FROM THE OFFICE OF PUBLIC AFFAIRS

Good morning. Today, Treasury carries through on a promise we made last year to provide investors, both middle income savers and big institutions, with the opportunity to purchase securities that provide protection from inflation.

This is an extremely important development in the U.S. financial markets. For the first time, the United States is offering investors protection from inflation. Inflation can erode savings, whether the savings are those of a retiree, a person saving for college or a big institutional investor. This product offers advantages to middle-income savers which have not been available before now.

We believe that over time it may well spawn significant changes in the financial markets, it could encourage investors to think about investments more in terms of real rates of return, which in turn could lead to intermediaries, like mutual funds, to offer "purchasing power" products such as indexed annuities.

Treasury is a conservative issuer, and appropriately so. We rarely introduce new products. In fact, Treasury has been studying inflation-indexed securities since at least the 1940s. This is a big idea, and now it is a reality. This product offers new opportunities to savers and, over time, will save the Treasury money.

I know from my years on Wall Street that the introduction of new financial instruments is never an easy process, even for those market participants who do it frequently.

We have gone through a long process. We asked market participants for their advice on how to design indexed securities so they would have the broadest possible market appeal. We then met with more than 800 people to solicit their views. We learned a great deal from this exchange of views, and many of the comments we received helped shape the product we are selling today.

Accordingly, we are announcing today that we will auction $7.0 billion of 10-year inflation-indexed notes on Wednesday, January 29, for settlement on Thursday, February 6.

Treasury is making a long-term commitment to this market. When new financial products are introduced, there is always an adjustment period for the market, and we expect indexed securities to be no different. No product like this has been offered in our country's history. Inflation-indexed securities are designed to prove to be a good deal for both investors and taxpayers, and that is why we are pleased to be making this announcement today.

Now, may I answer any questions?