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Offsetting Assets and Liabilities
12 Months Ended
Dec. 31, 2017
Offsetting Assets and Liabilities [Abstract]  
Offsetting Assets and Liabilities [Text Block]
NOTE 5—OFFSETTING ASSETS AND LIABILITIES

For financial statement purposes, the Company does not offset derivative instruments 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 the Company's derivative instruments, securities borrowing and securities lending transactions which are transacted under master agreements to enable the users of the Company’s consolidated financial statements to evaluate the potential effect of rights of set-off between these recognized assets and liabilities at December 31, 2017 and 2016 (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)
 
Financial Instruments
 
Collateral Received or Pledged (Including Cash)
 
Net Amount
December 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
Assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
Deposits paid for securities borrowed (2)
$
759

 
$

 
$
759

 
$
(251
)
 
$
(483
)
 
$
25

 
 
 
Total
$
759

 
$

 
$
759

 
$
(251
)
 
$
(483
)
 
$
25

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
 
Deposits received for securities loaned (3)
$
1,373

 
$

 
$
1,373

 
$
(251
)
 
$
(1,004
)
 
$
118

 
 
Derivative liabilities (4)(5)
5

 

 
5

 

 
(5
)
 

 
 
 
Total
$
1,378

 
$

 
$
1,378

 
$
(251
)
 
$
(1,009
)
 
$
118

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2016
 
 
 
 
 
 
 
 
 
 
 
 
Assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
Deposits paid for securities borrowed (2)
$
774

 
$

 
$
774

 
$
(192
)
 
$
(560
)
 
$
22

 
 
 
Total
$
774

 
$

 
$
774

 
$
(192
)
 
$
(560
)
 
$
22

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
 
Deposits received for securities loaned (3)
$
926

 
$

 
$
926

 
$
(192
)
 
$
(661
)
 
$
73

 
 
Derivative liabilities (4)(5)
6

 

 
6

 

 
(6
)
 

 
 
 
Total
$
932

 
$

 
$
932

 
$
(192
)
 
$
(667
)
 
$
73

(1)
Net amount of deposits paid for securities borrowed are reflected in the receivables from brokers, dealers and clearing organizations and other assets line items in the consolidated balance sheet. Net amount of deposits received for securities loaned and derivative liabilities are reflected in the payables to brokers, dealers and clearing organizations and other liabilities line items in the consolidated balance sheet, respectively.
(2)
Included in the gross amounts of deposits paid for securities borrowed was $347 million and $307 million at December 31, 2017 and 2016, 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.
(3)
Included in the gross amounts of deposits received for securities loaned was $821 million and $546 million at December 31, 2017 and 2016, 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.
(4)
Excludes net accrued interest payable of $2 million at both December 31, 2017 and 2016.
(5)
Collateral pledged included held-to-maturity securities at amortized cost at both December 31, 2017 and 2016.
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. Securities borrowing transactions require the Company to deposit cash with the lender whereas securities lending transactions result in the Company receiving collateral in the form of cash, with both requiring cash in an amount generally in excess of the market value of the securities. These 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.
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. Collateral exchanged under these contracts is not included in the table above as the contracts may not qualify as master netting agreements. At December 31, 2017 and 2016, the Company had $131 million and $165 million, respectively, of cleared derivative contract assets. At December 31, 2017 and 2016, the Company had $9 million and $25 million, respectively, of cleared derivative contract liabilities.
In January 2017, a clearing organization through which the Company executes certain of its derivative contracts amended its rulebook to legally characterize variation margin payments as settlements of the derivatives' exposure rather than collateral against the exposure. For these contracts, amounts exchanged with counterparties are reflected as a reduction of the related derivative assets or liabilities, including accrued interest, on the consolidated balance sheet. At December 31, 2017, the Company had derivative assets and liabilities of $6 million and $18 million, respectively, excluding accrued interest, that were settled by variation margin payments and are therefore excluded from the table above.