Wells Fargo 2013 Annual Report Download - page 194

Note 8: Securitizations and Variable Interest Entities (continued)
Transactions with Consolidated VIEs and Secured
Borrowings
The following table presents a summary of transfers of financial
assets accounted for as secured borrowings and involvements
with consolidated VIEs. “Consolidated assets” are presented
using GAAP measurement methods, which may include fair
value, credit impairment or other adjustments, and therefore in
some instances will differ from “Total VIE assets.” For VIEs that
obtain exposure synthetically through derivative instruments,
the remaining notional amount of the derivative is included in
“Total VIE assets.” On the consolidated balance sheet, we
separately disclose the consolidated assets of certain VIEs that
can only be used to settle the liabilities of those VIEs.
Carrying value
(in millions)
Total
VIE
assets
Consolidated
assets
Third
party
liabilities
Noncontrolling
interests
Net
assets
December 31, 2013
Secured borrowings:
Municipal tender option bond securitizations $ 11,626 9,210 (7,874) - 1,336
Commercial real estate loans 486 486 (277) - 209
Residential mortgage securitizations 5,337 5,611 (5,396) - 215
Total secured borrowings 17,449 15,307 (13,547) - 1,760
Consolidated VIEs:
Nonconforming residential
mortgage loan securitizations 6,770 6,018 (2,214) - 3,804
Multi-seller commercial paper conduit - - - - -
Structured asset finance 56 56 (18) - 38
Investment funds 1,536 1,536 (70) - 1,466
Other 582 512 (182) (5) 325
Total consolidated VIEs 8,944 8,122 (2,484) (5) 5,633
Total secured borrowings and consolidated VIEs $ 26,393 23,429 (16,031) (5) 7,393
December 31, 2012
Secured borrowings:
Municipal tender option bond securitizations $ 16,782 15,130 (13,248) - 1,882
Commercial real estate loans 975 975 (696) - 279
Residential mortgage securitizations 5,757 6,240 (5,824) - 416
Total secured borrowings 23,514 22,345 (19,768) - 2,577
Consolidated VIEs:
Nonconforming residential
mortgage loan securitizations 8,633 7,707 (2,933) - 4,774
Multi-seller commercial paper conduit 2,059 2,036 (2,053) - (17)
Structured asset finance 71 71 (17) - 54
Investment funds 1,837 1,837 (2) - 1,835
Other 3,454 2,974 (1,438) (48) 1,488
Total consolidated VIEs 16,054 14,625 (6,443) (48) 8,134
Total secured borrowings and consolidated VIEs $ 39,568 36,970 (26,211) (48) 10,711
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.
In addition to the transactions included in the previous table,
at both December 31, 2013, and December 31, 2012, 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, 2013, and December 31, 2012, we pledged
approximately $6.6 billion and $6.4 billion in loans (principal
and interest eligible to be capitalized), $160 million and
$179 million in available-for-sale securities, and $180 million
and $138 million in cash and cash equivalents to collateralize the
VIE’s borrowings, respectively. These assets were not transferred
to the VIE, and accordingly we have excluded the VIE from the
previous table.
MUNICIPAL TENDER OPTION BOND SECURITIZATIONS As
part of our normal portfolio investment activities, we consolidate
municipal bond trusts that hold highly rated, long-term, fixed-
rate municipal bonds, the majority of which are rated AA or
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