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beatandraise.com

1.0.0.3 false Commitments, Guarantees and Contingencies. false 1 $ 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, Guarantees and Contingencies. 3 us-gaap_CommitmentsAndContingenciesDisclosureTextBlock us-gaap true na duration string No definition available. false false false false false false false false false 1 false false 0 0 <div> 11.    Commitments, Guarantees and Contingencies.   Commitments.   The Company’s commitments associated with outstanding letters of credit and other financial guarantees obtained to satisfy collateral requirements, investment activities, corporate lending and financing arrangements, mortgage lending and margin lending as of December 31, 2009 are summarized below by period of expiration. Since commitments associated with these instruments may expire unused, the amounts shown do not necessarily reflect the actual future cash funding requirements:   <table border="0" cellspacing="0" cellpadding="0" width="100%" align="center"> <tr> <td width="63%"></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> <td valign="bottom" width="3%"></td> <td></td> <td></td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom"> </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="11" align="center">Years to Maturity</td> <td valign="bottom"> </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" rowspan="2" colspan="2" align="center">Total at December 31, 2009</td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom"> </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">Less than 1</td> <td valign="bottom"> </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">1-3</td> <td valign="bottom"> </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">3-5</td> <td valign="bottom"> </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">Over 5</td> <td valign="bottom"> </td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" colspan="14" align="center">(dollars in millions)</td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Letters of credit and other financial guarantees obtained to satisfy collateral requirements </td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">1,043</td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">1</td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">1</td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">52</td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">1,097</td> </tr> <tr> <td valign="top"> Investment activities </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">1,013</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">883</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">199</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">83</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">2,178</td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Primary lending commitments—Investment grade(1)(2) </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">10,146</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">26,378</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">4,033</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">154</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">40,711</td> </tr> <tr> <td valign="top"> Primary lending commitments—Non-investment grade(1) </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">344</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">4,193</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">2,515</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">124</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">7,176</td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Secondary lending commitments(1) </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">18</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">107</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">121</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">97</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">343</td> </tr> <tr> <td valign="top"> Commitments for secured lending transactions </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">683</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">1,415</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">114</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">—  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">2,212</td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Forward starting reverse repurchase agreements(3) </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">30,104</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">101</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">—  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">—  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">30,205</td> </tr> <tr> <td valign="top"> Commercial and residential mortgage-related commitments(1) </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">1,485</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">—  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">—  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">—  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">1,485</td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Other commitments(4) </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">289</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">1</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">150</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">—  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">440</td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom"> </td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom">  </td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom">  </td> <td valign="bottom"> </td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom">  </td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom">  </td> <td valign="bottom"> </td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom">  </td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom">  </td> <td valign="bottom"> </td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom">  </td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom">  </td> <td valign="bottom"> </td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom">  </td> <td style="BORDER-TOP: #000000 1px solid" valign="bottom">  </td> </tr> <tr> <td valign="top"> Total </td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">45,125</td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">33,079</td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">7,133</td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">510</td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">85,847</td> </tr> <tr style="FONT-SIZE: 1px"> <td valign="bottom"></td> <td valign="bottom"> </td> <td style="BORDER-TOP: #000000 3px double" valign="bottom">  </td> <td style="BORDER-TOP: #000000 3px double" valign="bottom">  </td> <td valign="bottom"> </td> <td style="BORDER-TOP: #000000 3px double" valign="bottom">  </td> <td style="BORDER-TOP: #000000 3px double" valign="bottom">  </td> <td valign="bottom"> </td> <td style="BORDER-TOP: #000000 3px double" valign="bottom">  </td> <td style="BORDER-TOP: #000000 3px double" valign="bottom">  </td> <td valign="bottom"> </td> <td style="BORDER-TOP: #000000 3px double" valign="bottom">  </td> <td style="BORDER-TOP: #000000 3px double" valign="bottom">  </td> <td valign="bottom"> </td> <td style="BORDER-TOP: #000000 3px double" valign="bottom">  </td> <td style="BORDER-TOP: #000000 3px double" valign="bottom">  </td> </tr> </table>   <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr> <td valign="top" width="3%" align="left">(1)</td> <td valign="top" align="left">These commitments are recorded at fair value within Financial instruments owned and Financial instruments sold, not yet purchased in the consolidated statements of financial condition (see Note 4 to the consolidated financial statements).</td> </tr> </table> <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr> <td valign="top" width="3%" align="left">(2)</td> <td valign="top" align="left">This amount includes commitments to asset-backed commercial paper conduits of $276 million as of December 31, 2009, of which $268 million have maturities of less than one year and $8 million of which have maturities of one to three years.</td> </tr> </table> <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr> <td valign="top" width="3%" align="left">(3)</td> <td valign="top" align="left">The Company enters into forward starting securities purchased under agreements to resell (agreements that have a trade date as of or prior to December 31, 2009 and settle subsequent to period-end.) These agreements primarily settle within three business days and as of December 31, 2009, $26.6 billion of the $30.2 billion settled within three business days.</td> </tr> </table> <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr> <td valign="top" width="3%" align="left">(4)</td> <td valign="top" align="left">Amount includes a $200 million lending facility to a real estate fund sponsored by the Company.</td> </tr> </table>   Letters of Credit and Other Financial Guarantees Obtained to Satisfy Collateral Requirements.    The Company has outstanding letters of credit and other financial guarantees issued by third-party banks to certain of the Company’s counterparties. The Company is contingently liable for these letters of credit and other financial guarantees, which are primarily used to provide collateral for securities and commodities borrowed and to satisfy various margin requirements in lieu of depositing cash or securities with these counterparties.   Investment Activities.    The Company enters into commitments associated with its real estate, private equity and principal investment activities, which include alternative products.   Lending Commitments.    Primary lending commitments are those which are originated by the Company whereas secondary lending commitments are purchased from third parties in the market. The commitments include lending commitments that are made to investment grade and non-investment grade companies in connection with corporate lending and other business activities.   Commitments for Secured Lending Transactions.    Secured lending commitments are extended by the Company to companies and are secured by real estate or other physical assets of the borrower. Loans made under these arrangements typically are at variable rates and generally provide for over-collateralization based upon the creditworthiness of the borrower.   Forward Starting Reverse Repurchase Agreements.    The Company has entered into forward starting securities purchased under agreements to resell (agreements that have a trade date as of or prior to December 31, 2009 and December 31, 2008, respectively, and settle subsequent to period-end) that are primarily secured by collateral from U.S. government agency securities and other sovereign government obligations.   Commercial and Residential Mortgage-Related Commitments.    The Company enters into forward purchase contracts involving residential mortgage loans, residential mortgage lending commitments to individuals and residential home equity lines of credit. In addition, the Company enters into commitments to originate commercial and residential mortgage loans.   Underwriting Commitments.    The Company provides underwriting commitments in connection with its capital raising sources to a diverse group of corporate and other institutional clients.   Other Commitments.    Other commitments include a binding contingent lending commitment on behalf of a client in connection with the Company’s Institutional Securities business segment. Other commitments generally include commercial lending commitments to small businesses and commitments related to securities-based lending activities in connection with the Company’s Global Wealth Management Group business segment.   The Company sponsors several nonconsolidated investment funds for third-party investors where the Company typically acts as general partner of, and investment adviser to, these funds and typically commits to invest a minority of the capital of such funds with subscribing third-party investors contributing the majority. The Company’s employees, including its senior officers, as well as the Company’s directors may participate on the same terms and conditions as other investors in certain of these funds that the Company forms primarily for client investment, except that the Company may waive or lower applicable fees and charges for its employees. The Company has contractual capital commitments, guarantees, lending facilities and counterparty arrangements with respect to these investment funds.   Premises and Equipment.    The Company has non-cancelable operating leases covering premises and equipment (excluding commodities operating leases, shown separately). As of December 31, 2009, future minimum rental commitments under such leases (net of subleases, principally on office rentals) were as follows (dollars in millions):   <table border="0" cellspacing="0" cellpadding="0" width="92%" align="center"> <tr> <td width="88%"></td> <td valign="bottom" width="9%"></td> <td></td> <td></td> </tr> <tr> <td valign="bottom" nowrap="nowrap"> Year Ended </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">Operating Premises Leases</td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> 2010 </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">683</td> </tr> <tr> <td valign="top"> 2011 </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">663</td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> 2012 </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">579</td> </tr> <tr> <td valign="top"> 2013 </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">490</td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> 2014 </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">416</td> </tr> <tr> <td valign="top"> Thereafter </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">2,701</td> </tr> </table>   The total of minimum rentals to be received in the future under non-cancelable operating subleases as of December 31, 2009 was $112 million.   Occupancy lease agreements, in addition to base rentals, generally provide for rent and operating expense escalations resulting from increased assessments for real estate taxes and other charges. Total rent expense, net of sublease rental income, was $707 million, $619 million, $599 million and $56 million in 2009, fiscal 2008, fiscal 2007 and the one month ended December 31, 2008, respectively.   In connection with its commodities business, the Company enters into operating leases for both crude oil and refined products storage and for vessel charters. These operating leases are integral parts of the Company’s commodities risk management business. As of December 31, 2009, future minimum rental commitments under such leases were as follows (dollars in millions):   <table border="0" cellspacing="0" cellpadding="0" width="92%" align="center"> <tr> <td width="88%"></td> <td valign="bottom" width="9%"></td> <td></td> <td></td> </tr> <tr> <td valign="bottom" nowrap="nowrap"> Year Ended </td> <td valign="bottom">  </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">Operating Equipment Leases</td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> 2010 </td> <td valign="bottom">  </td> <td valign="bottom">$</td> <td valign="bottom" align="right">514</td> </tr> <tr> <td valign="top"> 2011 </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">165</td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> 2012 </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">114</td> </tr> <tr> <td valign="top"> 2013 </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">73</td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> 2014 </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">36</td> </tr> <tr> <td valign="top"> Thereafter </td> <td valign="bottom">  </td> <td valign="bottom"> </td> <td valign="bottom" align="right">136</td> </tr> </table>   Guarantees.   The table below summarizes certain information regarding the Company’s obligations under guarantee arrangements as of December 31, 2009:   <table border="0" cellspacing="0" cellpadding="0" width="100%" align="center"> <tr> <td width="42%"></td> <td valign="bottom" width="2%"></td> <td></td> <td></td> <td valign="bottom" width="2%"></td> <td></td> <td></td> <td valign="bottom" width="2%"></td> <td></td> <td></td> <td valign="bottom" width="2%"></td> <td></td> <td></td> <td valign="bottom" width="2%"></td> <td></td> <td></td> <td valign="bottom" width="2%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="2%"></td> <td></td> <td></td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom"> </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="14" align="center">Maximum Potential Payout/Notional</td> <td valign="bottom"> </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" rowspan="3" colspan="2" align="center">Carrying Amount (Asset)/ Liability</td> <td valign="bottom" rowspan="3"> </td> <td valign="bottom"> </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" rowspan="3" colspan="2" align="center">Collateral/ Recourse</td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom"> </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="11" align="center">Years to Maturity</td> <td valign="bottom"> </td> <td valign="bottom" colspan="2"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> </tr> <tr> <td valign="bottom" nowrap="nowrap"> Type of Guarantee </td> <td valign="bottom"> </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">Less than 1</td> <td valign="bottom"> </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">1-3</td> <td valign="bottom"> </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">3-5</td> <td valign="bottom"> </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">Over 5</td> <td valign="bottom"> </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">Total</td> <td valign="bottom"> </td> <td valign="bottom"> </td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" colspan="21" align="center">(dollars in millions)</td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Credit derivative contracts(1) </td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">261,354</td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">768,194</td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">850,116</td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">567,361</td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">2,447,025</td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">43,621</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">—  </td> </tr> <tr> <td valign="top"> Other credit contracts </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">—  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">51</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">24</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">1,089</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">1,164</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">1,118</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">—  </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Credit-linked notes </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">160</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">74</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">337</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">668</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">1,239</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(335</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">—  </td> </tr> <tr> <td valign="top"> Non-credit derivative contracts(1)(2) </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">637,688</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">340,280</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">142,700</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">232,210</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">1,352,878</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">70,314</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">—  </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Standby letters of credit and other financial guarantees issued(3)(4) </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">982</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">3,134</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">1,126</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">4,886</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">10,128</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">976</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">5,324</td> </tr> <tr> <td valign="top"> Market value guarantees </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">—  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">—  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">—  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">775</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">775</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">45</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">126</td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Liquidity facilities </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">4,402</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">—  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">307</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">143</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">4,852</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">24</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">6,264</td> </tr> <tr> <td valign="top"> Whole loan sales guarantees </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">—  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">—  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">—  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">21,164</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">21,164</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">81</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">—  </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> General partner guarantees </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">195</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">55</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">101</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">131</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">482</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">95</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">—  </td> </tr> </table>   <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr> <td valign="top" width="3%" align="left">(1)</td> <td valign="top" align="left">Carrying amount of derivative contracts are shown on a gross basis prior to cash collateral or counterparty netting. For further information on derivative contracts see Note 10 to the consolidated financial statements.</td> </tr> </table> <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr> <td valign="top" width="3%" align="left">(2)</td> <td valign="top" align="left">Amounts include a guarantee to investors in undivided participating interests in claims the Company made against a derivative counterparty that filed for bankruptcy protection. To the extent, in the future, any portion of the claims is disallowed or reduced by the bankruptcy court in excess of a certain amount, then the Company must refund a portion of the purchase price plus interest. For further information see Note 16 to the consolidated financial statements.</td> </tr> </table> <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr> <td valign="top" width="3%" align="left">(3)</td> <td valign="top" align="left">Approximately $2.0 billion of standby letters of credit are also reflected in the “Commitments” table above in primary and secondary lending commitments. Standby letters of credit are recorded at fair value within Financial instruments owned or Financial instruments sold, not yet purchased in the consolidated statements of financial condition.</td> </tr> </table> <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr> <td valign="top" width="3%" align="left">(4)</td> <td valign="top" align="left">Amounts include guarantees issued by consolidated real estate funds sponsored by the Company of approximately $2.0 billion. These guarantees relate to obligations of the fund’s investee entities, including guarantees related to capital expenditures and principal and interest debt payments. Accrued losses under these guarantees of approximately $1.1 billion are reflected as a reduction of the carrying value of the related fund investments, which are reflected in Financial instruments owned—investments on the consolidated statement of financial condition.</td> </tr> </table>   The table below summarizes certain information regarding the Company’s obligations under guarantee arrangements as of December 31, 2008:   <table border="0" cellspacing="0" cellpadding="0" width="100%" align="center"> <tr> <td width="40%"></td> <td valign="bottom" width="2%"></td> <td></td> <td></td> <td valign="bottom" width="2%"></td> <td></td> <td></td> <td valign="bottom" width="2%"></td> <td></td> <td></td> <td valign="bottom" width="2%"></td> <td></td> <td></td> <td valign="bottom" width="2%"></td> <td></td> <td></td> <td valign="bottom" width="2%"></td> <td></td> <td></td> <td></td> <td valign="bottom" width="2%"></td> <td></td> <td></td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom"> </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="14" align="center">Maximum Potential Payout/Notional</td> <td valign="bottom"> </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" rowspan="3" colspan="2" align="center">Carrying Amount (Asset)/ Liability</td> <td valign="bottom" rowspan="3"> </td> <td valign="bottom"> </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" rowspan="3" colspan="2" align="center">Collateral/ Recourse</td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom"> </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="11" align="center">Years to Maturity</td> <td valign="bottom"> </td> <td valign="bottom" colspan="2"> </td> <td valign="bottom"> </td> <td valign="bottom"> </td> </tr> <tr> <td valign="bottom" nowrap="nowrap"> Type of Guarantee </td> <td valign="bottom"> </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">Less than 1</td> <td valign="bottom"> </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">1-3</td> <td valign="bottom"> </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">3-5</td> <td valign="bottom"> </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">Over 5</td> <td valign="bottom"> </td> <td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" colspan="2" align="center">Total</td> <td valign="bottom"> </td> <td valign="bottom"> </td> </tr> <tr> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" colspan="21" align="center">(dollars in millions)</td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Credit derivative contracts(1) </td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">225,742</td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">778,266</td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">1,593,218</td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">989,207</td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">3,586,433</td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">427,338</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom">$</td> <td valign="bottom" align="right">—  </td> </tr> <tr> <td valign="top"> Other credit contracts </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">53</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">43</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">188</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">3,014</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">3,298</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">3,379</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">—  </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Credit-linked notes </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">207</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">486</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">326</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">640</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">1,659</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">(242</td> <td valign="bottom" nowrap="nowrap">) </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">—  </td> </tr> <tr> <td valign="top"> Non-credit derivative contracts(1) </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">684,432</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">385,734</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">195,419</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">274,652</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">1,540,237</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">145,609</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">—  </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Standby letters of credit and other financial guarantees issued </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">779</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">1,964</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">4,418</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">8,978</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">78</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">4,787</td> </tr> <tr> <td valign="top"> Market value guarantees </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">—  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">—  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">—  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">645</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">645</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">36</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">134</td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Liquidity facilities </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">3,152</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">698</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">188</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">376</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">4,414</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">25</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">3,741</td> </tr> <tr> <td valign="top"> General partner guarantees </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">54</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">198</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">33</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">150</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">435</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">29</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">—  </td> </tr> <tr bgcolor="#CCEEFF"> <td valign="top"> Auction rate security guarantees </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">1,747</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">—  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">—  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">—  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">1,747</td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">40</td> <td valign="bottom" nowrap="nowrap">  </td> <td valign="bottom"> </td> <td valign="bottom"> </td> <td valign="bottom" align="right">—  </td> </tr> </table>   <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr> <td valign="top" width="3%" align="left">(1)</td> <td valign="top" align="left">Carrying amount of derivative contracts are shown on a gross basis prior to cash collateral or counterparty netting. For further information on derivative contracts, see Note 10.</td> </tr> </table>   The Company has obligations under certain guarantee arrangements, including contracts and indemnification agreements that contingently require a guarantor to make payments to the guaranteed party based on changes in an underlying measure (such as an interest or foreign exchange rate, security or commodity price, an index or the occurrence or non-occurrence of a specified event) related to an asset, liability or equity security of a guaranteed party. Also included as guarantees are contracts that contingently require the guarantor to make payments to the guaranteed party based on another entity’s failure to perform under an agreement, as well as indirect guarantees of the indebtedness of others. The Company’s use of guarantees is described below by type of guarantee:   Derivative Contracts.    Certain derivative contracts meet the accounting definition of a guarantee, including certain written options, contingent forward contracts and credit default swaps (see Note 10 regarding credit derivatives in which the Company has sold credit protection to the counterparty). Although the Company’s derivative arrangements do not specifically identify whether the derivative counterparty retains the underlying asset, liability or equity security, the Company has disclosed information regarding all derivative contracts that could meet the accounting definition of a guarantee. The maximum potential payout for certain derivative contracts, such as written interest rate caps and written foreign currency options, cannot be estimated, as increases in interest or foreign exchange rates in the future could possibly be unlimited. Therefore, in order to provide information regarding the maximum potential amount of future payments that the Company could be required to make under certain derivative contracts, the notional amount of the contracts has been disclosed. In certain situations, collateral may be held by the Company for those contracts that meet the definition of a guarantee. Generally, the Company sets collateral requirements by counterparty so that the collateral covers various transactions and products and is not allocated specifically to individual contracts. Also, the Company may recover amounts related to the underlying asset delivered to the Company under the derivative contract.   The Company records all derivative contracts at fair value. Aggregate market risk limits have been established, and market risk measures are routinely monitored against these limits. The Company also manages its exposure to these derivative contracts through a variety of risk mitigation strategies, including, but not limited to, entering into offsetting economic hedge positions. The Company believes that the notional amounts of the derivative contracts generally overstate its exposure.   Standby Letters of Credit and other Financial Guarantees Issued.    In connection with its corporate lending business and other corporate activities, the Company provides standby letters of credit and other financial guarantees to counterparties. Such arrangements represent obligations to make payments to third parties if the counterparty fails to fulfill its obligation under a borrowing arrangement or other contractual obligation. A majority of the Company’s standby letters of credit is provided on behalf of counterparties that are investment grade.   Market Value Guarantees.    Market value guarantees are issued to guarantee timely payment of a specified return to investors in certain affordable housing tax credit funds. These guarantees are designed to return an investor’s contribution to a fund and the investor’s share of tax losses and tax credits expected to be generated by a fund. From time to time, the Company may also guarantee return of principal invested, potentially including a specified rate of return, to fund investors.   Liquidity Facilities.    The Company has entered into liquidity facilities with SPEs and other counterparties, whereby the Company is required to make certain payments if losses or defaults occur. Primarily, the Company acts as liquidity provider to municipal bond securitization SPEs and for standalone municipal bonds in which the holders of beneficial interests issued by these SPEs or the holders of the individual bonds, respectively, have the right to tender their interests for purchase by the Company on specified dates at a specified price. The Company often may have recourse to the underlying assets held by the SPEs in the event payments are required under such liquidity facilities as well as make-whole or recourse provisions with the trust sponsors. Primarily all of the underlying assets in the SPEs are investment grade.   Whole loan sale guarantees.    The Company provides representations and warranties that certain assets sold as whole loans conform to specified guidelines. The Company may be required to repurchase such assets or indemnify the purchaser against losses if the assets do not meet certain conforming guidelines. Due diligence is performed by the Company to ensure that asset guideline qualifications are met, and, to the extent the Company has acquired such assets from other parties, the Company seeks to obtain its own representations and warranties regarding the assets. The maximum potential amount of future payments the Company could be required to make would be equal to the current outstanding balances of assets transferred by the Company that are subject to its representations and warranties.   General Partner Guarantees.    As a general partner in certain private equity and real estate partnerships, the Company receives distributions from the partnerships according to the provisions of the partnership agreements. The Company may, from time to time, be required to return all or a portion of such distributions to the limited partners in the event the limited partners do not achieve a certain return as specified in various partnership agreements, subject to certain limitations.   ARS Guarantees.    Under the terms of various agreements entered into with government agencies and the terms of the Company’s announced offer to repurchase, the Company agreed to repurchase at par certain ARS held by retail clients that were purchased through the Company. In addition, the Company agreed to reimburse retail clients who have sold certain ARS purchased through the Company at a loss. The Company’s maximum exposure as it relates to these repurchase obligations was based on the Company’s best estimate of the outstanding ARS eligible under the repurchase program. At December 31, 2008, the Company recorded a liability at fair value related to these ARS purchase obligations. The Company had no ARS purchase obligation at December 31, 2009.   Other Guarantees and Indemnities.   In the normal course of business, the Company provides guarantees and indemnifications in a variety of commercial transactions. These provisions generally are standard contractual terms. Certain of these guarantees and indemnifications are described below.   <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr> <td width="4%"> </td> <td valign="top" width="1%" align="left">•</td> <td valign="top" width="1%"> </td> <td valign="top" align="left"> Trust Preferred Securities.    The Company has established Morgan Stanley Capital Trusts for the limited purpose of issuing trust preferred securities to third parties and lending the proceeds to the Company in exchange for junior subordinated debentures. The Company has directly guaranteed the repayment of the trust preferred securities to the holders thereof to the extent that the Company has made payments to a Morgan Stanley Capital Trust on the junior subordinated debentures. In the event that the Company does not make payments to a Morgan Stanley Capital Trust, holders of such series of trust preferred securities would not be able to rely upon the guarantee for payment of those amounts. The Company has not recorded any liability in the consolidated financial statements for these guarantees and believes that the occurrence of any events (i.e., non-performance on the part of the paying agent) that would trigger payments under these contracts is remote. See Note 13 for details on the Company’s junior subordinated debentures. </td> </tr> </table>   <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr> <td width="4%"> </td> <td valign="top" width="1%" align="left">•</td> <td valign="top" width="1%"> </td> <td valign="top" align="left"> Indemnities.    The Company provides standard indemnities to counterparties for certain contingent exposures and taxes, including U.S. and foreign withholding taxes, on interest and other payments made on derivatives, securities and stock lending transactions, certain annuity products and other financial arrangements. These indemnity payments could be required based on a change in the tax laws or change in interpretation of applicable tax rulings or a change in factual circumstances. Certain contracts contain provisions that enable the Company to terminate the agreement upon the occurrence of such events. The maximum potential amount of future payments that the Company could be required to make under these indemnifications cannot be estimated. The Company has not recorded any contingent liability in the consolidated financial statements for these indemnifications and believes that the occurrence of any events that would trigger payments under these contracts is remote. </td> </tr> </table>   <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr> <td width="4%"> </td> <td valign="top" width="1%" align="left">•</td> <td valign="top" width="1%"> </td> <td valign="top" align="left"> Exchange/Clearinghouse Member Guarantees.    The Company is a member of various U.S. and non-U.S. exchanges and clearinghouses that trade and clear securities and/or derivative contracts. Associated with its membership, the Company may be required to pay a proportionate share of the financial obligations of another member who may default on its obligations to the exchange or the clearinghouse. While the rules governing different exchange or clearinghouse memberships vary, in general the Company’s guarantee obligations would arise only if the exchange or clearinghouse had previously exhausted its resources. The maximum potential payout under these membership agreements cannot be estimated. The Company has not recorded any contingent liability in the consolidated financial statements for these agreements and believes that any potential requirement to make payments under these agreements is remote. </td> </tr> </table>   <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr> <td width="4%"> </td> <td valign="top" width="1%" align="left">•</td> <td valign="top" width="1%"> </td> <td valign="top" align="left"> Guarantees on Securitized Assets.    As part of the Company’s Institutional Securities securitization and related activities, the Company provides representations and warranties that certain assets transferred in securitization transactions conform to specified guidelines. The Company may be required to repurchase such assets or indemnify the purchaser against losses if the assets do not meet certain conforming guidelines. Due diligence is performed by the Company to ensure that asset guideline qualifications are met, and, to the extent the Company has acquired such assets from other parties, the Company seeks to obtain its own representations and warranties regarding the assets. In many securitization transactions, some, but not all, of the original asset sellers provide the representations and warranties directly to the purchaser, and the Company makes representations and warranties only with respect to other assets. The maximum potential amount of future payments the Company could be required to make would be equal to the current outstanding balances of assets transferred by the Company that are subject to its representations and warranties. The Company has not provided any contingent liability in the consolidated financial statements for representations and warranties made in connection with securitization transactions, and it believes that the probability of any payments under those arrangements is remote. </td> </tr> </table>   <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr> <td width="4%"> </td> <td valign="top" width="1%" align="left">•</td> <td valign="top" width="1%"> </td> <td valign="top" align="left"> Merger and Acquisition Guarantees.    The Company may, from time to time, in its role as investment banking advisor be required to provide guarantees in connection with certain European merger and acquisition transactions. If required by the regulating authorities, the Company provides a guarantee that the acquirer in the merger and acquisition transaction has or will have sufficient funds to complete the transaction and would then be required to make the acquisition payments in the event the acquirer’s funds are insufficient at the completion date of the transaction. These arrangements generally cover the time frame from the transaction offer date to its closing date and, therefore, are generally short term in nature. The maximum potential amount of future payments that the Company could be required to make cannot be estimated. The Company believes the likelihood of any payment by the Company under these arrangements is remote given the level of the Company’s due diligence associated with its role as investment banking advisor. </td> </tr> </table>   <table style="BORDER-COLLAPSE: collapse" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr> <td width="4%"> </td> <td valign="top" width="1%" align="left">•</td> <td valign="top" width="1%"> </td> <td valign="top" align="left"> Guarantees on Morgan Stanley Stable Value Program.    On September 30, 2009, the Company entered into an agreement with the investment manager for the Stable Value Program (“SVP”), a fund within the Company’s 401(k) plan, and certain other third parties. Under the agreement, the Company contributed $20 million to the SVP on October 15, 2009. The Company recorded the contribution in Compensation and benefits expense on the consolidated statement of income for 2009. Additionally, the Company may have a future obligation to make a payment of $40 million to the SVP following the third anniversary of the agreement, after which the SVP would be wound down over a period of time. The future obligation is contingent upon whether the market-to-book value ratio of the portion of the SVP that is subject to certain book-value stabilizing contracts has fallen below a specific threshold and the Company and the other parties to the agreement all decline to make payments to restore the SVP to such threshold as of the third anniversary of the agreement. The Company has not recorded a liability for this guarantee in the consolidated financial statements. </td> </tr> </table>   In the ordinary course of business, the Company guarantees the debt and/or certain trading obligations (including obligations associated with derivatives, foreign exchange contracts and the settlement of physical commodities) of certain subsidiaries. These guarantees generally are entity or product specific and are required by investors or trading counterparties. The activities of the subsidiaries covered by these guarantees (including any related debt or trading obligations) are included in the Company’s consolidated financial statements.   Contingencies.   Legal.    In the normal course of business, the Company has been named, from time to time, as a defendant in various legal actions, including arbitrations, class actions and other litigation, arising in connection with its activities as a global diversified financial services institution. Certain of the actual or threatened legal actions include claims for substantial compensatory and/or punitive damages or claims for indeterminate amounts of damages. In some cases, the issuers that would otherwise be the primary defendants in such cases are bankrupt or are in financial distress.   The Company is also involved, from time to time, in other reviews, investigations and proceedings (both formal and informal) by governmental and self-regulatory agencies regarding the Company’s business, including, among other matters, accounting and operational matters, certain of which may result in adverse judgments, settlements, fines, penalties, injunctions or other relief.   The Company contests liability and/or the amount of damages as appropriate in each pending matter. In view of the inherent difficulty of predicting the outcome of such matters, particularly in cases where claimants seek substantial or indeterminate damages or where investigations and proceedings are in the early stages, the Company cannot predict with certainty the loss or range of loss, if any, related to such matters; how or if such matters will be resolved; when they will ultimately be resolved; or what the eventual settlement, fine, penalty or other relief, if any, might be. Subject to the foregoing, the Company believes, based on current knowledge and after consultation with counsel, that the outcome of such pending matters will not have a material adverse effect on the consolidated statement of financial condition of the Company, although the outcome of such matters could be material to the Company’s operating results and cash flows for a particular future period, depending on, among other things, the level of the Company’s revenues, income or cash flows for such period. Legal reserves have been established in accordance with the requirements for accounting for contingencies. Once established, reserves are adjusted when there is more information available or when an event occurs requiring a change. </div> 11.    Commitments, Guarantees and Contingencies.   Commitments.   The Company’s commitments associated with outstanding false false No definition available. No authoritative reference available. false false 1 1 false UnKnown UnKnown UnKnown false true