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This excerpt taken from the BAC 8-K filed May 28, 2009. Other Guarantees The Corporation also sells products that guarantee the return of principal to investors at a preset future date. These guarantees cover a broad range of underlying asset classes and are designed to cover the shortfall between the market value of the underlying portfolio and the principal amount on the preset future date. To manage its exposure, the Corporation requires that these guarantees be backed by structural and investment constraints and certain pre-defined triggers that would require the underlying assets or portfolio to be liquidated and invested in zero-coupon bonds that mature at the preset future date. The Corporation is required to fund any shortfall at the preset future date between the proceeds of the liquidated assets and the purchase price of the zero-coupon bonds. These guarantees are booked as derivatives and marked to market in the trading portfolio. At December 31, 2008 and 2007, the notional amount of these guarantees totaled $1.3 billion and $1.5 billion. These guarantees have various maturities ranging from two to five years. At December 31, 2008 and 2007, the Corporation had not made a payment under these products and has assessed the probability of payments under these guarantees as remote. The Corporation has entered into additional guarantee agreements, including lease end obligation agreements, partial credit guarantees on certain leases, real estate joint venture guarantees, sold risk participation swaps and sold put options that require gross settlement. The maximum potential future payment under these agreements was approximately $7.3 billion and $4.8 billion at December 31, 2008 and 2007. The estimated maturity dates of these obligations are between 2009 and 2033. The Corporation has made no material payments under these guarantees. For additional information on recourse obligations related to residential mortgage loans sold and other guarantees related to securitizations, see Note 8 – Securitizations to the Consolidated Financial Statements. This excerpt taken from the BAC 10-Q filed May 7, 2009. Other Guarantees The Corporation also sells products that guarantee the return of principal to investors at a preset future date. These guarantees cover a broad range of underlying asset classes and are designed to cover the shortfall between the market value of the underlying portfolio and the principal amount on the preset future date. To manage its exposure, the Corporation requires that these guarantees be backed by structural and investment constraints and certain pre-defined triggers that would require the underlying assets or portfolio to be liquidated and invested in zero-coupon bonds that mature at the preset future date. The Corporation is required to fund any shortfall at the preset future date between the proceeds of the liquidated assets and the purchase price of the zero-coupon bonds. These guarantees are booked as derivatives and marked to market in the trading portfolio. At both March 31, 2009 and December 31, 2008, the notional amount of these guarantees totaled $1.3 billion. These guarantees have various maturities ranging from two to five years. At March 31, 2009 and December 31, 2008, the Corporation had not made a payment under these products and has assessed the probability of payments under these guarantees as remote. The Corporation has entered into additional guarantee agreements, including lease end obligation agreements, partial credit guarantees on certain leases, real estate joint venture guarantees, sold risk participation swaps and sold put options that require gross settlement. The maximum potential future payment under these agreements was approximately $7.7 billion and $7.3 billion at March 31, 2009 and December 31, 2008. The estimated maturity dates of these obligations are between 2009 and 2033. The Corporation has made no material payments under these guarantees.
48
Table of ContentsFor additional information on recourse obligations related to residential mortgage loans sold and other guarantees related to securitizations, see Note 8 – Securitizations.
This excerpt taken from the BAC 10-K filed Feb 27, 2009. Other Guarantees The Corporation also sells products that guarantee the return of principal to investors at a preset future date. These guarantees cover a broad range of underlying asset classes and are designed to cover the shortfall between the market value of the underlying portfolio and the principal amount on the preset future date. To manage its exposure, the Corporation requires that these guarantees be backed by structural and investment constraints and certain pre-defined triggers that would require the underlying assets or portfolio to be liquidated and invested in zero-coupon bonds that mature at the preset future date. The Corporation is required to fund any shortfall at the preset future date between the proceeds of the liquidated assets and the purchase price of the zero-coupon bonds. These guarantees are booked as derivatives and marked to market in the trading portfolio. At December 31, 2008 and 2007, the notional amount of these guarantees totaled $1.3 billion and $1.5 billion. These guarantees have various maturities ranging from two to five years. At December 31, 2008 and 2007, the Corporation had not made a payment under these products and has assessed the probability of payments under these guarantees as remote. The Corporation has entered into additional guarantee agreements, including lease end obligation agreements, partial credit guarantees on certain leases, real estate joint venture guarantees, sold risk participation swaps and sold put options that require gross settlement. The maximum potential future payment under these agreements was approximately $7.3 billion and $4.8 billion at December 31, 2008 and 2007. The estimated maturity dates of these obligations are between 2009 and 2033. The Corporation has made no material payments under these guarantees. For additional information on recourse obligations related to residential mortgage loans sold and other guarantees related to securitizations, see Note 8 – Securitizations to the Consolidated Financial Statements. This excerpt taken from the BAC 8-K filed Feb 25, 2009. Other
Guarantees
Merrill Lynch provides indemnifications related to the
U.S. tax treatment of certain foreign tax planning
transactions. The maximum exposure to loss associated with these
transactions at December 26, 2008 is $167 million;
however, Merrill Lynch believes that the likelihood of loss with
respect to these arrangements is remote, and therefore has not
recorded any liabilities in respect of these guarantees.
In connection with providing supplementary protection to its
customers, MLPF&S holds insurance in excess of that
furnished by the Securities Investor Protection Corporation
(“SIPC”), and MLI holds insurance in excess of the
protection provided by the United Kingdom Compensation Scheme
(Financial Services Compensation Scheme, “FSCS”). The
policy provides total combined coverage up to $1 billion in
the aggregate (including up to $1.9 million per customer
for cash) for losses incurred by customers in excess of the SIPC
and/or FSCS
limits. ML & Co. provides full indemnity to the policy
provider syndicate against any losses as a result of this
agreement. No contingent liability is carried in the
Consolidated Balance Sheets for this indemnification as the
potential for Merrill Lynch to be required to make payments
under this agreement is remote.
Note 12. Employee Benefit Plans
See Note 1 for a discussion of the Bank of America
acquisition, which was completed on January 1, 2009. The
following disclosures reflect Merrill Lynch’s historical
employee benefit plan information for all periods presented. The
disclosures do not reflect the effects of the January 1,
2009 acquisition by Bank of America or the effects of any
employee benefit plan modifications that may occur as a result
of the acquisition.
Merrill Lynch provides pension and other postretirement benefits
to its employees worldwide through defined contribution pension,
defined benefit pension and other postretirement plans. These
plans vary based on the country and local practices. Merrill
Lynch reserves the right to amend, modify or terminate any of
its employee plans, programs and practices for any reason at any
time without prior notice to employees. Merrill Lynch’s (or
its successor’s) decision to amend, replace or terminate
any of the plans may be due to changes in federal law or state
laws, including the requirements of the Internal Revenue Code or
ERISA, or for any other reason.
Merrill Lynch accounts for its defined benefit pension plans in
accordance with SFAS No. 158, Employers’
Accounting for Defined Benefit Pension and Other Postretirement
Plans — an amendment of FASB Statements No. 87,
88, 106, and 132(R), SFAS No. 87,
Employers’ Accounting for Pensions and
SFAS No. 88, Employers’ Accounting for
Settlements and Curtailments of Defined Benefit Pension Plans
and for Termination Benefits. Its postretirement benefit
plans are accounted for in accordance with
SFAS No. 106, Employers’ Accounting for
Postretirement Benefits Other Than Pensions. Merrill Lynch
discloses information regarding defined benefit pension and
postretirement plans in accordance with
SFAS No. 132(R), Employers’ Disclosures about
Pensions and Other Postretirement Benefits. Postemployment
benefits are accounted for in accordance with
SFAS No. 112, Employers’ Accounting for
Postemployment Benefits.
SFAS No. 158 requires an employer to recognize the
overfunded and underfunded status of its defined benefit pension
and other postretirement plans, measured as the difference
between the fair value of plan assets and the benefit
obligation, as an asset or liability in its statement of
financial condition. The benefit obligation is defined as the
projected benefit obligation for pension plans and the
accumulated postretirement benefit obligation for postretirement
plans. SFAS No. 158 also requires defined benefit plan
assets and benefit obligations to be measured as of the date of
the Company’s fiscal year end. Merrill Lynch had
historically used a September 30 measurement date. Under the
provisions of SFAS No. 158, Merrill Lynch has changed
its measurement date to coincide with its fiscal year end
effective December 26, 2008. Merrill Lynch adopted the
measurement date provisions of SFAS No. 158 under the
alternative transition method.
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