Variable Interest Entities and Other Investments

6 Months Ended

Jun. 30, 2012

Variable Interest Entities and Other Investments [Abstract]

Variable Interest Entities and Other Investments

Note 4—Variable Interest Entities and Other Investments

The Company is involved in various structures that are considered to be VIEs. Generally, a VIE is a corporation, partnership, trust or any other legal structure where the equity investors do not have sufficient equity at risk in the entity to allow the entity to independently finance its activities, lack the power to direct the significant activities of the entity through voting or similar rights, or do not have an obligation to absorb the entity’s losses or the right to receive the entity’s returns. The Company’s investments in VIEs primarily consist of equity investments in low income housing credit (LIHC) structures and renewable energy projects, which are designed to generate a return primarily through the realization of federal tax credits, and private capital investments. For further information related to the Company’s consolidated VIEs and those that were not consolidated, see Note 6 to the consolidated financial statements in the Company’s 2011 Form 10-K.

Consolidated VIEs

At June 30, 2012, assets of $278 million and liabilities of $9 million were consolidated by the Company on its consolidated balance sheet related to two LIHC investment fund structures because the Company sponsors, manages and syndicates the funds. The assets are included in other assets as well as interest bearing deposits in banks, the liabilities are primarily included in long-term debt, and third-party investor interests are included in stockholder’s equity as noncontrolling interests. Neither creditors nor equity investors in the LIHC investments have any recourse to the general credit of the Company, and the Company’s creditors do not have any recourse to the assets of the consolidated LIHC investments. At June 30, 2012, the Company also consolidated $61 million of assets related to trusts that own and lease railcars because the Company directs the significant activities of these trusts. The assets are included in other assets on the Company’s consolidated balance sheet.

For the three and six months ended June 30, 2012, the Company recorded $8 million and $15 million of expenses related to its consolidated VIEs, respectively. For the three and six months ended June 30, 2011, the Company recorded $6 million and $12 million of expenses related to its consolidated VIEs, respectively. These expenses are included in other noninterest expense on the Company’s consolidated statements of income.

Unconsolidated VIEs in which the Company has a Variable Interest

The following table presents the Company’s carrying amounts related to the unconsolidated VIEs and location on the consolidated balance sheet at June 30, 2012. The table also presents the Company’s maximum exposure to loss resulting from its involvement with these VIEs. The maximum exposure to loss represents the carrying amount of the Company’s involvement plus any legally binding unfunded commitments in the unlikely event that all of the assets in the VIEs become worthless.

	June 30, 2012
(Dollars in millions)	Total Assets		Total Liabilities		Maximum Exposure to Loss
LIHC investments	$	541	$	42	$	811
Renewable energy investments		281		—		281
Private capital investment		18		—		23
Total unconsolidated VIEs	$	840	$	42	$	1,115

Other Investments

The following table shows the balances of other investments as of June 30, 2012 and December 31, 2011:

(Dollars in millions)	June 30, 2012		December 31, 2011
Renewable energy investments	$	281	$	291
Consolidated VIEs, net of liabilities		330		285
LIHC investments—unguaranteed		354		353
LIHC investments—guaranteed		187		163
Private capital investment—cost method		9		72
Private capital investment—equity method		31		24
Total other investments	$	1,192	$	1,188

The Company evaluates these investments periodically for other-than-temporary impairment. During the first half of 2012, the Company recorded $2 million of impairment related to private capital investments accounted for under the cost method. For further information on the Company’s other investments, see Note 6 to the consolidated financial statements in the Company’s 2011 Form 10-K.