0-8.0%</td><td> 13.7-37.2</td><td> %</td><td>30.0-48.0</td><td> %</td><td> 0.0-8.0</td><td> %</td></tr><tr><td></td><td>PPR</td><td></td><td>CPR</td><td> </td><td></td><td>CPR</td><td> CPR</td><td> </td><td>CPR</td><td> </td><td> CPR</td><td> </td></tr><tr><td>Weighted-average life (in years)</td><td>0.4</td><td></td><td>3.2-4.0</td><td> </td><td></td><td>9.3</td><td> 1.3-5.4</td><td> </td><td>2.3-2.8</td><td> </td><td> 1.3-10.2</td><td> </td></tr><tr><td>Expected credit losses</td><td>3.5-3.9%</td><td></td><td>—</td><td> %<sup></sup><sup>(e) </sup> </td><td></td><td>—% (e)</td><td> 0.6-1.6</td><td> %</td><td>1.2-2.2</td><td> %</td><td> 0.0-1.0<sup></sup><sup> </sup> </td><td> %<sup></sup><sup>(e) </sup> </td></tr><tr><td>Discount rate</td><td>12.0%</td><td></td><td>5.8-13.8</td><td> %</td><td></td><td>9.0%</td><td> 6.3-20.0</td><td> %</td><td>12.1-26.7</td><td> %</td><td> 10.0-14.0</td><td> %</td></tr></table>
<table><tr><td>(in billions, except ratios)</td><td>Reported</td><td>Pro forma</td></tr><tr><td>Assets</td><td>$1,562.1</td><td>$1,623.9</td></tr><tr><td>Liabilities</td><td>1,438.9</td><td>1,500.9</td></tr><tr><td>Net income</td><td>15.4</td><td>15.2</td></tr><tr><td>Tier 1 capital ratio</td><td>8.4%</td><td>8.4%</td></tr><tr><td>Tier 1 leverage ratio</td><td>6.0</td><td>5.8</td></tr></table>
<table><tr><td>Year ended December 31,(in millions, except per share and ratio data)</td><td>2007</td><td>2006</td><td>Change</td></tr><tr><td> Selected income statement data</td><td></td><td></td><td></td></tr><tr><td>Total net revenue</td><td>$71,372</td><td>$61,999</td><td>15%</td></tr><tr><td>Provision for credit losses</td><td>6,864</td><td>3,270</td><td>110</td></tr><tr><td>Total noninterest expense</td><td>41,703</td><td>38,843</td><td>7</td></tr><tr><td>Income from continuing operations</td><td>15,365</td><td>13,649</td><td>13</td></tr><tr><td>Income from discontinued operations</td><td>—</td><td>795</td><td>NM</td></tr><tr><td> Net income</td><td>15,365</td><td>14,444</td><td>6</td></tr><tr><td> Diluted earnings per share</td><td></td><td></td><td></td></tr><tr><td>Income from continuing operations</td><td>$4.38</td><td>$3.82</td><td>15%</td></tr><tr><td>Net income</td><td>4.38</td><td>4.04</td><td>8</td></tr><tr><td> Return on common equity</td><td></td><td></td><td></td></tr><tr><td>Income from continuing operations</td><td>13%</td><td>12%</td><td></td></tr><tr><td>Net income</td><td>13</td><td>13</td><td></td></tr></table>

Question: What's the average of Principal securitized of Consumer activities Education loans is, and Provision for credit losses of 2007 ?
Answer: 4016
Reasoning program: add(1168.0,6864.0), divide(#0,const_2)