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Investments in Securities

3 Months Ended

Mar. 31, 2019

Investments, Debt and Equity Securities [Abstract]

Investments in SecuritiesTrading Securities

Trading securities are recorded at fair value with subsequent changes in fair value recorded as “Fair value gains (losses), net” in our condensed consolidated statements of operations and comprehensive income. The following table displays our investments in trading securities.



	As of
	March 31, 2019			December 31, 2018
	(Dollars in millions)
Mortgage-related securities:
Fannie Mae		$	1,583		$	1,467
Other agency		3,158			3,503
Private-label and other mortgage securities		1,054			1,306
Total mortgage-related securities		5,795			6,276
Non-mortgage-related securities:
U.S. Treasury securities		35,020			35,502
Other securities		84			89
Total non-mortgage-related securities		35,104			35,591
Total trading securities		$	40,899		$	41,867

The following table displays information about our net trading gains.



		For the Three Months Ended March 31,
		For the Three Months Ended March 31,
		2019		2018
	(Dollars in millions)
Net trading gains		$	92	$	98
Net trading gains recognized in the period related to securities still held at period end		89		76

Available-for-Sale Securities

We record available-for-sale (“AFS”) securities at fair value with unrealized gains and losses, recorded net of tax, as a component of “Other comprehensive loss” and we recognize realized gains and losses from the sale of AFS securities in “Investment gains, net” in our condensed consolidated statements of operations and comprehensive income.

The following table displays the gross realized gains and proceeds on sales of AFS securities.



		For the Three Months Ended March 31,
		For the Three Months Ended March 31,
		2019		2018
	(Dollars in millions)
Gross realized gains		$	61	$	363
Total proceeds (excludes initial sale of securities from new portfolio securitizations)		131		635

The following tables display the amortized cost, gross unrealized gains and losses, and fair value by major security type for AFS securities.



	As of March 31, 2019
	Total Amortized Cost⁽¹⁾			Gross Unrealized Gains			Gross Unrealized Losses⁽²⁾				Total Fair Value
	(Dollars in millions)
Fannie Mae		$	1,689		$	82		$	(19	)	$	1,752
Other agency		225			17			—			242
Alt-A and subprime private-label securities		246			206			—			452
Mortgage revenue bonds		416			13			(4		)	425
Other mortgage-related securities		334			9			—			343
Total		$	2,910		$	327		$	(23	)	$	3,214



	As of December 31, 2018
	Total Amortized Cost⁽¹⁾			Gross Unrealized Gains			Gross Unrealized Losses⁽²⁾				Total Fair Value
	(Dollars in millions)
Fannie Mae		$	1,754		$	69		$	(26	)	$	1,797
Other agency		239			17			—			256
Alt-A and subprime private-label securities		325			267			—			592
Mortgage revenue bonds		425			13			(4		)	434
Other mortgage-related securities		336			14			—			350
Total		$	3,079		$	380		$	(30	)	$	3,429


⁽¹⁾	Amortized cost consists of unpaid principal balance, unamortized premiums, discounts and other cost basis adjustments, as well as net other-than-temporary impairments (“OTTI”) recognized in “Investment gains, net” in our condensed consolidated statements of operations and comprehensive income.

⁽²⁾

Represents the gross unrealized losses on securities for which we have not recognized OTTI, as well as the noncredit component of OTTI and cumulative changes in fair value of securities for which we previously recognized the credit component of OTTI in “Accumulated other comprehensive income” in our condensed consolidated balance sheets.The following tables display additional information regarding gross unrealized losses and fair value by major security type for AFS securities in an unrealized loss position.



	As of March 31, 2019
	Less Than 12 Consecutive Months						12 Consecutive Months or Longer
	Gross Unrealized Losses				Fair Value		Gross Unrealized Losses				Fair Value
	(Dollars in millions)
Fannie Mae		$	—		$	—		$	(19	)	$	372
Mortgage revenue bonds		(1		)	15			(3		)	3
Total		$	(1	)	$	15		$	(22	)	$	375

	As of December 31, 2018
	Less Than 12 Consecutive Months						12 Consecutive Months or Longer
	Gross Unrealized Losses				Fair Value		Gross Unrealized Losses				Fair Value
	(Dollars in millions)
Fannie Mae		$	—		$	—		$	(26	)	$	487
Mortgage revenue bonds		(1		)	24			(3		)	19
Total		$	(1	)	$	24		$	(29	)	$	506

Other-Than-Temporary Impairments

The unrealized credit loss component of AFS debt securities held by us and recognized in our condensed consolidated statements of operations and comprehensive income was $323 million and $635 million as of March 31, 2019 and December 31, 2018, respectively. The decrease in the first three months of 2019 was primarily driven by securities for which we had a change in intent and it was more likely than not we would sell them before recovery of our amortized cost basis.

The unrealized credit loss component of AFS debt securities held by us and recognized in our condensed consolidated statements of operations and comprehensive income was $729 million and $1.1 billion as of March 31, 2018 and December 31, 2017, respectively. The decrease in the first three months of 2018 was primarily driven by securities that we no longer hold in our portfolio.Maturity Information

The following table displays the amortized cost and fair value of our AFS securities by major security type and remaining contractual maturity, assuming no principal prepayments. The contractual maturity of mortgage-backed securities is not a reliable indicator of their expected life because borrowers generally have the right to prepay their obligations at any time.



	As of March 31, 2019
	Total Amortized Cost			Total Fair Value		One Year or Less					After One Year Through Five Years					After Five Years Through Ten Years					After Ten Years
	Total Amortized Cost			Total Fair Value		Amortized Cost			Fair Value		Amortized Cost			Fair Value		Amortized Cost			Fair Value		Amortized Cost			Fair Value
	(Dollars in millions)
Fannie Mae		$	1,689	$	1,752		$	—	$	—		$	14	$	15		$	114	$	124		$	1,561	$	1,613
Other agency		225		242			—		—			23		24			29		32			173		186
Alt-A and subprime private-label securities		246		452			—		—			—		—			1		1			245		451
Mortgage revenue bonds		416		425			2		2			30		30			52		54			332		339
Other mortgage-related securities		334		343			—		—			—		—			28		31			306		312
Total		$	2,910	$	3,214		$	2	$	2		$	67	$	69		$	224	$	242		$	2,617	$	2,901