Fifth Third Bank 2010 Annual Report Download - page 66

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
64 Fifth Third Bancorp
ended December 31, 2009, the VIE did not transfer any loans
back to the Bancorp as a result of a credit event.
The VIE issued commercial paper and used the proceeds to
fund the acquisition of commercial loans transferred to it by the
Bancorp. The ability of the VIE to issue commercial paper was a
function of general market conditions and the credit rating of the
liquidity provider. In the event the VIE was unable to issue
commercial paper, the Bancorp agreed to provide liquidity
support in the form of a line of credit to the VIE and the
repurchase of assets from the VIE. As of December 31, 2009, the
LAPA was $1.4 billion. In addition to the liquidity support
options discussed above, the Bancorp also purchased commercial
paper issued by the VIE. Beginning in 2008 and continuing
through the year ended December 31, 2009, dislocation in the
short-term funding market caused the VIE difficulty in obtaining
sufficient funding through the issuance of commercial paper. As a
result, the Bancorp purchased commercial paper throughout 2009.
As of December 31, 2009, the Bancorp held $805 million of asset-
backed commercial paper issued by the VIE, representing 87% of
the total commercial paper issued by the VIE.
Effective January 1, 2010, with the adoption of guidance
amending the accounting for QSPEs and the consolidation of
VIEs, the Bancorp determined it was the primary beneficiary (and
therefore consolidator) of this VIE. Refer to Note 1 of the Notes
to Consolidated Financial Statements for further details regarding
the guidance and the related impact of adoption by the Bancorp.