The Charles Schwab Corporation (SCHW) 10-Q 2008 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,
	2008		2007		2008		2007
Earnings from continuing operations before taxes on earnings	$	514	$	424	$	1,022	$	815
Fixed charges
Interest expense:
Deposits from banking clients		21		63		57		122
Payables to brokerage clients		9		89		44		185
Long-term debt		15		7		30		14
Other		6		5		11		10
Total		51		164		142		331
Interest portion of rental expense		15		14		31		29
Total fixed charges (A)		66		178		173		360
Earnings from continuing operations before taxes on earnings and fixed charges (B)	$	580	$	602	$	1,195	$	1,175
Ratio of earnings to fixed charges (B) ÷ (A)(1)		8.8		3.4		6.9		3.3
Ratio of earnings to fixed charges excluding deposits from banking clients and payables to brokerage clients interest expense(2)		15.3		17.3		15.2		16.4

⁽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 deposits from banking clients and payables to brokerage 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 deposits from banking clients and payables to brokerage clients interest expense reflects the elimination of such interest expense as a fixed charge.