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Derivative Instruments and Hedging Activities
 3 Months Ended
Mar. 31, 2016
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
The Company enters into derivative transactions primarily to protect against interest rate risk on the value of certain assets, liabilities and future cash flows. Each derivative instrument is recorded on the consolidated balance sheet at fair value as a freestanding asset or liability. The following table summarizes the fair value of derivatives as reported in the consolidated balance sheet at March 31, 2016 and December 31, 2015 (dollars in millions): 
 
 
 
Fair Value
 
Notional
 
Asset(1)
 
Liability(2)
 
Net(3)
March 31, 2016
 
 
 
 
 
 
 
Interest rate contracts:
 
 
 
 
 
 
 
Fair value hedges
$
2,176

 
$
8

 
$
(131
)
 
$
(123
)
Total derivatives designated as hedging instruments(4)
$
2,176

 
$
8

 
$
(131
)
 
$
(123
)
December 31, 2015
 
 
 
 
 
 
 
Interest rate contracts:
 
 
 
 
 
 
 
Fair value hedges
$
2,204

 
$
10

 
$
(55
)
 
$
(45
)
Total derivatives designated as hedging instruments(4)
$
2,204

 
$
10

 
$
(55
)
 
$
(45
)
 
(1)
Reflected in the other assets line item on the consolidated balance sheet.
(2)
Reflected in the other liabilities line item on the consolidated balance sheet.
(3)
Represents derivative assets net of derivative liabilities for disclosure purposes only.
(4)
All derivatives were designated as hedging instruments at March 31, 2016 and December 31, 2015.
Fair Value Hedges
Fair value hedges are used to offset exposure to changes in value of certain fixed-rate assets and liabilities. Fair value hedges are accounted for by recording the fair value of the derivative instrument and the fair value of the asset or liability being hedged on the consolidated balance sheet. Changes in the fair value of both the derivative instruments and the underlying assets or liabilities are recognized in the gains (losses) on securities and other line item in the consolidated statement of income. To the extent that the hedge is ineffective, the changes in the fair values will not offset and the difference, or hedge ineffectiveness, is reflected in the gains (losses) on securities and other line item in the consolidated statement of income.
Hedge accounting is discontinued for fair value hedges if a derivative instrument is sold, terminated or otherwise de-designated. If fair value hedge accounting is discontinued, the previously hedged item is no longer adjusted for changes in fair value through the consolidated statement of income and the cumulative net gain or loss on the hedged asset or liability at the time of de-designation is amortized to interest income or interest expense using the effective interest method over the expected remaining life of the hedged item. Changes in the fair value of the derivative instruments after de-designation of fair value hedge accounting are recorded in the gains (losses) on securities and other line item in the consolidated statement of income.
The following table summarizes the effect of interest rate contracts designated as fair value hedges and related hedged items on the consolidated statement of income for the three months ended March 31, 2016 and 2015 (dollars in millions): 
 
Three Months Ended March 31,
 
2016
 
2015
 
Hedging
Instrument
 
Hedged
Item
 
Hedge
Ineffectiveness(1)
 
Hedging
Instrument
 
Hedged
Item
 
Hedge
Ineffectiveness(1)
Agency debentures
$
(47
)
 
$
46

 
$
(1
)
 
$
(21
)
 
$
20

 
$
(1
)
Agency mortgage-backed securities
(69
)
 
68

 
(1
)
 
(19
)
 
19

 
—

Total gains (losses) included in earnings
$
(116
)
 
$
114

 
$
(2
)
 
$
(40
)
 
$
39

 
$
(1
)
(1)
Reflected in the gains (losses) on securities and other line item on the consolidated statement of income.