The Charles Schwab Corporation (SCHW) 10-Q 2007 Q2 Quarterly report

THE CHARLES SCHWAB CORPORATION

Exhibit 12.1

Computation of Ratio of Earnings to Fixed Charges

(Dollar amounts in millions)

(Unaudited)

	Three Months Ended June 30,				Six Months Ended June 30,
	2007		2006		2007		2006
Earnings from continuing operations before taxes on earnings	$	424	$	369	$	815	$	722
Fixed charges
Interest expense:
Brokerage client cash balances		89		107		185		216
Deposits from banking clients		63		47		122		77
Long-term debt		7		8		14		15
Other		5		6		10		11
Total		164		168		331		319
Interest portion of rental expense		14		14		29		27
Total fixed charges (A)		178		182		360		346
Earnings from continuing operations before taxes on earnings and fixed charges (B)	$	602	$	551	$	1,175	$	1,068
Ratio of earnings to fixed charges (B) ÷ (A)(1)		3.4		3.0		3.3		3.1
Ratio of earnings to fixed charges excluding brokerage and banking clientinterest expense(2)		17.3		14.2		16.4		14.6

⁽¹⁾ The ratio of earnings to fixed charges is calculated in accordance with SEC requirements. For such purposes, “earnings” consist of earnings from continuing operations before taxes on earnings and fixed charges. “Fixed charges” consist of interest expense as listed above, including one-third of rental expense, which is estimated to be representative of the interest factor.

⁽²⁾ Because interest expense incurred in connection with both payables to brokerage clients and deposits from banking clients is completely offset by interest revenue on related investments and loans, the Company considers such interest to be an operating expense. Accordingly, the ratio of earnings to fixed charges excluding brokerage and banking client interest expense reflects the elimination of such interest expense as a fixed charge.