The Charles Schwab Corporation (SCHW) 10-Q 2008 Q3 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 September 30,				Nine Months Ended September 30,
	2008		2007		2008		2007
Earnings from continuing operations before taxes on earnings	$	499	$	512	$	1,521	$	1,327
Fixed charges
Interest expense:
Deposits from banking clients		22		65		79		187
Payables to brokerage clients		6		84		49		269
Short-term borrowings		—		—		1		—
Long-term debt		14		7		44		21
Other		8		4		19		14
Total		50		160		192		491
Interest portion of rental expense		15		15		46		44
Total fixed charges (A)		65		175		238		535
Earnings from continuing operations before taxes on earnings and fixed charges (B)	$	564	$	687	$	1,759	$	1,862
Ratio of earnings to fixed charges (B) ÷ (A)(1)		8.7		3.9		7.4		3.5
Ratio of earnings to fixed charges excluding deposits from banking clients and payables to brokerage clients interest expense(2)		14.5		20.7		14.8		17.8

⁽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.