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2.0.0.10 false Commitments and Contingencies 118 - Disclosure - Commitments and Contingencies true false false false 1 usd $ false false iso4217_USD Standard http://www.xbrl.org/2003/iso4217 USD iso4217 0 iso4217_USD_per_shares Divide http://www.xbrl.org/2003/iso4217 USD iso4217 http://www.xbrl.org/2003/instance shares 0 shares Standard http://www.xbrl.org/2003/instance shares 0 5 Commitments and Contingencies 3 us-gaap_CommitmentsAndContingenciesDisclosureTextBlock us-gaap true na duration string No definition available. false false false false false false false false false false false false 1 false false false false 0 0 <div> <table border="0" cellspacing="0" cellpadding="0" width="100%" align="center"> <tr bgcolor="#E5E5E5"> <td valign="top"> NOTE 11 – Commitments and Contingencies </td> </tr> </table> In the normal course of business, the Corporation enters into a number of off-balance sheet commitments. These commitments expose the Corporation to varying degrees of credit and market risk and are subject to the same credit and market risk limitation reviews as those instruments recorded on the Corporation’s Consolidated Balance Sheet. For additional information on commitments and contingencies, see Note 14 – Commitments and Contingencies to the Consolidated Financial Statements of the Corporation’s 2009 Annual Report on Form 10-K.     Credit Extension Commitments   The Corporation enters into commitments to extend credit such as loan commitments, SBLCs and commercial letters of credit to meet the financing needs of its customers. The unfunded legally binding lending commitments shown in the following table are net of amounts distributed (e.g., syndicated) to other financial institutions of $36.3 billion and $30.9 billion at March 31, 2010 and December 31, 2009. At March 31, 2010, the carrying amount of these commitments, excluding commitments accounted for under the fair value option, was $1.6 billion, including deferred revenue of $34 million and a reserve for unfunded lending commitments of $1.5 billion. At December 31, 2009, the comparable amounts were $1.5 billion, $34 million and $1.5 billion, respectively. The carrying amount of these commitments is recorded in accrued expenses and other liabilities.   The table below also includes the notional amount of commitments of $27.3 billion and $27.0 billion at March 31, 2010 and December 31, 2009, that are accounted for under the fair value option. However, the table below excludes fair value adjustments of $746 million and $950 million on these commitments that were recorded in accrued expenses and other liabilities. For information regarding the Corporation’s loan commitments accounted for under the fair value option, see Note 14 – Fair Value Measurements.   <table border="0" cellspacing="0" cellpadding="0" width="100%" align="center"> <tr> <td width="53%"></td> <td valign="bottom" width="4%"></td> <td></td> <td></td> <td valign="bottom" width="4%"></td> <td></td> <td></td> <td valign="bottom" width="4%"></td> <td></td> <td></td> <td valign="bottom" width="4%"></td> <td></td> <td></td> <td valign="bottom" width="4%"></td> <td></td> <td></td> </tr> <tr> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">   (Dollars in millions)</td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">   </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">Expires in 1 Year or Less</td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">   </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center"> Expires after 1 Year through 3 Years </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">   </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center"> Expires after 3 Years through 5 Years </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">   </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center"> Expires after 5 Years </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">   </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">Total</td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top">   Credit extension commitments, March 31, 2010 </td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr> <td valign="top">   Loan commitments </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">160,606</td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">161,559</td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">26,029</td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">25,163</td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">373,357    </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top">   Home equity lines of credit </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">1,817</td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">3,655</td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">12,351</td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">72,498</td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">90,321    </td> </tr> <tr> <td valign="top">   Standby letters of credit and financial guarantees (1) </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">31,694</td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">19,713</td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">4,235</td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">13,791</td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">69,433    </td> </tr> <tr bgcolor="#CCEEFF"> <td style="BORDER-BOTTOM: #000000 1px solid" valign="top">   Commercial letters of credit </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">   </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="right">1,971</td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">   </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="right">30</td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">   </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="right">-</td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">   </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="right">1,438</td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">   </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="right">3,439    </td> </tr> <tr> <td valign="top"> Legally binding commitments </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">196,088</td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">184,957</td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">42,615</td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">112,890</td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">536,550    </td> </tr> <tr bgcolor="#CCEEFF"> <td style="BORDER-BOTTOM: #000000 1px solid" valign="top">   Credit card lines (2) </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">   </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="right">521,659</td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">   </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="right">-</td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">   </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="right">-</td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">   </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="right">-</td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">   </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="right">521,659    </td> </tr> <tr> <td style="BORDER-BOTTOM: #000000 2px solid" valign="top"> Total credit extension commitments </td> <td style="BORDER-BOTTOM: #000000 2px solid" valign="bottom">   </td> <td style="BORDER-BOTTOM: #000000 2px solid" valign="bottom"> $</td> <td style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" align="right">717,747</td> <td style="BORDER-BOTTOM: #000000 2px solid" valign="bottom">   </td> <td style="BORDER-BOTTOM: #000000 2px solid" valign="bottom"> $</td> <td style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" align="right">184,957</td> <td style="BORDER-BOTTOM: #000000 2px solid" valign="bottom">   </td> <td style="BORDER-BOTTOM: #000000 2px solid" valign="bottom"> $</td> <td style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" align="right">42,615</td> <td style="BORDER-BOTTOM: #000000 2px solid" valign="bottom">   </td> <td style="BORDER-BOTTOM: #000000 2px solid" valign="bottom"> $</td> <td style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" align="right">112,890</td> <td style="BORDER-BOTTOM: #000000 2px solid" valign="bottom">   </td> <td style="BORDER-BOTTOM: #000000 2px solid" valign="bottom"> $</td> <td style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" align="right">1,058,209    </td> </tr> <tr> <td height="16"></td> <td height="16" colspan="3"></td> <td height="16" colspan="3"></td> <td height="16" colspan="3"></td> <td height="16" colspan="3"></td> <td height="16" colspan="3"></td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top">   Credit extension commitments, December 31, 2009 </td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> <td valign="bottom">  </td> <td valign="bottom"></td> <td valign="bottom"></td> </tr> <tr> <td valign="top">   Loan commitments </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">149,248</td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">187,585</td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">30,897</td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">28,489</td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">396,219    </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top">   Home equity lines of credit </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">1,810</td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">3,272</td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">10,667</td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">76,924</td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">92,673    </td> </tr> <tr> <td valign="top">   Standby letters of credit and financial guarantees (1) </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">29,794</td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">21,285</td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">4,923</td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">13,740</td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">69,742    </td> </tr> <tr bgcolor="#CCEEFF"> <td style="BORDER-BOTTOM: #000000 1px solid" valign="top">   Commercial letters of credit </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">   </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="right">2,020</td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">   </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="right">40</td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">   </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="right">-</td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">   </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="right">1,465</td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">   </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="right">3,525    </td> </tr> <tr> <td valign="top"> Legally binding commitments </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">182,872</td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">212,182</td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">46,487</td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">120,618</td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">562,159    </td> </tr> <tr bgcolor="#CCEEFF"> <td style="BORDER-BOTTOM: #000000 1px solid" valign="top">   Credit card lines (2) </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">   </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="right">541,919</td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">   </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="right">-</td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">   </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="right">-</td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">   </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="right">-</td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">   </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align="right">541,919    </td> </tr> <tr> <td style="BORDER-BOTTOM: #000000 2px solid" valign="top"> Total credit extension commitments </td> <td style="BORDER-BOTTOM: #000000 2px solid" valign="bottom">   </td> <td style="BORDER-BOTTOM: #000000 2px solid" valign="bottom"> $</td> <td style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" align="right">724,791</td> <td style="BORDER-BOTTOM: #000000 2px solid" valign="bottom">   </td> <td style="BORDER-BOTTOM: #000000 2px solid" valign="bottom"> $</td> <td style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" align="right">212,182</td> <td style="BORDER-BOTTOM: #000000 2px solid" valign="bottom">   </td> <td style="BORDER-BOTTOM: #000000 2px solid" valign="bottom"> $</td> <td style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" align="right">46,487</td> <td style="BORDER-BOTTOM: #000000 2px solid" valign="bottom">   </td> <td style="BORDER-BOTTOM: #000000 2px solid" valign="bottom"> $</td> <td style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" align="right">120,618</td> <td style="BORDER-BOTTOM: #000000 2px solid" valign="bottom">   </td> <td style="BORDER-BOTTOM: #000000 2px solid" valign="bottom"> $</td> <td style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" align="right">1,104,078    </td> </tr> </table>   <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr> <td valign="top" width="1%" align="left">  (1)  </td> <td valign="top" align="left"> At March 31, 2010, the notional amounts of SBLCs and financial guarantees classified as investment grade and non-investment grade based on the credit quality of the underlying reference name within the instrument were $40.5 billion and $28.9 billion compared to $39.7 billion and $30.0 billion at December 31, 2009. </td> </tr> </table> <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr> <td valign="top" width="1%" align="left">  (2)  </td> <td valign="top" align="left"> Includes business card unused lines of credit. </td> </tr> </table> Legally binding commitments to extend credit generally have specified rates and maturities. Certain of these commitments have adverse change clauses that help to protect the Corporation against deterioration in the borrower’s ability to pay.     Other Commitments   Global Principal Investments and Other Equity Investments At March 31, 2010 and December 31, 2009, the Corporation had unfunded equity investment commitments of approximately $2.6 billion and $2.8 billion. These commitments generally relate to the Corporation’s Global Principal Investments business which is comprised of a diversified portfolio of investments in private equity, real estate and other alternative investments. These investments are made either directly in a company or held through a fund. Bridge equity commitments provide equity bridge financing to facilitate clients’ investment activities. These conditional commitments are generally retired prior to or shortly following funding via syndication or the client’s decision to terminate. Where the Corporation has a binding equity bridge commitment and there is a market disruption or other unexpected event, there is heightened exposure in the portfolio and higher potential for loss, unless an orderly disposition of the exposure can be made. At March 31, 2010, the Corporation did not have any unfunded bridge equity commitments. The Corporation had funded equity bridges of $1.2 billion that were committed prior to the market disruption. These equity bridges were considered held for investment and recorded in other assets. During the fourth quarter of 2009, these equity bridges were written down to a zero balance. In the three months ended March 31, 2009, the Corporation recorded a total of $150 million in losses in equity investment income related to these investments. Loan Purchases In 2005, the Corporation entered into an agreement for the committed purchase of retail automotive loans over a five-year period ending June 30, 2010. Under this agreement, the Corporation purchased $3.6 billion of such loans in the three months ended March 31, 2010 and purchased $6.6 billion of such loans for the year ended December 31, 2009. At March 31, 2010, the Corporation was committed for additional purchases of $3.0 billion over the remaining term of the agreement. All loans purchased under this agreement are subject to a comprehensive set of credit criteria. This agreement is accounted for as a derivative liability with a fair value of $73 million and $189 million at March 31, 2010 and December 31, 2009. At March 31, 2010 and December 31, 2009, the Corporation had commitments to purchase loans (e.g., residential mortgage and commercial real estate) of $2.6 billion and $2.2 billion, which upon settlement will be included in loans or LHFS. Operating Leases The Corporation is a party to operating leases for certain of its premises and equipment. Commitments under these leases are approximately $2.3 billion, $2.8 billion, $2.3 billion, $1.9 billion and $1.4 billion for 2010 through 2014, respectively, and $7.6 billion for all years thereafter. Other Commitments At March 31, 2010 and December 31, 2009, the Corporation had commitments to enter into forward-dated resale and securities borrowing agreements of $78.2 billion and $51.8 billion. In addition, the Corporation had commitments to enter into forward-dated repurchase and securities lending agreements of $89.9 billion and $58.3 billion. All of these commitments expire within the next 12 months. In connection with federal and state securities regulators, the Corporation agreed to purchase at par auction rate securities (ARS) held by certain customers. During the first quarter of 2010, the buyback commitment period to repurchase ARS expired. The Corporation has entered into agreements with providers of market data, communications, systems consulting and other office-related services. At March 31, 2010 and December 31, 2009, the minimum fee commitments over the remaining terms of these agreements totaled $2.4 billion and $2.3 billion.     Other Guarantees   Bank-owned Life Insurance Book Value Protection The Corporation sells products that offer book value protection to insurance carriers who offer group life insurance policies to corporations, primarily banks. The book value protection is provided on portfolios of intermediate investment-grade fixed-income securities and is intended to cover any shortfall in the event that policyholders surrender their policies and market value is below book value. To manage its exposure, the Corporation imposes significant restrictions on surrenders and the manner in which the portfolio is liquidated and the funds are accessed. In addition, investment parameters of the underlying portfolio are restricted. These constraints, combined with structural protections, including a cap on the amount of risk assumed on each policy, are designed to provide adequate buffers and guard against payments even under extreme stress scenarios. These guarantees are recorded as derivatives and carried at fair value in the trading portfolio. At both March 31, 2010 and December 31, 2009, the notional amount of these guarantees totaled $15.6 billion and the Corporation’s maximum exposure related to these guarantees totaled $4.9 billion with estimated maturity dates between 2030 and 2040. As of March 31, 2010, the Corporation has not made a payment under these products. The probability of surrender has increased due to investment manager underperformance and the deteriorating financial health of policyholders, but remains a small percentage of total notional. Employee Retirement Protection The Corporation sells products that offer book value protection primarily to plan sponsors of Employee Retirement Income Security Act of 1974 (ERISA) governed pension plans, such as 401(k) plans and 457 plans. The book value protection is provided on portfolios of intermediate/short-term investment-grade fixed-income securities and is intended to cover any shortfall in the event that plan participants continue to withdraw funds after all securities have been liquidated and there is remaining book value. The Corporation retains the option to exit the contract at any time. If the Corporation exercises its option, the purchaser can require the Corporation to purchase high quality fixed-income securities, typically government or government-backed agency securities, with the proceeds of the liquidated assets to assure the return of principal. To manage its exposure, the Corporation imposes significant restrictions and constraints on the timing of the withdrawals, the manner in which the portfolio is liquidated and the funds are accessed, and the investment parameters of the underlying portfolio. These constraints, combined with structural protections, are designed to provide adequate buffers and guard against payments even under extreme stress scenarios. These guarantees are recorded as derivatives and carried at fair value in the trading portfolio. At March 31, 2010 and December 31, 2009, the notional amount of these guarantees totaled $36.3 billion and $36.8 billion with estimated maturity dates between 2010 and 2014 if the exit option is exercised on all deals. As of March 31, 2010, the Corporation has not made a payment under these products and has assessed the probability of payments under these guarantees as remote. Merchant Services On June 26, 2009, the Corporation contributed its merchant processing business to a joint venture in exchange for a 46.5 percent ownership interest in the joint venture. The Corporation indemnified the joint venture for any losses resulting from transactions processed through June 26, 2009 on the contributed merchant portfolio. For additional information on the joint venture agreement, see Note 5 – Securities. The Corporation, on behalf of the joint venture, provides credit and debit card processing services to various merchants by processing credit and debit card transactions on the merchants’ behalf. In connection with these services, a liability may arise in the event of a billing dispute between the merchant and a cardholder that is ultimately resolved in the cardholder’s favor and the merchant defaults on its obligation to reimburse the cardholder. A cardholder, through its issuing bank, generally has until the later of up to six months after the date a transaction is processed or the delivery of the product or service to present a chargeback to the joint venture as the merchant processor. If the joint venture is unable to collect this amount from the merchant, it bears the loss for the amount paid to the cardholder. The joint venture is primarily liable for any losses on transactions from the contributed portfolio that occur after June 26, 2009. However, if the joint venture fails to meet its obligation to reimburse the cardholder for disputed transactions, then the Corporation could be held liable for the disputed amount. For the three months ended March 31, 2010 and 2009, the Corporation processed $79.1 billion and $74.8 billion of transactions and recorded losses as a result of these chargebacks of $3 million and $7 million. At March 31, 2010 and December 31, 2009, the Corporation, on behalf of the joint venture, held as collateral $22 million and $26 million of merchant escrow deposits which may be used to offset amounts due from the individual merchants. The joint venture also has the right to offset any payments with cash flows otherwise due to the merchant. Accordingly, the Corporation believes that the maximum potential exposure is not representative of the actual potential loss exposure. The Corporation believes the maximum potential exposure for chargebacks would not exceed the total amount of merchant transactions processed through Visa and MasterCard for the last six months, which represents the claim period for the cardholder, plus any outstanding delayed-delivery transactions. As of March 31, 2010 and December 31, 2009, the maximum potential exposure totaled approximately $129.2 billion and $131.0 billion. The Corporation does not expect to make material payments in connection with these guarantees. The maximum potential exposure disclosed above does not include volumes processed by First Data contributed portfolios. Brokerage Business For a portion of the Corporation’s brokerage business, the Corporation has contracted with a third party to provide clearing services that include underwriting margin loans to the Corporation’s clients. This contract stipulates that the Corporation will indemnify the third party for any margin loan losses that occur in its issuing margin to the Corporation’s clients. The maximum potential future payment under this indemnification was $700 million and $657 million at March 31, 2010 and December 31, 2009. Historically, any payments made under this indemnification have not been material. As these margin loans are highly collateralized by the securities held by the brokerage clients, the Corporation has assessed the probability of making such payments in the future as remote. This indemnification would end with the termination of the clearing contract which is expected to occur in the third quarter of 2010. Other Derivative Contracts The Corporation funds selected assets, including securities issued by CDOs and CLOs, through derivative contracts, typically total return swaps, with third parties and SPEs that are not consolidated on the Corporation’s Consolidated Balance Sheet. At March 31, 2010 and December 31, 2009, the total notional amount of these derivative contracts was approximately $3.9 billion and $4.9 billion with commercial banks and $1.5 billion and $2.8 billion with SPEs. The underlying securities are senior securities and substantially all of the Corporation’s exposures are insured. Accordingly, the Corporation’s exposure to loss consists principally of counterparty risk to the insurers. In certain circumstances, generally as a result of ratings downgrades, the Corporation may be required to purchase the underlying assets, which would not result in additional gain or loss to the Corporation as such exposure is already reflected in the fair value of the derivative contracts.   Other Guarantees The Corporation sells products that guarantee the return of principal to investors at a preset future date. These guarantees cover a broad range of underlying asset classes and are designed to cover the shortfall between the market value of the underlying portfolio and the principal amount on the preset future date. To manage its exposure, the Corporation requires that these guarantees be backed by structural and investment constraints and certain pre-defined triggers that would require the underlying assets or portfolio to be liquidated and invested in zero-coupon bonds that mature at the preset future date. The Corporation is required to fund any shortfall at the preset future date between the proceeds of the liquidated assets and the purchase price of the zero-coupon bonds. These guarantees are recorded as derivatives and carried at fair value in the trading portfolio. At March 31, 2010 and December 31, 2009, the notional amount of these guarantees totaled $1.9 billion and $2.1 billion. These guarantees have various maturities ranging from two to five years. As of March 31, 2010 and December 31, 2009, the Corporation had not made a payment under these products and has assessed the probability of payments under these guarantees as remote. The Corporation has entered into additional guarantee agreements, including lease end obligation agreements, partial credit guarantees on certain leases, real estate joint venture guarantees, sold risk participation swaps and sold put options that require gross settlement. The maximum potential future payment under these agreements was approximately $3.7 billion and $3.6 billion at March 31, 2010 and December 31, 2009. The estimated maturity dates of these obligations are between 2010 and 2033. The Corporation has made no material payments under these guarantees. In addition, the Corporation has guaranteed the payment obligations of certain subsidiaries of Merrill Lynch on certain derivative transactions. The aggregate notional amount of such derivative liabilities was approximately $2.9 billion and $2.5 billion at March 31, 2010 and December 31, 2009.     Litigation and Regulatory Matters   The following supplements the disclosure in Note 14 – Commitments and Contingencies to the Consolidated Financial Statements of the Corporation’s 2009 Annual Report on Form 10-K. In the ordinary course of business, the Corporation and its subsidiaries are routinely defendants in or parties to many pending and threatened legal actions and proceedings, including actions brought on behalf of various classes of claimants. Certain of these actions and proceedings are based on alleged violations of consumer protection, securities, environmental, banking, employment and other laws. In certain of these actions and proceedings, claims for substantial monetary damages are asserted against the Corporation and its subsidiaries. In the ordinary course of business, the Corporation and its subsidiaries are also subject to regulatory examinations, information gathering requests, inquiries and investigations. Certain subsidiaries of the Corporation are registered broker/dealers or investment advisors and are subject to regulation by the SEC, the Financial Industry Regulatory Authority (FINRA), the New York Stock Exchange, the Financial Services Authority and other domestic, international and state securities regulators. In connection with formal and informal inquiries by those agencies, such subsidiaries receive numerous requests, subpoenas and orders for documents, testimony and information in connection with various aspects of their regulated activities. In view of the inherent difficulty of predicting the outcome of such litigation and regulatory matters, particularly where the claimants seek very large or indeterminate damages or where the matters present novel legal theories or involve a large number of parties, the Corporation cannot state with confidence what the eventual outcome of the pending matters will be, what the timing of the ultimate resolution of these matters will be, or what the eventual loss, fines or penalties related to each pending matter may be. In accordance with applicable accounting guidance, the Corporation establishes reserves for litigation and regulatory matters when those matters present loss contingencies that are both probable and estimable, although there may be an exposure to loss in excess of any amounts accrued. When loss contingencies are not both probable and estimable, the Corporation does not establish reserves. As a litigation or regulatory matter develops, the Corporation, in conjunction with its outside counsel handling the matter, if any, evaluates on an ongoing basis whether such matter presents a loss contingency that is probable and/or estimable. If, at the time of evaluation, the loss contingency related to a litigation or regulatory matter is not both probable and estimable, the matter will continue to be monitored for further developments that would make such loss contingency both probable and estimable. Once the loss contingency related to a litigation or regulatory matter is deemed to be both probable and estimable, the Corporation will establish a reserve with respect to such loss contingency and continue to monitor the matter for further developments that could affect the amount of the reserve that has been previously established. Excluding fees paid to external legal service providers, litigation-related expenses of $558 million and $181 million were recognized during the three months ended March 31, 2010 and 2009.     In some of the matters described below, including but not limited to the Lehman Brothers Holdings, Inc. matters, loss contingencies are not both probable and estimable in the view of management, and accordingly, reserves have not been established for those matters. However, information is provided below or included in Note 14 – Commitments and Contingencies to the Consolidated Financial Statements of the Corporation’s 2009 Annual Report on Form 10-K regarding the nature of the contingency and, where specified, the amount of the claim associated with the loss contingency. Based on current knowledge, management does not believe that loss contingencies arising from pending litigation and regulatory matters, including the litigation and regulatory matters described below, will have a material adverse effect on the consolidated financial position or liquidity of the Corporation, but may be material to the Corporation’s results of operations for any particular reporting period. Auction Rate Securities (ARS) Claims On March 1, 2010, plaintiffs in the Mayor and City Council of Baltimore, Maryland v. Citigroup et al., and Mayfield et al. v. Citigroup Inc. et al. cases filed a notice of appeal from the order of the U.S. District Court for the Southern District of New York dismissing those cases. On March 31, 2010, the U.S. District Court for the Southern District of New York dismissed the second amended consolidated complaint with prejudice in Burton v. Merrill Lynch & Co., Inc., et al. On April 22, 2010, plaintiff Colin Wilson filed a notice of appeal from the order of the U.S. District Court for the Southern District of New York dismissing the second amended consolidated complaint.   Countrywide Bond Insurance Litigation On February 26, 2010, Countrywide Home Loans, Inc. (CHL) filed a motion to dismiss certain claims asserted in Financial Guaranty Insurance Company v. Countrywide Home Loans, Inc. On April 30, 2010, Financial Guaranty Insurance Company (FGIC) filed an amended complaint, which adds the Corporation, Countrywide Financial Corporation (CFC), Countrywide Securities Corporation (CSC) and Countrywide Bank F.S.B. as defendants. On March 24, 2010, CHL, CSC and CFC filed a separate but related action against FGIC in New York Supreme Court seeking monetary damages of at least $100 million against FGIC in connection with FGIC’s failure to pay claims under certain bond insurance policies provided by FGIC. On March 24, 2010, CHL, CSC, CWHEQ, Inc. and CWABS, Inc. initiated a proceeding in New York Supreme Court under Article 78 of the New York Civil Practice Law and Rules challenging the November 24, 2009 order of the New York State Insurance Department, which directed FGIC to cease payment of claims under certain bond insurance policies. In the Article 78 proceeding, CHL, CSC, CWHEQ, Inc. and CWABS, Inc. assert that the New York State Insurance Department’s November 24, 2009 order to FGIC to stop paying insurance proceeds was in excess of the Insurance Department’s powers and violated New York Insurance law and related regulations. The parties are therefore seeking a declaration that the November 24, 2009 order is void. On April 29, 2010, in the action in New York Supreme Court, entitled MBIA Insurance Corporation, Inc. v. Countrywide Home Loans, et al., the court issued an order granting in part and denying in part defendants’ motion to dismiss, declining to dismiss plaintiff’s claims against the Corporation. Countrywide Equity and Debt Securities Matters On April 2, 2010, the plaintiffs and CFC in In re Countrywide Financial Corp. Securities Litigation reached an agreement in principle to settle the case for $600 million and dismiss all claims with prejudice. This amount was fully accrued as of March 31, 2010. The proposed settlement, which would settle claims against CFC and all other defendants (except for defendant KPMG LLP), is subject to negotiation and execution of a mutually acceptable settlement agreement and court approval. In Argent Classic Convertible Arbitrage Fund L.P. v. Countrywide Financial Corp. et al., CFC and Argent Classic, on its own behalf, have agreed to settle the matter in an amount that is not material to the Corporation’s earnings and on May 4, 2010, filed with the U.S. District Court for the Central District of California a stipulation to dismiss the case with prejudice as to all parties. Countrywide Mortgage-backed Securities Litigation On March 15, 2010, the Federal Home Loan Bank of San Francisco (FHLB San Francisco) filed two complaints in the Superior Court of the State of California, County of San Francisco. The case entitled Federal Home Loan Bank of San Francisco v. Deutsche Bank Securities Inc., et al. was filed against CSC, Merrill Lynch, Pierce, Fenner & Smith, Inc. (MLPF&S) and other defendants. The case entitled Federal Home Loan Bank of San Francisco v. Credit Suisse Securities (USA) LLC, et al. was filed against Banc of America Securities LLC (BAS), Banc of America Funding Corp., Banc of America Mortgage Securities, Inc., CSC, CWALT, Inc., CFC and other defendants. The complaints allege violations of the California Corporate Securities Act, the Securities Act of 1933, the California Civil Code and common law in connection with various offerings of mortgage-backed securities. The complaints assert, among other things, misstatements and omissions concerning the credit quality of the mortgage loans underlying the securities and the loan origination practices associated with those loans. The complaints seek unspecified damages and rescission, among other relief. In re Initial Public Offering Securities Litigation On March 2, 2010, the objectors withdrew their discretionary appeal to certification of the settlement class and filed an appeal of the order by the U.S. District Court for the Southern District of New York approving the settlement. Lehman Brothers Holdings, Inc. Litigation BAS, MLPF&S and other defendants’ motion to dismiss the consolidated amended complaint was denied without prejudice on March 17, 2010 when plaintiffs advised the U.S. District Court for the Southern District of New York that they would seek to file a third amended complaint. Lyondell Litigation On March 11, 2010, the U.S. Bankruptcy Court for the Southern District of New York approved the settlement in principle, which is not material to the Corporation’s earnings. The settlement became effective on April 30, 2010. MBIA Insurance Corporation CDO Litigation On April 9, 2010, the New York Superior Court, New York County, issued an order granting the motion to dismiss as to the fraud, negligent misrepresentation and rescission claims, and denying the motion to dismiss solely as to the breach of contract claim.   Merrill Lynch Acquisition-related Matters Other Acquisition-related Litigation On March 25, 2010, the parties in Catalano v. Bank of America filed a stipulation and proposed order dismissing the action without prejudice to any rights plaintiff may have as a member of any putative class alleged in the consolidated securities action pending in the In re Bank of America Securities, Derivative and Employment Retirement Income Security Act (ERISA) Litigation. On April 9, 2010, the U.S. District Court for the Southern District of New York consolidated two purported class actions, Iron Workers of Western Pennsylvania Pension Plan v. Bank of America Corp., et al. and Dornfest v. Bank of America Corp., et al., with the consolidated securities actions in the In re Bank of America Securities, Derivative and Employment Retirement Income Security Act (ERISA) Litigation, and ruled that the plaintiffs in the two purported class actions may pursue those actions as individual actions, but not as class actions. Merrill Lynch Subprime-related Matters Connecticut Carpenters Pension Fund, et al. v. Merrill Lynch & Co., Inc., et al.; Iron Workers Local No. 25 Pension Fund v. Credit-Based Asset Servicing and Securitization LLC, et al.; Public Employees’ Ret. System of Mississippi v. Merrill Lynch & Co. Inc. et al.; Wyoming State Treasurer v. Merrill Lynch & Co. Inc. On March 31, 2010, the U.S. District Court for the Southern District of New York issued an order granting in part and denying in part defendants’ motion to dismiss the consolidated amended complaint. Ocala Litigation On March 17, 2010, each plaintiff filed an amended complaint in lieu of an opposition to the motion to dismiss filed by Bank of America, N.A. that restated the previously asserted claims and added claims for breach of fiduciary duty. On April 30, 2010, Bank of America, N.A. filed a motion to dismiss each of these amended complaints. Parmalat Finanziaria S.p.A. Matters Proceedings in the United States On March 18, 2010, the Food Holdings Limited plaintiffs filed a notice of appeal from the opinion and order dismissing their claims to the U.S. Court of Appeals for the Second Circuit. On April 1, 2010, the Corporation filed a cross-appeal as to certain rulings. As a result of an agreement among the parties to settle the matter in an amount that is not material to the Corporation’s earnings, on March 11, 2010, the U.S. District Court for the Southern District of New York signed a stipulation of voluntary dismissal in Hartford Life Insurance v. Bank of America Corporation, et al. dismissing the case. Further to the agreement, on March 22, 2010, the U.S. District Court for the Southern District of New York signed a stipulation of voluntary dismissal in Prudential Life Insurance Company of America and Hartford Life Insurance Company v. Bank of America Corporation, et al. dismissing Hartford’s claims from the case. Pender Litigation On April 7, 2010, the U.S. District Court for the Western District of North Carolina dismissed plaintiffs’ claim of age discrimination by The Bank of America Pension Plan and plaintiffs’ sole claim against PricewaterhouseCoopers LLP, and reserved judgment on the rest of defendants’ motion to dismiss. Tribune PHONES Litigation On March 5, 2010, an adversary proceeding, entitled Wilmington Trust Company v. JP Morgan Chase Bank, N.A., et al., was filed in the U.S. Bankruptcy Court for the District of Delaware. This adversary proceeding, in which Bank of America, N.A., BAS, MLPF&S and Merrill Lynch Capital Corporation, among others, were named as defendants, relates to the pending Chapter 11 cases in In re Tribune Company, et al. The plaintiff in the adversary proceeding, Wilmington Trust Company (Wilmington Trust), is the indenture trustee for approximately $1.2 billion of Exchangeable Subordinated Debentures (the PHONES) issued by Tribune Company (Tribune). In its complaint, Wilmington Trust challenges certain financing transactions entered into among the defendants and Tribune and certain of its operating subsidiaries under certain credit agreements dated May 17, 2007 and December 20, 2007 (collectively known as the Credit Agreements). The complaint alleges that the defendants were only willing to enter into the Credit Agreements if they could subordinate the PHONES to Tribune’s indebtedness under the Credit Agreements. Wilmington Trust seeks to: (i) equitably subordinate the defendants’ claims under the Credit Agreements to the PHONES; (ii) transfer any liens securing defendants’ claims under the Credit Agreements to Tribune’s bankruptcy estate; and (iii) disallow all claims of the defendants against the Tribune debtors until the PHONES are paid in full. The complaint also asserts a claim for breach of fiduciary duty against Citibank, N.A. (Citibank), as former indenture trustee for the PHONES, in an unspecified amount. For allegedly aiding and abetting Citibank’s alleged breach of fiduciary duty, Wilmington Trust seeks damages in an unspecified amount from each of the defendants, equitable subordination of the defendants’ bankruptcy claims and the imposition of a constructive trust over the defendants’ legal interests in Tribune and its subsidiaries.   On March 18, 2010, the Tribune debtors filed a motion, which the Bankruptcy Court heard on April 13, 2010, seeking a determination that Wilmington Trust has violated the automatic stay by filing the complaint and to halt all further proceedings regarding the complaint. </div> NOTE 11 – Commitments and Contingencies In the normal course of business, the Corporation enters into a number of off-balance sheet commitments. false false false Includes disclosure of commitments and contingencies. This element may be used as a single block of text to encapsulate the entire disclosure including data and tables. 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