Morgan Stanley 2010 Annual Report Download - page 171

MORGAN STANLEY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Fair Value Option.
The Company elected the fair value option for certain eligible instruments that are risk managed on a fair value
basis. The following tables present net gains (losses) due to changes in fair value for items measured at fair value
pursuant to the fair value option election for 2010, 2009, fiscal 2008 and the one month ended December 31,
2008.
Principal
Transactions-
Trading
Interest
Expense
(Losses) Gains
Included in
Net Revenues
(dollars in millions)
2010
Deposits .................................................... $ 2 $ (173) $ (171)
Commercial paper and other short-term borrowings .................. (8) — (8)
Long-term borrowings ......................................... (872) (849) (1,721)
Securities sold under agreements to repurchase ...................... 9 (1) 8
2009
Deposits .................................................... $ (81) $ (321) $ (402)
Commercial paper and other short-term borrowings .................. (176) — (176)
Long-term borrowings ......................................... (7,660) (983) (8,643)
Fiscal 2008
Deposits .................................................... $ 14 $ — $ 14
Commercial paper and other short-term borrowings .................. 1,238 (2) 1,236
Long-term borrowings ......................................... 12,428 (1,059) 11,369
One Month Ended December 31, 2008
Deposits .................................................... $ (120) $ (26) $ (146)
Commercial paper and other short-term borrowings .................. (81) — (81)
Long-term borrowings ......................................... (2,168) (80) (2,248)
In addition to the amounts in the above table, as discussed in Note 2, all of the instruments within Financial
instruments owned or Financial instruments sold, not yet purchased are measured at fair value, either through the
election of the fair value option, or as required by other accounting guidance.
The following tables present information on the Company’s short-term and long-term borrowings (including
structured notes), loans and unfunded lending commitments for which the fair value option was elected.
Fair Value Option—Gains (Losses) due to Changes in Instrument Specific Credit Spreads
2010 2009
Fiscal
2008
One Month
Ended
December 31,
2008
(dollars in millions)
Short-term and long-term borrowings(1) ........................ $(873) $(5,510) $ 5,594 $(241)
Loans(2) ................................................. 448 4,139 (5,864) (498)
Unfunded lending commitments(3) ............................ (148) (8) 280 6
(1) The change in the fair value of structured notes includes an adjustment to reflect the credit quality of the Company based upon
observations of the Company’s secondary bond market spreads.
(2) Instrument specific credit gains or (losses) were determined by excluding the non-credit components of gains and losses, such as those
due to changes in interest rates.
(3) Losses were generally determined based on the differential between estimated expected client yields and contractual yields at each
respective period end.
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