Variable Interest Entities

We use special-purpose entities ("SPEs") that are considered VIEs to issue variable funding notes to third party bank-sponsored warehouse facilities or asset-backed securities to investors in securitization transactions. The securities issued by these VIEs are backed by the cash flows related to finance receivables and leasing related assets transferred by us to the VIEs (securitized assets).

The transfers of the securitized assets to the SPEs are considered to be sales for legal purposes. However, the securitized assets and the related debt, accounted for as secured borrowings, remain on our condensed consolidated balance sheets as discussed below. Except for the acquisition accounting adjustments, which are not recorded at the SPE trusts, we recognize finance charge income, leased vehicle income and other income on the securitized assets and interest expense on the secured debt issued by the special-purpose entities. We also maintain an allowance for estimated probable credit losses on the securitized assets to cover estimated incurred credit losses using a methodology consistent with that used for our non-securitized asset portfolio.

We hold variable interests in the VIEs that could potentially be significant to the VIEs. We determined that we are the primary beneficiary of the SPEs because (i) our servicing responsibilities for the securitized assets give us the power to direct the activities that most significantly impact the performance of the VIEs and (ii) our variable interests in the VIEs give us the obligation to absorb losses and the right to receive residual returns that could potentially be significant. Therefore, the assets and liabilities of the VIEs are included in our condensed consolidated balance sheets.

The following table summarizes the assets and liabilities related to our consolidated VIEs (in millions):



	September 30, 2013		December 31, 2012
Restricted cash	$	1,350	$	744
VIE securitized assets	$	21,761	$	10,442
VIE liabilities	$	18,147	$	9,378

Restricted cash represents collections from the underlying securitized assets and certain reserve accounts held as credit enhancement on securitizations for the benefit of the noteholders. Cash pledged to support the secured borrowings is deposited to a restricted cash account, which is invested in highly liquid securities with original maturities of 90 days or less.

The assets of the VIEs and the restricted cash held by us serve as the sole source of repayment for the asset-backed securities issued by these entities. Investors in the notes issued by the VIEs do not have recourse to us or our other assets, with the exception of customary representation and warranty repurchase provisions and indemnities we provide as the servicer. We are not required and do not currently intend to provide additional financial support to these VIEs. While these subsidiaries are included in our condensed consolidated financial statements, these subsidiaries are separate legal entities and their assets are legally owned by them and not available to our creditors.

In addition, we entered into interest rate swaps and caps with certain SPEs that issue variable rate debt against fixed rate securitized assets. Under the terms of these swaps, the SPEs are obligated to pay us a fixed rate of interest on certain payment dates in exchange for receiving a floating rate of interest on notional amounts equal to the outstanding balance of the secured debt. This arrangement enables the SPEs to mitigate the interest rate risk inherent in issuing variable rate debt that is secured by fixed rate securitized assets, as required to maintain ratings on such securitizations. See Note 8 - "Derivative Financial Instruments" for further discussion.