We enter into derivative instruments, which may include interest rate swaps, foreign-currency forwards, equity options, futures, and interest rate options in connection with our risk-management activities. Our primary objective for utilizing derivative financial instruments is to manage interest rate risk associated with our fixed- and variable-rate assets and liabilities, foreign exchange risks related to our foreign-currency denominated assets and liabilities, and other market risks related to our investment portfolio.

We monitor our mix of fixed- and variable-rate assets and liabilities and may enter into interest rate swaps, forwards, futures, options, and swaptions to achieve our desired mix of fixed- and variable-rate assets and liabilities. We execute these trades to modify our exposure to interest rate risk by converting certain fixed-rate instruments to a variable-rate and certain variable-rate instruments to a fixed-rate. We use a mix of both derivatives that qualify for hedge accounting treatment and economic hedges (which do not qualify for hedge accounting treatment).

Derivatives qualifying for hedge accounting treatment can include receive-fixed swaps designated as fair value hedges of specific fixed-rate unsecured debt obligations, receive-fixed swaps designated as fair value hedges of specific fixed-rate FHLB advances, pay-fixed swaps designated as fair value hedges of securities within our available-for-sale portfolio, and pay-fixed swaps designated as fair value hedges of closed portfolios of fixed-rate held-for-investment consumer automotive loan assets in which the hedged item is the last layer expected to be remaining at the end of the hedging relationship. Other derivatives qualifying for hedge accounting consist of pay-fixed swaps designated as cash flow hedges of the expected future cash flows in the form of interest payments on certain variable-rate borrowings and deposit liabilities, receive-fixed swaps designated as cash flow hedges of the expected future cash flows in the form of interest receipts on certain securities within our available-for-sale portfolio, as well as interest rate floor contracts designated as cash flow hedges of the expected future cash flows in the form of interest receipts on a portion of our dealer floorplan commercial loans.

We enter into foreign-currency forwards with external counterparties as net investment hedges of foreign exchange exposure on our investment in foreign subsidiaries. Our equity is impacted by the cumulative translation adjustments resulting from the translation of foreign subsidiary results; this impact is reflected in our accumulated other comprehensive income. We also periodically enter into foreign-currency forwards to economically hedge any foreign-denominated debt, centralized lending, and foreign-denominated third-party loans. These foreign-currency forwards that are used as economic hedges are recorded at fair value with changes recorded as income or expense offsetting the gains and losses on the associated foreign-currency transactions.

Derivative financial instruments contain an element of credit risk if counterparties are unable to meet the terms of the agreements. Credit risk associated with derivative financial instruments is measured as the net replacement cost should the counterparties that owe us under the contract completely fail to perform under the terms of those contracts, assuming no recoveries of underlying collateral as measured by the market value of the derivative financial instrument.

We execute certain OTC derivatives, such as interest rate caps and floors, using bilateral agreements with financial counterparties. Bilateral agreements generally require both parties to post collateral in the event the fair values of the derivative financial instruments meet posting thresholds established under the agreements. In the event that either party defaults on the obligation, the secured party may seize the collateral. Payments related to the exchange of collateral for OTC derivatives are recognized as collateral.

We placed noncash collateral totaling $121 million supporting our derivative positions at September 30, 2020, compared to $118 million of noncash collateral at December 31, 2019, in accounts maintained by counterparties. These amounts include collateral placed at clearinghouses and exclude cash and noncash collateral pledged under repurchase agreements. Refer to Note 13 for details on the repurchase agreements. The receivables for cash collateral placed are included on our Condensed Consolidated Balance Sheet in other assets.

We received cash collateral from counterparties totaling $5 million in accounts maintained by counterparties at September 30, 2020, compared to $40 million and $29 million of cash and noncash collateral at December 31, 2019. These amounts include collateral received from clearinghouses and exclude cash and noncash collateral pledged under repurchase agreements. Refer to Note 13 for details on repurchase agreements. The payables for cash collateral received are included on our Condensed Consolidated Balance Sheet in accrued expenses and other liabilities. Included in these amounts is noncash collateral where we have been granted the right to sell or pledge the underlying assets. We have not sold or pledged any of the noncash collateral received under these agreements.

The following table summarizes the amounts of derivative instruments reported on our Condensed Consolidated Balance Sheet. The amounts are presented on a gross basis, are segregated by derivatives that are designated and qualifying as hedging instruments or those that are not, and are further segregated by type of contract within those two categories.

Derivative contracts in a receivable and payable position exclude open trade equity on derivatives cleared through central clearing counterparties. Any associated collateral exchanged with our central clearing counterparties are treated as settlements of the derivative exposure, rather than collateral. Such payments are recognized as settlements of the derivatives contracts in a receivable and payable position on our Condensed Consolidated Balance Sheet.


	September 30, 2020						December 31, 2019
	Derivative contracts in a				Notional amount		Derivative contracts in a				Notional amount
($ in millions)	receivable position		payable position				receivable position		payable position
Derivatives designated as accounting hedges
Interest rate contracts
Swaps	$	—	$	—	$	12,465	$	—	$	—	$	17,101
Purchased options	—		—		—		62		—		14,100

Foreign exchange contracts
Forwards	1		—		155		—		3		157
Total derivatives designated as accounting hedges	1		—		12,620		62		3		31,358
Derivatives not designated as accounting hedges
Interest rate contracts

Futures and forwards	1		—		305		—		—		81
Written options	17		—		607		2		—		522
Purchased options	—		—		—		—		—		416
Total interest rate risk	18		—		912		2		—		1,019
Foreign exchange contracts

Futures and forwards	2		—		161		—		2		112


Total foreign exchange risk	2		—		161		—		2		112
Equity contracts

Written options	—		4		1		—		—		—
Purchased options	2		—		1		—		—		—
Total equity risk	2		4		2		—		—		—
Total derivatives not designated as accounting hedges	22		4		1,075		2		2		1,131
Total derivatives	$	23	$	4	$	13,695	$	64	$	5	$	32,489


($ in millions)	Carrying amount of the hedged items				Cumulative amount of fair value hedging adjustment included in the carrying amount of the hedged items
					Total				Discontinued (a)
	September 30, 2020		December 31, 2019		September 30, 2020		December 31, 2019		September 30, 2020		December 31, 2019
Assets
Available-for-sale securities (b) (c)	$	1,266	$	1,217	$	46	$	18	$	30	$	18
Finance receivables and loans, net (d)	32,274		33,312		277		135		67		44
Liabilities

Long-term debt	$	8,877	$	11,995	$	202	$	24	$	200	$	127

(b)The carrying amount of hedged available-for-sale securities is presented above using amortized cost and includes $594 million and $230 million at September 30, 2020, and December 31, 2019, respectively, related to closed portfolios used to designate hedging relationships in which the hedged item is the last layer expected to be remaining at the end of the hedging relationship. Refer to Note 7 for a reconciliation of the amortized cost and fair value of available-for-sale securities.

(c)The amount that is identified as the last of layer in the open hedge relationship was $490 million as of September 30, 2020. The basis adjustment associated with the open last of layer relationship was a $1 million asset as of September 30, 2020, which would be allocated across the entire remaining pool upon termination, or maturity, of the hedge relationship. The amount that is identified as the last of layer in the discontinued hedge relationship was $690 million and $200 million as of September 30, 2020, and December 31, 2019, respectively. The basis adjustment associated with the discontinued last of layer relationship was a $21 million asset as of September 30, 2020, and a $2 million asset as of December 31, 2019, which was allocated across the entire remaining pool upon termination of the hedge relationship. There were no open last-of-layer relationships at December 31, 2019.

(d)The hedged item represents the carrying value of the hedged portfolio of assets. The amount identified as the last of layer in the open hedge relationship was $10.2 billion at both September 30, 2020, and December 31, 2019. The basis adjustment associated with the open last-of-layer relationship was a $210 million asset as of September 30, 2020, and a $91 million asset as of December 31, 2019, which would be allocated across the entire remaining closed pool upon termination or maturity of the hedge relationship. The amount that is identified as the last of layer in the discontinued hedge relationship was $17.5 billion at September 30, 2020, and $12.8 billion at December 31, 2019. The basis adjustment associated with the discontinued last-of-layer relationship was a $67 million asset and $43 million asset as of September 30, 2020, and December 31, 2019, respectively, which was allocated across the entire remaining pool upon termination of the hedge relationship.


	Three months ended September 30,				Nine months ended September 30,
($ in millions)	2020		2019		2020		2019
Gain (loss) recognized in earnings
Interest rate contracts
Gain on mortgage and automotive loans, net	$	7	$	—	$	(8)	$	1
Other income, net of losses	(4)		—		(27)		(7)
Total interest rate contracts	3		—		(35)		(6)
Foreign exchange contracts

Other income, net of losses	(4)		1		(1)		(2)

Total foreign exchange contracts	(4)		1		(1)		(2)
Total (loss) gain recognized in earnings	$	(1)	$	1	$	(36)	$	(8)


	Interest and fees on finance receivables and loans				Interest and dividends on investment securities and other earning assets					Interest on deposits			Interest on long-term debt
Three months ended September 30, ($ in millions)	2020		2019			2020		2019			2020		2019		2020		2019
(Loss) gain on fair value hedging relationships
Interest rate contracts
Hedged fixed-rate unsecured debt	$	—	$	—		$	—	$	—		$	—	$	—	$	(2)	$	(36)
Derivatives designated as hedging instruments on fixed-rate unsecured debt	—		—			—		—			—		—		2		36


Hedged available-for-sale securities	—		—			(2)		17			—		—		—		—
Derivatives designated as hedging instruments on available-for-sale securities	—		—			2		(17)			—		—		—		—
Hedged fixed-rate consumer automotive loans	(45)		32			—		—			—		—		—		—
Derivatives designated as hedging instruments on fixed-rate consumer automotive loans	45		(32)			—		—			—		—		—		—
Total gain on fair value hedging relationships	—		—			—		—			—		—		—		—
Gain (loss) on cash flow hedging relationships
Interest rate contracts
Hedged variable-rate commercial loans
Reclassified from accumulated other comprehensive income into income	23		—			—		—			—		—		—		—
Hedged deposit liabilities
Reclassified from accumulated other comprehensive income into income	—		—			—		—			(2)		(2)		—		—


Hedged variable-rate borrowings
Reclassified from accumulated other comprehensive income into income	—		—			—		—			—		—		—		4


Total gain (loss) on cash flow hedging relationships	$	23	$	—		$	—	$	—		$	(2)	$	(2)	$	—	$	4
Total amounts presented in the Condensed Consolidated Statement of Comprehensive Income	$	1,602	$	1,859		$	173	$	237		$	452	$	658	$	309	$	378


	Interest and fees on finance receivables and loans				Interest and dividends on investment securities and other earning assets				Interest on deposits				Interest on long-term debt
Nine months ended September 30, ($ in millions)	2020		2019		2020		2019		2020		2019		2020		2019
(Loss) gain on fair value hedging relationships
Interest rate contracts
Hedged fixed-rate unsecured debt	$	—	$	—	$	—	$	—	$	—	$	—	$	(172)	$	(55)
Derivatives designated as hedging instruments on fixed-rate unsecured debt	—		—		—		—		—		—		172		55


Hedged available-for-sale securities	—		—		43		29		—		—		—		—
Derivatives designated as hedging instruments on available-for-sale securities	—		—		(43)		(29)		—		—		—		—
Hedged fixed-rate consumer automotive loans	180		173		—		—		—		—		—		—
Derivatives designated as hedging instruments on fixed-rate consumer automotive loans	(180)		(173)		—		—		—		—		—		—
Total gain on fair value hedging relationships	—		—		—		—		—		—		—		—
Gain (loss) on cash flow hedging relationships
Interest rate contracts
Hedged variable rate commercial loans
Reclassified from accumulated other comprehensive income into income	48		—		—		—		—		—		—		—
Hedged deposit liabilities
Reclassified from accumulated other comprehensive income into income			—		—		—		(7)		(1)		—		—


Hedged variable-rate borrowings
Reclassified from accumulated other comprehensive income into income	—		—		—		—		—		—		—		12


Total gain (loss) on cash flow hedging relationships	$	48	$	—	$	—	$	—	$	(7)	$	(1)	$	—	$	12
Total amounts presented in the Condensed Consolidated Statement of Comprehensive Income	$	4,974	$	5,526	$	596	$	721	$	1,585	$	1,901	$	975	$	1,204


	Interest and fees on finance receivables and loans				Interest and dividends on investment securities and other earning assets					Interest on long-term debt
Three months ended September 30, ($ in millions)	2020		2019			2020		2019			2020		2019
Gain (loss) on fair value hedging relationships
Interest rate contracts
Amortization of deferred unsecured debt basis adjustments	$	—	$	—		$	—	$	—		$	3	$	6

Amortization of deferred secured debt basis adjustments (FHLB advances)	—		—			—		—			(5)		(6)

Amortization of deferred basis adjustments of available-for-sale securities	—		—			(2)		(1)			—		—
Interest for qualifying accounting hedges of available-for-sale securities	—		—			(2)		2			—		—
Amortization of deferred loan basis adjustments	(12)		(8)			—		—			—		—
Interest for qualifying accounting hedges of consumer automotive loans held-for-investment	(37)		10			—		—			—		—
Total (loss) gain on fair value hedging relationships	$	(49)	$	2		$	(4)	$	1		$	(2)	$	—


	Interest and fees on finance receivables and loans				Interest and dividends on investment securities and other earning assets				Interest on long-term debt
Nine months ended September 30, ($ in millions)	2020		2019		2020		2019			2020		2019
Gain (loss) on fair value hedging relationships
Interest rate contracts
Amortization of deferred unsecured debt basis adjustments	$	—	$	—	$	—	$	—		$	11	$	18

Amortization of deferred secured debt basis adjustments (FHLB advances)	—		—		—		—			(17)		(17)

Amortization of deferred basis adjustments of available-for-sale securities	—		—		(5)		(2)			—		—
Interest for qualifying accounting hedges of available-for-sale securities	—		—		(4)		2			—		—
Amortization of deferred loan basis adjustments	(38)		(21)		—		—			—		—
Interest for qualifying accounting hedges of consumer automotive loans held-for-investment	(84)		27		—		—			—		—

Total (loss) gain on fair value hedging relationships	(122)		6		(9)		—			(6)		1
Gain on cash flow hedging relationships
Interest rate contracts
Interest for qualifying accounting hedges of variable-rate borrowings	1		—		—		—			—		—


Total gain on cash flow hedging relationships	$	1	$	—	$	—	$	—		$	—	$	—