OFFSETTING ASSETS AND LIABILITIES

For financial statement purposes, the Company does not offset derivative instruments, repurchase agreements, or securities borrowing and securities lending transactions. These activities are generally transacted under master agreements that are widely used by counterparties and that may allow for net settlements of payments in the normal course, as well as offsetting of all contracts with a given counterparty in the event of bankruptcy or default of one of the two parties to the transaction. The following table presents information about these transactions to enable the users of the Company’s financial statements to evaluate the potential effect of rights of set-off between these recognized assets and recognized liabilities at March 31, 2016 and December 31, 2015 (dollars in millions):



										Gross Amounts Not Offset in the Consolidated Balance Sheet
				Gross Amounts of Recognized Assets and Liabilities		Gross Amounts Offset in the Consolidated Balance Sheet		Net Amounts Presented in the Consolidated Balance Sheet ⁽¹⁾⁽²⁾		Financial Instruments			Collateral Received or Pledged (Including Cash)			Net Amount
March 31, 2016
	Assets:
		Deposits paid for securities borrowed ⁽³⁾		$	186	$	—	$	186	$	(144	)	$	(33	)	$	9
			Total	$	186	$	—	$	186	$	(144	)	$	(33	)	$	9

	Liabilities:
		Deposits received for securities loaned ⁽⁴⁾		1,395		—		1,395		(144		)	(1,160		)	91
		Derivative liabilities ⁽⁵⁾⁽⁶⁾		31		—		31		—			(31		)	—
			Total	$	1,426	$	—	$	1,426	$	(144	)	$	(1,191	)	$	91

December 31, 2015
	Assets:
		Deposits paid for securities borrowed ⁽³⁾		$	120	$	—	$	120	$	(94	)	$	(18	)	$	8
			Total	$	120	$	—	$	120	$	(94	)	$	(18	)	$	8

	Liabilities:
		Deposits received for securities loaned ⁽⁴⁾		1,535		—		1,535		(94		)	(1,314		)	127
		Repurchase agreements ⁽⁶⁾		82		—		82		—			(81		)	1
		Derivative liabilities ⁽⁵⁾⁽⁶⁾		11		—		11		—			(11		)	—
			Total	$	1,628	$	—	$	1,628	$	(94	)	$	(1,406	)	$	128


(1)	Net amount of deposits paid for securities borrowed presented in the consolidated balance sheet are reflected in the receivables from brokers, dealers and clearing organizations line item.


(2)	Net amount of deposits received for securities loaned, repurchase agreements and derivative liabilities presented in the consolidated balance sheet are reflected in the payables to brokers, dealers and clearing organizations, other borrowings and other liabilities line items, respectively.

(3)

Included in the gross amounts of deposits paid for securities borrowed was $52 million and $34 million at March 31, 2016 and December 31, 2015, respectively, transacted through a program with a clearing organization, which guarantees the return of cash to the Company. For presentation purposes, these amounts presented are based on the counterparties under the Company’s master securities loan agreements.

(4)

Included in the gross amounts of deposits received for securities loaned was $698 million and $722 million at March 31, 2016 and December 31, 2015, respectively, transacted through a program with a clearing organization, which guarantees the return of securities to the Company. For presentation purposes, these amounts presented are based on the counterparties under the Company’s master securities loan agreements.


(5)	Excludes net accrued interest payable of $1 million and $3 million at March 31, 2016 and December 31, 2015, respectively.


(6)	The Company pledges available-for-sale and held-to-maturity securities as collateral for amounts due on repurchase agreements and derivative liabilities. The collateral pledged included available-for-sale securities at fair value and held-to-maturity securities at amortized cost for March 31, 2016 and available-for-sale securities at fair value for December 31, 2015.

Derivative Transactions

Certain types of derivatives that the Company utilizes in its hedging activities are subject to derivatives clearing agreements ("cleared derivatives contracts") under the Dodd-Frank Act. These cleared derivatives contracts enable clearing by a derivatives clearing organization through a clearing member. Under the contracts, the clearing member typically has a one-way right to offset all contracts in the event of the Company’s default or bankruptcy. As such, the cleared derivatives contracts are not bilateral master netting agreements and do not allow for offsetting. At March 31, 2016 and December 31, 2015, the Company had $8 million and $10 million, respectively, in derivative assets of cleared derivatives contracts and $100 million and $44 million, respectively, in derivative liabilities of cleared derivatives contracts.

Securities Lending Transactions

Deposits paid for securities borrowed and deposits received for securities loaned are recorded at the amount of cash collateral advanced or received. Deposits paid for securities borrowing transactions require the Company to deposit cash with the lender whereas deposits received for securities loaned result in the Company receiving collateral in the form of cash in an amount generally in excess of the market value of the securities loaned. Securities lending transactions have overnight or continuous remaining contractual maturities.

Securities lending transactions expose the Company to counterparty credit risk and market risk. To manage the counterparty risk, the Company maintains internal standards for approving counterparties, reviews and analyzes the credit rating of each counterparty, and monitors its positions with each counterparty on an ongoing basis. In addition, for certain of the Company's securities lending transactions, the Company uses a program with a clearing organization that guarantees the return of securities. The Company monitors the market value of the securities borrowed and loaned using collateral arrangements that require additional collateral to be obtained from or excess collateral to be returned to the counterparties based on changes in market value, to maintain specified collateral levels.