Sally / Beth,

As we discussed when I was in Houston I have put together a draft on 
Valuation Methodology Changes and Model Approval. I had a meeting arranged 
for today to go through my proposal with Ted Murphy and Tani Nath (she heads 
up research and structuring here in London) but Ted cancelled at the last 
minute (again). Tani and I met and are broadly in agreement, but before we 
can go any further we need Ted's input. He is now away for 2 1/2 weeks so 
there is going to be no further progress on this front.

In the mean time I would appreciate your comments on what I have put 
together. I would prefer it if it is not circulated around Houston at this 
stage until I can accurately say that Ted is happy from a global RAC 
perspective. Likewise I still need to get Houston research comfortable but I 
am going to wait until Ted has had a chance to add his feedback so I can at 
least say that it is only Houston research that is outstanding. Others will 
also need to be consulted (and I would like to agree a list of key people 
with you) but I can't see their being any real contention. Can you ?

I am assuming that resourcing is likely to be an issue for you in Houston 
(and it may well be here too) and this has been added to the outstanding 
list. I am envisaging that some of the risk management work could be 
completed as part of the curve validation 

If there are any questions or feedback please let me know.

James