Quarterly report pursuant to Section 13 or 15(d)

Fair Value Option

v2.4.0.6
Fair Value Option
 6 Months Ended
Jun. 30, 2012
Fair Value Option [Abstract]  
Fair Value Option
NOTE 16 – Fair Value Option

The Corporation elects to account for certain financial instruments under the fair value option. For additional information on the primary financial instruments for which the fair value option elections have been made, see Note 23 – Fair Value Option to the Consolidated Financial Statements of the Corporation's 2011 Annual Report on Form 10-K.

The table below provides information about the fair value carrying amount and the contractual principal outstanding of assets and liabilities accounted for under the fair value option at June 30, 2012 and December 31, 2011.

Fair Value Option Elections
 
June 30, 2012
 
December 31, 2011
(Dollars in millions)
Fair Value
Carrying
Amount
 
Contractual
Principal
Outstanding
 
Fair Value
Carrying
Amount
Less Unpaid
Principal
 
Fair Value
Carrying
Amount
 
Contractual
Principal
Outstanding
 
Fair Value
Carrying
Amount
Less Unpaid
Principal
Loans reported as trading account assets
$
1,224

 
$
2,144

 
$
(920
)
 
$
1,151

 
$
2,371

 
$
(1,220
)
Trading inventory - other
1,277

 
n/a

 
n/a

 
1,173

 
n/a

 
n/a

Consumer and commercial loans
8,361

 
9,365

 
(1,004
)
 
8,804

 
10,823

 
(2,019
)
Loans held-for-sale
10,187

 
11,579

 
(1,392
)
 
7,630

 
9,673

 
(2,043
)
Securities financing agreements
143,350

 
142,843

 
507

 
121,688

 
121,092

 
596

Other assets
115

 
n/a

 
n/a

 
251

 
n/a

 
n/a

Long-term deposits
2,874

 
2,654

 
220

 
3,297

 
3,035

 
262

Asset-backed secured financings
652

 
1,218

 
(566
)
 
650

 
1,271

 
(621
)
Unfunded loan commitments
948

 
n/a

 
n/a

 
1,249

 
n/a

 
n/a

Other short-term borrowings
3,816

 
3,816

 
—

 
5,908

 
5,909

 
(1
)
Long-term debt (1)
48,345

 
52,109

 
(3,764
)
 
46,239

 
55,854

 
(9,615
)
(1) 
The majority of the difference between the fair value carrying amount and contractual principal outstanding at June 30, 2012 and December 31, 2011 relates to the impact of the Corporation's credit spreads as well as the fair value of the embedded derivative, where applicable.
n/a = not applicable

The table below provides information about where changes in the fair value of assets and liabilities accounted for under the fair value option are included in the Corporation's Consolidated Statement of Income for the three and six months ended June 30, 2012 and 2011.

Gains (Losses) Relating to Assets and Liabilities Accounted for Under the Fair Value Option
 
Three Months Ended June 30, 2012
(Dollars in millions)
Trading
Account
Profits
(Losses)
 
Mortgage
Banking
Income
(Loss)
 
Other
Income
(Loss)
 
Total
Loans reported as trading account assets
$
56

 
$
—

 
$
—

 
$
56

Consumer and commercial loans
6

 
—

 
(5
)
 
1

Loans held-for-sale
(7
)
 
518

 
(24
)
 
487

Securities financing agreements
23

 
—

 
14

 
37

Other assets
—

 
—

 
(11
)
 
(11
)
Long-term deposits
—

 
—

 
(1
)
 
(1
)
Asset-backed secured financings
—

 
(17
)
 
—

 
(17
)
Unfunded loan commitments
—

 
—

 
(112
)
 
(112
)
Other short-term borrowings
12

 
—

 
—

 
12

Long-term debt
756

 
—

 
(62
)
 
694

Total
$
846

 
$
501

 
$
(201
)
 
$
1,146

 
 
 
 
 
 
 
 
 
Three Months Ended June 30, 2011
Loans reported as trading account assets
$
4

 
$
—

 
$
—

 
$
4

Commercial loans
7

 
—

 
26

 
33

Loans held-for-sale
2

 
1,511

 
31

 
1,544

Securities financing agreements
—

 
—

 
98

 
98

Other assets
—

 
—

 
1

 
1

Long-term deposits
—

 
—

 
(40
)
 
(40
)
Asset-backed secured financings
—

 
(36
)
 
—

 
(36
)
Unfunded loan commitments
—

 
—

 
(76
)
 
(76
)
Other short-term borrowings
37

 
—

 
—

 
37

Long-term debt
(178
)
 
—

 
214

 
36

Total
$
(128
)
 
$
1,475

 
$
254

 
$
1,601

Gains (Losses) Relating to Assets and Liabilities Accounted for Under the Fair Value Option
 
Six Months Ended June 30, 2012
(Dollars in millions)
Trading
Account
Profits
(Losses)
 
Mortgage
Banking
Income
(Loss)
 
Other
Income
(Loss)
 
Total
Loans reported as trading account assets
$
134

 
$
—

 
$
—

 
$
134

Consumer and commercial loans
5

 
—

 
297

 
302

Loans held-for-sale
49

 
949

 
80

 
1,078

Securities financing agreements
23

 
—

 
(90
)
 
(67
)
Other assets
—

 
—

 
7

 
7

Long-term deposits
—

 
—

 
20

 
20

Asset-backed secured financings
—

 
(55
)
 
—

 
(55
)
Unfunded loan commitments
—

 
—

 
292

 
292

Other short-term borrowings
19

 
—

 
—

 
19

Long-term debt
(35
)
 
—

 
(3,376
)
 
(3,411
)
Total
$
195

 
$
894

 
$
(2,770
)
 
$
(1,681
)
 
 
 
 
 
 
 
 
 
Six Months Ended June 30, 2011
Loans reported as trading account assets
$
73

 
$
—

 
$
—

 
$
73

Commercial loans
(4
)
 
—

 
132

 
128

Loans held-for-sale
2

 
2,383

 
252

 
2,637

Securities financing agreements
—

 
—

 
(13
)
 
(13
)
Other assets
—

 
—

 
30

 
30

Long-term deposits
—

 
—

 
(35
)
 
(35
)
Asset-backed secured financings
—

 
(82
)
 
—

 
(82
)
Unfunded loan commitments
—

 
—

 
56

 
56

Other short-term borrowings
93

 
—

 
—

 
93

Long-term debt
(113
)
 
—

 
(372
)
 
(485
)
Total
$
51

 
$
2,301

 
$
50

 
$
2,402