Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2014

Assets and Liabilities Measured at Fair Value on a Recurring Basis

									Netting
(In millions)	Level 1		(a)	Level 2		(a)	Level 3		adjustment		(b)	Net balance

September 30, 2014
Assets
Investment securities
Debt
U.S. corporate	$	-		$	20,315		$	3,117	$	-		$	23,432
State and municipal		-			5,032			572		-			5,604
Residential mortgage-backed		-			1,812			16		-			1,828
Commercial mortgage-backed		-			3,124			10		-			3,134
Asset-backed(c)		-			393			7,267		-			7,660
Corporate – non-U.S.		-			711			1,003		-			1,714
Government – non-U.S.		59			2,318			-		-			2,377
U.S. government and federal agency		-			368			264		-			632
Retained interests		-			-			27		-			27
Equity
Available-for-sale		431			27			9		-			467
Trading		139			2			-		-			141
Derivatives(d)		-			9,345			137		(7,186)			2,296
Other(e)		-			-			347		-			347
Total	$	629		$	43,447		$	12,769	$	(7,186)		$	49,659

Liabilities
Derivatives	$	-		$	4,215		$	15	$	(3,889)		$	341
Other(f)		-			1,151			-		-			1,151
Total	$	-		$	5,366		$	15	$	(3,889)		$	1,492

December 31, 2013
Assets
Investment securities
Debt
U.S. corporate	$	-		$	18,788		$	2,953	$	-		$	21,741
State and municipal		-			4,193			96		-			4,289
Residential mortgage-backed		-			1,824			86		-			1,910
Commercial mortgage-backed		-			3,025			10		-			3,035
Asset-backed(c)		-			489			6,898		-			7,387
Corporate – non-U.S.		61			645			1,064		-			1,770
Government – non-U.S.		1,590			789			31		-			2,410
U.S. government and federal agency		-			545			225		-			770
Retained interests		-			-			72		-			72
Equity
Available-for-sale		475			31			11		-			517
Trading		78			2			-		-			80
Derivatives(d)		-			8,304			175		(6,739)			1,740
Other(e)		-			-			494		-			494
Total	$	2,204		$	38,635		$	12,115	$	(6,739)		$	46,215

Liabilities
Derivatives	$	-		$	5,409		$	20	$	(4,355)		$	1,074
Other(f)		-			1,170			-		-			1,170
Total	$	-		$	6,579		$	20	$	(4,355)		$	2,244

Included $912 million of Government – non-U.S. and $17 million of Corporate – non-U.S. available-for-sale debt securities transferred from Level 1 to Level 2 primarily attributable to changes in market observable data in the nine months ended September 30, 2014. The fair value of securities transferred between Level 1 and Level 2 was $2 million in the twelve months ended December 31, 2013.

(b) The netting of derivative receivables and payables (including the effects of any collateral posted or received) is permitted when a legally enforceable master netting agreement exists.

(c) Includes investments in our CLL business in asset-backed securities collateralized by senior secured loans of high-quality, middle-market companies in a variety of industries.

(d) The fair value of derivatives includes an adjustment for non-performance risk. The cumulative adjustment was a gain (loss) of $20 million and $(7) million at September 30, 2014 and December 31, 2013, respectively. See Note 15 for additional information on the composition of our derivative portfolio.

(e) Includes private equity investments and loans designated under the fair value option.

(f) Primarily represented the liability associated with certain of our deferred incentive compensation plans.

Changes in level 3 instruments

Changes in Level 3 Instruments for the Three Months Ended

																			Net
																			change in
			Net		Net														unrealized
			realized/		realized/														gains
			unrealized		unrealized														(losses)
			gains		gains														relating to
			(losses)		(losses)								Transfers		Transfers				instruments
	Balance at		included		included								into		out of		Balance at		still held at
(In millions)	July 1		in earnings(a)		in AOCI		Purchases		Sales		Settlements		Level 3(b)		Level 3(b)		September 30		September 30(c)

2014
Investment securities
Debt
U.S. corporate	$	3,155	$	7	$	(9)	$	102	$	(63)	$	(91)	$	32	$	(16)	$	3,117	$	-
State and municipal		560		-		-		4		(10)		(1)		19		-		572		-
RMBS		66		-		-		-		-		(3)		-		(47)		16		-
CMBS		12		-		-		-		-		(2)		-		-		10		-
ABS		7,277		1		(106)		784		-		(689)		-		-		7,267		-
Corporate – non-U.S.		1,054		6		(18)		179		(10)		(208)		-		-		1,003		-
Government – non-U.S.		1		-		-		-		-		-		-		(1)		-		-
U.S. government and
federal agency		249		-		6		-		-		-		9		-		264		-
Retained interests		73		32		(10)		-		(67)		(1)		-		-		27		-
Equity
Available-for-sale		9		-		-		-		-		-		-		-		9		-
Derivatives(d)(e)		151		(13)		1		(3)		-		(1)		-		(1)		134		(15)
Other		357		3		-		266		(1)		(280)		-		2		347		-
Total	$	12,964	$	36	$	(136)	$	1,332	$	(151)	$	(1,276)	$	60	$	(63)	$	12,766	$	(15)

2013
Investment securities
Debt
U.S. corporate	$	3,229	$	24	$	(32)	$	160	$	(34)	$	(49)	$	-	$	-	$	3,298	$	-
State and municipal		98		-		(4)		4		-		(4)		-		-		94		-
RMBS		91		-		(2)		-		-		(1)		-		-		88		-
CMBS		5		-		-		-		-		(1)		10		-		14		-
ABS		5,346		1		36		569		-		(14)		-		-		5,938		-
Corporate – non-U.S.		1,197		(29)		(2)		1,827		-		(1,930)		-		(10)		1,053		-
Government – non-U.S.		38		1		(6)		-		-		-		-		-		33		-
U.S. government and
federal agency		264		-		(52)		-		-		-		-		-		212		-
Retained interests		93		-		(11)		-		-		(4)		-		-		78		-
Equity
Available-for-sale		10		-		-		-		-		-		1		-		11		-
Derivatives(d)(e)		167		1		1		(1)		-		2		2		(1)		171		13
Other		854		16		(1)		148		(295)		-		-		(4)		718		(34)
Total	$	11,392	$	14	$	(73)	$	2,707	$	(329)	$	(2,001)	$	13	$	(15)	$	11,708	$	(21)

Earnings effects are primarily included in the GECC revenues from services and Interest and other financial charges captions in the Condensed Statement of Earnings.

(b) Transfers in and out of Level 3 are considered to occur at the beginning of the period. Transfers out of Level 3 were primarily a result of increased use of quotes from independent pricing vendors based on recent trading activity.

(d) Represented derivative assets net of derivative liabilities and included cash accruals of $12 million and $8 million not reflected in the fair value hierarchy table in the three months ended September 30, 2014 and 2013, respectively.

(e) Gains (losses) included in net realized/unrealized gains (losses) included in earnings were offset by the earnings effects from the underlying items that were economically hedged. See Note 15.

Changes in Level 3 Instruments for the Nine Months Ended

																			Net
																			change in
			Net			Net													unrealized
			realized/			realized/													gains
			unrealized			unrealized													(losses)
			gains			gains													relating to
			(losses)			(losses)							Transfers		Transfers				instruments
	Balance at		included			included							into		out of		Balance at		still held at
(In millions)	January 1		in earnings(a)			in AOCI	Purchases		Sales		Settlements		Level 3(b)		Level 3(b)		September 30		September 30(c)

2014
Investment securities
Debt
U.S. corporate	$	2,953	$	27	$	103	$	449	$	(222)	$	(230)	$	170	$	(133)	$	3,117	$	-
State and municipal		96		-		31		17		(17)		(9)		454		-		572		-
RMBS		86		1		-		-		(16)		(8)		-		(47)		16		-
CMBS		10		-		-		-		-		(2)		2		-		10		-
ABS		6,898		3		(132)		1,780		-		(1,272)		-		(10)		7,267		-
Corporate – non-U.S.		1,064		9		61		614		(75)		(665)		1		(6)		1,003		-
Government – non-U.S.		31		-		-		-		-		-		-		(31)		-		-
U.S. government and
federal agency		225		-		32		-		-		-		9		(2)		264		-
Retained interests		72		35		(5)		1		(67)		(9)		-		-		27		-
Equity
Available-for-sale		11		-		-		2		(2)		(2)		-		-		9		-
Derivatives(d)(e)		164		(25)		1		(4)		-		1		(1)		(2)		134		(19)
Other		494		17		-		523		(16)		(392)		-		(279)		347		4
Total	$	12,104	$	67	$	91	$	3,382	$	(415)	$	(2,588)	$	635	$	(510)	$	12,766	$	(15)

2013
Investment securities
Debt
U.S. corporate	$	3,591	$	(247)	$	184	$	257	$	(383)	$	(139)	$	108	$	(73)	$	3,298	$	-
State and municipal		77		-		(8)		20		-		(5)		10		-		94		-
RMBS		100		-		(4)		-		(2)		(6)		-		-		88		-
CMBS		6		-		-		-		-		(2)		10		-		14		-
ABS		5,023		3		(32)		1,479		(1)		(539)		12		(7)		5,938		-
Corporate – non-U.S.		1,218		(112)		18		4,637		(3)		(4,672)		21		(54)		1,053		-
Government – non-U.S.		42		1		(10)		-		-		-		-		-		33		-
U.S. government and
federal agency		277		-		(65)		-		-		-		-		-		212		-
Retained interests		83		5		5		2		-		(17)		-		-		78		-
Equity
Available-for-sale		13		-		-		-		-		-		-		(2)		11		-
Derivatives(d)(e)		416		(52)		2		(2)		-		(221)		28		-		171		(30)
Other		799		(81)		3		352		(351)		-		-		(4)		718		(121)
Total	$	11,645	$	(483)	$	93	$	6,745	$	(740)	$	(5,601)	$	189	$	(140)	$	11,708	$	(151)

Earnings effects are primarily included in the GECC revenues from services and Interest and other financial charges captions in the Condensed Statement of Earnings.
Transfers in and out of Level 3 are considered to occur at the beginning of the period. Transfers out of Level 3 were primarily a result of increased use of quotes from independent pricing vendors based on recent trading activity.
Represents the amount of unrealized gains or losses for the period included in earnings.
Represents derivative assets net of derivative liabilities and included cash accruals of $12 million and $8 million not reflected in the fair value hierarchy table for the nine months ended September 30, 2014 and 2013, respectively.
Gains (losses) included in “net realized/unrealized gains (losses) included in earnings” were offset by the earnings effects from the underlying items that were economically hedged. See Note 15.

Non-recurring fair value amounts (as measured at the time of the adjustment) for those assets remeasured to fair value on a non-recurring basis

	Remeasured during				Remeasured during
	the nine months ended				the year ended
	September 30, 2014				December 31, 2013
(In millions)	Level 2		Level 3		Level 2		Level 3

Financing receivables and loans held for sale	$	97	$	1,971	$	210	$	2,986
Cost and equity method investments		260		437		-		690
Long-lived assets, including real estate		452		1,024		2,050		1,088
Total	$	809	$	3,432	$	2,260	$	4,764

Fair value adjustments to assets measured on a non-recurring basis

The following table represents the fair value adjustments to assets measured at fair value on a non-recurring basis and still held at September 30, 2014 and 2013.

	Three months ended September 30				Nine months ended September 30
(In millions)	2014		2013		2014		2013

Financing receivables and loans held for sale	$	(112)	$	(107)	$	(298)	$	(257)
Cost and equity method investments		(94)		(45)		(333)		(276)
Long-lived assets, including real estate		(374)		(366)		(491)		(855)
Total	$	(580)	$	(518)	$	(1,122)	$	(1,388)

Significant Unobservable Inputs Used For Level Three Recurring And Nonrecurring Measurements [Table Text Block]

Level 3 Measurements - Significant Unobservable Inputs

					Range
(Dollars in millions)	Fair value		Valuation technique	Unobservable inputs	(weighted average)

September 30, 2014
Recurring fair value measurements
Investment securities – Debt
U.S. corporate	$	985	Income approach	Discount rate(a)	1.5%-10.0%(6.2%)
State and municipal		478	Income approach	Discount rate(a)	2.0%-5.2%(3.3%)
Asset-backed		7,244	Income approach	Discount rate(a)	1.9%-11.0%(5.0%)
Corporate – non-U.S.		633	Income approach	Discount rate(a)	0.2%-15.1%(7.8%)
Other financial assets		227	Income approach,	EBITDA multiple	5.4X-9.1X(7.7X)
			Market comparables	Discount rate(a)	4.1%-4.8%(4.3%)
				Capitalization rate(b)	6.3%-7.8%(7.4%)
Non-recurring fair value measurements
Financing receivables and	$	787	Income approach,	Capitalization rate(b)	2.7%-11.3%(7.3%)
loans held for sale			Business enterprise	EBITDA multiple	4.3X-6.5X(6.1X)
			value
Cost and equity method investments		343	Income approach,	Discount rate(a)	8.0%-10.0%(9.4%)
			Business enterprise	EBITDA multiple	1.8X-16.2X(7.8X)
			value, Market comparables
Long-lived assets, including real estate		877	Income approach	Capitalization rate(b)	5.5%-15.3%(6.3%)
				Discount rate(a)	2.0%-19.0%(6.8%)

December 31, 2013
Recurring fair value measurements
Investment securities – Debt
U.S. corporate	$	898	Income approach	Discount rate(a)	1.5%-13.3% (6.5%)
Asset-backed		6,854	Income approach	Discount rate(a)	1.2%-10.5%(3.7%)
Corporate – non-U.S.		819	Income approach	Discount rate(a)	1.4%-46.0%(15.1%)
Other financial assets		381	Income approach,	WACC(c)	9.3%-9.3% (9.3%)
			Market comparables	EBITDA multiple	5.4X-12.5X(9.5X)
				Discount rate(a)	5.2%-8.8%(5.3%)
				Capitalization rate(b)	6.3%-7.5%(7.2%)
Non-recurring fair value measurements
Financing receivables and	$	1,937	Income approach,	Capitalization rate(b)	5.5%-16.7%(8.0%)
loans held for sale			Business enterprise	EBITDA multiple	4.3X-5.5X(4.8X)
			value	Discount rate(a)	6.6%-6.6% (6.6%)
Cost and equity method investments		102	Income approach,	Discount rate(a)	5.7%-5.9%(5.8%)
			Market comparables	Capitalization rate(b)	8.5%-10.6% (10.0%)
				WACC(c)	9.3%-9.6%(9.4%)
				EBITDA multiple	7.1X-14.5X(11.3X)
				Revenue multiple	2.2X-12.6X(9.4X)
Long-lived assets, including real estate		694	Income approach	Capitalization rate(b)	5.4%-14.5%(7.8%)
				Discount rate(a)	4.0%-23.0%(9.0%)

Discount rates are determined based on inputs that market participants would use when pricing investments, including credit and liquidity risk. An increase in the discount rate would result in a decrease in the fair value.
Represents the rate of return on net operating income that is considered acceptable for an investor and is used to determine a property’s capitalized value. An increase in the capitalization rate would result in a decrease in the fair value.
Weighted average cost of capital (WACC).

- Definition

Tabular disclosure of the fair value measurement of assets using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets) and gains or losses recognized in other comprehensive income (loss), and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs), by class of asset.

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