Wells Fargo 2015 Annual Report Download - page 193

Transactions with Consolidated VIEs and Secured some instances will differ from “Total VIE assets.” For VIEs that
Borrowings obtain exposure synthetically through derivative instruments,
Table 8.7 presents a summary of financial assets and liabilities the remaining notional amount of the derivative is included in
for asset transfers accounted for as secured borrowings and “Total VIE assets.” On the consolidated balance sheet, we
involvements with consolidated VIEs. “Assets” are presented separately disclose the consolidated assets of certain VIEs that
using GAAP measurement methods, which may include fair can only be used to settle the liabilities of those VIEs.
value, credit impairment or other adjustments, and therefore in
Table 8.7: Transactions with Consolidated VIEs and Secured Borrowings
Carrying value
(in millions)
Total VIE
assets Assets Liabilities
Noncontrolling
interests Net assets
December 31, 2015
Secured borrowings:
Municipal tender option bond securitizations $ 2,818 2,400 (1,800) — 600
Commercial real estate loans — — — — —
Residential mortgage securitizations 4,738 4,887 (4,844) — 43
Total secured borrowings 7,556 7,287 (6,644) — 643
Consolidated VIEs:
Nonconforming residential mortgage loan securitizations 4,134 3,654 (1,239) — 2,415
Commercial real estate loans 1,185 1,185 — — 1,185
Structured asset finance 54 20 (18) — 2
Investment funds 482 482 — — 482
Other 305 295 (101) (93) 101
Total consolidated VIEs 6,160 5,636 (1,358) (93) 4,185
Total secured borrowings and consolidated VIEs $ 13,716 12,923 (8,002) (93) 4,828
December 31, 2014
Secured borrowings:
Municipal tender option bond securitizations $ 5,422 4,837 (3,143) — 1,694
Commercial real estate loans 250 250 (63) — 187
Residential mortgage securitizations 4,804 5,045 (4,926) — 119
Total secured borrowings 10,476 10,132 (8,132) — 2,000
Consolidated VIEs:
Nonconforming residential mortgage loan securitizations 5,041 4,491 (1,509) — 2,982
Structured asset finance 47 47 (23) — 24
Investment funds 904 904 (2) — 902
Other 431 375 (143) (103) 129
Total consolidated VIEs 6,423 5,817 (1,677) (103) 4,037
Total secured borrowings and consolidated VIEs $ 16,899 $ 15,949 $ (9,809) $ (103) $ 6,037
In addition to the structure types included in the previous
table, at both December 31, 2015 and 2014, we had
approximately $6.0 billion of private placement debt financing
issued through a consolidated VIE. The issuance is classified as
long-term debt in our consolidated financial statements. At
December 31, 2015, we pledged approximately $529 million in
loans (principal and interest eligible to be capitalized), and
$5.9 billion in available-for-sale securities to collateralize the
VIE's borrowings, compared with $637 million and $5.7 billion,
respectively, at December 31, 2014. These assets were not
transferred to the VIE, and accordingly we have excluded the
VIE from the previous table.
We have raised financing through the securitization of
certain financial assets in transactions with VIEs accounted for
as secured borrowings. We also consolidate VIEs where we are
the primary beneficiary. In certain transactions we provide
contractual support in the form of limited recourse and liquidity
to facilitate the remarketing of short-term securities issued to
third party investors. Other than this limited contractual
support, the assets of the VIEs are the sole source of repayment
of the securities held by third parties.
MUNICIPAL TENDER OPTION BOND SECURITIZATIONS As
part of our normal investment portfolio activities, we consolidate
municipal bond trusts that hold highly rated, long-term, fixed-
rate municipal bonds, the majority of which are rated AA or
better. Our residual interests in these trusts generally allow us to
capture the economics of owning the securities outright, and
constructively make decisions that significantly impact the
economic performance of the municipal bond vehicle, primarily
by directing the sale of the municipal bonds owned by the
vehicle. In addition, the residual interest owners have the right
to receive benefits and bear losses that are proportional to
owning the underlying municipal bonds in the trusts. The trusts
obtain financing by issuing floating-rate trust certificates that
reprice on a weekly or other basis to third-party investors. Under
certain conditions, if we elect to terminate the trusts and
withdraw the underlying assets, the third party investors are
entitled to a small portion of any unrealized gain on the
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