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Federal Reserve Bank
of New York
Annual Report
For the year ended
December 31, 2012

Second Federal Reserve District

Federal Reserve Bank of New York
33 Liberty Street
New York, N.Y. 10045-0001
Phone: (212) 720-5000

www.newyorkfed.org

Federal Reserve bank of New York
2012 annual report

May 2013

To the Depository Institutions in
the Second Federal Reserve District:

It is my pleasure to send you the ninety-eighth annual report of the Federal Reserve
Bank of New York, covering the year 2012.
Following the “Letter from the President,” the 2012 Annual Report presents detailed
tables, with extensive notes, on the Bank’s f inancial condition.
I hope you will find the information we present interesting and useful.

William C. Dudley
President

Contents
Letter from the President

Management’s Report on Internal Control
over Financial Reporting

External Auditor Independence

Consolidated Financial Statements

Directors of the Federal Reserve Bank of New York

107

Advisory Groups

113

Officers of the Federal Reserve Bank of New York

121

Map of the Second Federal Reserve District

139

Letter from
the President

Federal Reserve bank of New York
2012 annual report

LETTER FROM THE PRESIDENT

Financial Stability: Progress, but More
Work to Be Done

inancial stability is central to the Federal
Reserve’s mission as a central bank. As the
recent financial crisis demonstrated so painfully, we cannot achieve our dual mandate of full
employment and price stability if financial instability disrupts the availability of credit and other
financial services to households and businesses.
In the aftermath of the crisis, the New York
Fed has been working with colleagues in the
Federal Reserve System, as well as other agencies
and regulators in the United States and around
the world, to make our financial system more
resilient. Our common aim is to strengthen the
financial system and improve our capacity to
identify, monitor, and mitigate emerging threats
to financial stability.
Such threats to financial stability can either
emerge from within the financial system itself or
arise from external shocks. Both types of shocks
can be amplified by vulnerabilities in the system.
While it is impossible to predict the nature or
timing of all risk events, we can make the financial system less prone to generate excesses and
address structural weaknesses that magnify and
propagate stress.
Because the United States—and, increasingly, countries around the globe—have a capital markets–based financial system, these efforts

have to take place both at the level of the individual firms under our supervision and at the
level of market infrastructures and practices.
In this letter, I will highlight some of the
significant and wide-ranging contributions our
staff has made to important financial sector
reform initiatives over the past year. Since our
work is ongoing, I will also highlight components of the overall architecture that are still in
need of construction or repair.
A special problem still in the “in need of
construction or repair” category is ending what
is popularly known as the “too-big-to-fail”
(TBTF) problem. The underlying problem is
that the potential disorderly failure of a large,
complex financial firm can generate significant
negative externalities for society—externalities
that the firm and its suppliers of capital have no
incentive to internalize in advance, unless they
are forced to do so by regulators.

Threats to financial
stability can either emerge
from within the financial
system itself or arise from
external shocks. . . . While
it is impossible to predict
the nature or timing of all
risk events, we can make
the financial system less
prone to generate excesses
and address structural
weaknesses that magnify
and propagate stress.

By creating a perception that large, complex
firms will not be allowed to fail, the TBTF phenomenon risks creating a funding subsidy for
such institutions. This is bad not only because it
creates an un-level playing field between larger
and smaller institutions, but also because it may
create incentives for financial institutions to
become even larger and more complex, thereby
increasing the degree of systemic risk in the
financial system.

TBTF cannot be ended simply by pledging
in normal times never to intervene to prevent
the failure of large, complex firms. Markets will
view this as a “time-inconsistent” statement—
one that will be reneged upon if a crisis situation
emerges because the cost of a messy failure of
a large, complex firm to workers, families, and
businesses that had nothing to do with the
firm’s own risk taking would be intolerably high.

In 2012, the Federal
Reserve worked with
our sister agencies to
strengthen . . . financial
institutions. . . . As part
of the Bank’s ongoing
supervisory activities at
firms headquartered in
our District, we focused on
corporate governance, risk
culture, and information
systems in an effort to
bolster the management
of these firms and hence
the financial system.

Ending TBTF requires more than this: it
requires reducing the cost to society when large,
complex firms fail and eliminating any perverse
incentives for firms to become bigger or more
systemically important. My view is that we
should seek to do this in a way that preserves to
the greatest extent possible such social benefits
as come with scale and scope in finance.
The New York Fed is committed to doing all
that we can within our authority to end TBTF
in a way consistent with the public interest and
the balancing of social cost and benefit. Aspects
of this effort run through much of our execution of the Federal Reserve’s financial stability
agenda.

Making Firms More Resilient
and More Resolvable
The Bank plays an important role in the Federal
Reserve System’s efforts to make the firms under
our supervision more resilient and resolvable.
Large bank holding companies remain important building blocks of our financial system and
are deeply integrated with our capital markets.
Governance, business models, and risk
In 2012, the Federal Reserve worked with our
sister agencies to strengthen these financial institutions, thereby reducing the risk of failure. As
part of the Bank’s ongoing supervisory activities at firms headquartered in our District, we

focused on corporate governance, risk culture,
and information systems in an effort to bolster
the management of these firms and hence the
financial system.
As we deepen the reorganization of our
supervisory activities begun in 2010, we continue to focus on a better understanding of the
business models and risks of these firms. This
includes challenging senior management and
boards of directors to ensure that their risk management practices are strong enough to promote
sound decision making throughout the organization—from top to bottom and side to side.
Capital
In the United States and internationally, regulators have focused on raising both the quantity
and quality of capital held by major banks, with
the aim of making them more resilient. One
effort where the Bank has made substantial contributions is the design, modeling, and analysis
of the Federal Reserve System’s Comprehensive
Capital Analysis and Review (CCAR).
In this year’s CCAR exercise, a substantial
number of Bank staff—more than 10 percent
of the Bank—contributed to System efforts to
promote the development and maintenance
of robust, forward-looking capital planning at
bank holding companies. The exercise is aimed
at ensuring that firms have sufficient capital to
continue operations during periods of severe
economic and financial market stress. Since
firm management—or we, as supervisors—will
never be able to identify every emerging risk,
it is important to ensure that firms have the
capacity to withstand a wide range of negative
events, and the CCAR has emerged as one of
the Federal Reserve’s most important tools for
this resiliency.

Federal Reserve bank of New York
2012 annual report

Liquidity
In addition to our work on capital assessment,
the Bank has been a leader in developing and
applying methods of evaluating the liquidity of
large financial institutions. Liquidity, like capital, is a bulwark against unforeseen shocks;
higher liquidity serves as a buffer so that firms
do not have to sell illiquid assets at the first signs
of stress.
Led by staff from the Office of Financial
Stability and Regulatory Policy and the
Financial Institution Supervision Group
(FISG), the Bank has contributed to the
development of the liquidity coverage ratio—a
measure of the amount of liquid assets that
banks should hold to cover short-term stress.
The Bank offered insight on the Basel liquidity reforms through participation in the Basel
Committee on Banking Supervision and the
Bank for International Settlements’ Committee
on the Global Financial System. One of our
senior leaders served as the co-chair of the Basel
Committee’s Working Group on Liquidity—
which was instrumental in the Committee’s
establishment of global liquidity standards.
In addition, Bank staff helped direct System
efforts on the design and execution of an innovative approach to horizontal liquidity analysis
and review, including the evaluation of liquidity
risk-management practices as well as liquidity
adequacy.
Recovery and resolution planning
No matter how much capital or liquidity a
financial institution has, there is always some
risk that it will fail. To end TBTF, our goal is to
make it so that when a firm does get in distress,
the costs to society of a failure are low enough
that policymakers do not feel compelled to
intervene.

On this front, New York Fed staff are working with our colleagues at the Federal Deposit
Insurance Corporation and across the Federal
Reserve to strengthen recovery and resolution
planning as a discipline for the large financial firms under our supervision. The Bank
has committed substantial supervisory and legal
resources to the analysis of the “living wills”
generated by the largest bank holding companies—statutorily mandated plans for the orderly
wind-down of failing financial firms, designed to
limit potential risks to financial stability.
This effort has generated significant insights
into both the complex interconnections of the
largest global banking organizations and the
challenges such complexity poses for orderly resolution. While the efforts of our staff have been
substantial, much more work remains before
the costs of a TBTF institution’s failure can be
reduced to a tolerable level.
In this regard, the Bank is working with
regulators around the world to determine how
the official sector can manage the failure of a
cross-border banking organization in a way that
does not disrupt the global financial system. Our
contributions have included substantial intellectual input on global financial stability work
in support of the Financial Stability Board’s
Resolution Steering Group.

Financial stability
cannot be achieved at the
level of the individual
firm alone. It requires
stable and robust market
infrastructures as well,
so that the system as a
whole will not generate
excesses or amplify shocks
and can absorb the
failure of even the largest
firms while continuing
to supply credit to the
economy.

Making Markets More Stable
and Robust to Shocks
Financial stability cannot be achieved at the
level of the individual firm alone. It requires
stable and robust market infrastructures as well,
so that the system as a whole will not generate
excesses or amplify shocks and can absorb the
failure of even the largest firms while continuing
to supply credit to the economy.

In 2012, the Bank contributed to multiple
workstreams focused on improving financial
stability through better market infrastructure.
Key efforts included supporting reforms in the
tri-party repo system, money market funds,
over-the-counter (OTC) derivatives, and foreign
exchange settlement. Significant work was also
carried out to support the stability of financial
market infrastructures.

In 2012, the Bank
contributed to multiple
workstreams focused
on improving financial
stability through better
market infrastructure. Key
efforts included supporting
reforms in the tri-party
repo system, money market
funds, over-the-counter
derivatives, and foreign
exchange settlement.

Tri-party repo system
The tri-party repo market is a large and important market where securities dealers fund a
substantial portion of firm and client assets.
The crisis revealed significant fragility in the
tri-party repo system. To help support financial
stability in this market in 2012, a cross-bank
team including contributors from FISG and the
Markets, Risk, and Research groups continued
their work with market participants to effect
changes in settlement infrastructure. The aim is
to help reduce the extension of intraday credit
within the tri-party repo market and to improve
dealers’ liquidity risk-management practices.
To this end, the Bank intensified its direct
oversight of market participants to make the
infrastructure changes necessary to reduce reliance on intraday credit and worked with brokerdealers affiliated with bank holding companies
and foreign banking organizations to improve
risk-management practices.
Money market funds
In 2012, the Bank continued to support reform
in the money market fund business. The crisis
made clear that the monies provided to the
money market mutual funds by their own investors are inherently unstable and susceptible
to runs in times of panic. Investors in money
market funds with a fixed net asset value can
take money out on a daily basis at par value,

with no redemption penalty. This can occur
even if the money market fund does not have
sufficient cash or liquid assets to meet all potential redemptions. This creates an incentive for
investors to be the first to get out whenever
there is any uncertainty about the underlying
value of the assets in the fund. The size of the
money market fund sector and its interconnectedness with the rest of the financial system make
reform of these vulnerabilities crucial.
While the primary responsibility for implementing money market fund reform lies with
the U.S. Securities and Exchange Commission,
the Bank provided substantial analysis to policymakers on reform alternatives, with leadership
from staff in the Research Group and the Office
of Financial Stability and Regulatory Policy.
In early 2013, I personally joined with the
presidents of the other eleven Reserve Banks to
offer our public support for reform in this market.
OTC derivatives
The Bank continues its work in support of
stability in the OTC derivatives markets. As
the supervisor of the financial institutions most
active in the OTC derivatives markets, the Bank
understands that resilient and well-functioning
OTC derivatives markets are an important component of the financial markets and the broader
global economy. In 2012, Bank staff, led by
FISG, contributed to efforts to ensure that the
derivatives clearance and settlement activities at
supervised firms (currently being transitioned
to the new regulatory regime under the DoddFrank Wall Street Reform and Consumer
Protection Act) are being conducted in a safe
and sound manner.
Further, the Bank helped advance the Group
of Twenty’s OTC derivatives reform agenda and
collaborated with domestic and international

Federal Reserve bank of New York
2012 annual report

authorities on a variety of initiatives to support
implementation of OTC derivatives reform.
Internationally, the Bank co-chaired the
Financial Stability Board’s OTC Derivatives
Working Group, which monitors progress in
implementing the Group of Twenty’s commitments on central clearing, reporting to
trade repositories, and trading on organized
platforms. In addition, Bank staff, and particularly Risk and FISG staff, contributed to the
Working Group on Margining Requirements of
the Basel Committee on Banking Supervision
and the International Organization of Securities
Commissions, which will soon finalize a policy
framework that establishes minimum standards for margin requirements for non-centrally
cleared derivatives.
Resiliency in the foreign exchange market
The Bank has special responsibilities for supporting stability and resiliency in the foreign
exchange market. This market is the most liquid
sector of global financial markets, and the one
that generates the largest amount of daily crossborder payments. The Bank led a working group,
sponsored by the Basel Committee on Banking
Supervision and the Bank for International
Settlements’ Committee on Payment and
Settlement Systems, that revised supervisory
guidance on risks linked to the settlement of
foreign exchange transactions. The updated
guidance expands on and replaces a version published in 2000, covers a broader range of risks,
and reflects the significant changes in the foreign
exchange market during the past decade.1 The

guidance serves as a basis for the Bank to facilitate further discussions on sound practices with
other regulators and the industry, and will be
integrated with the Bank’s supervisory program.
Financial market infrastructure
Another area where the Bank provided leadership this year was the strengthening of the financial market utilities, multilateral systems that
link financial institutions through the transfer, clearing, or settling of payments, securities,
or other financial transactions. Regulators and
supervisors are working together to ensure that
the utilities have appropriate governance, risk‑
management practices, and resources. In addition, the Bank is collaborating with regulators
to develop an enhanced ability to look at utilities across the Second District in a consistent
way and aims to use this “lens” to identify and
address sources of systemic risk.2
Again, this aspect of the Bank’s work has
international dimensions. For example, I served
as chairman of the Committee on Payment
and Settlement Systems of the Bank for
International Settlements through the spring
of last year and, together with other Bank staff,
worked with central bankers and practitioners
around the globe to finalize new principles for
financial market infrastructures. These international principles for financial market infrastructures are aimed at substantially raising the
bar for resiliency. This effort and other global
engagements will help ensure that we are moving toward a more resilient financial system.

We have made significant
progress in increasing the
stability of the world’s
financial system, but
the task of reforming
the system remains
incomplete. . . . Much
more must be done to
ensure that the financial
system is robust enough
to absorb shocks and still
provide the credit needed
for economic growth and
job creation.

1 Supervisory Guidance for Managing Risks Associated with the Settlement of Foreign Exchange Transactions,

published by the Basel Committee and the Committee on Payment and Settlement Systems in February 2013
(available at https://www.bis.org/publ/bcbs241.htm).

2 As outlined in Risk Management Supervision of Designated Clearing Entities, prepared by the Commodity

Futures Trading Commission, the Securities and Exchange Commission, and the Board of Governors of the
Federal Reserve System (available at http://www.sec.gov/news/studies/2011/813study.pdf).

Unfinished Business
We have made significant progress in increasing
the stability of the world’s financial system, but
the task of reforming the system remains incomplete and uneven. Much more must be done to
ensure that the financial system is robust enough
to absorb shocks and still provide the credit
needed for economic growth and job creation.

Improved financial
stability will also
require more
collaboration at home
and internationally.
After the crisis, it
became evident that
the regulatory and
supervisory framework
had not kept up
with the changes
in size, complexity,
interconnectedness,
and globalization that
created growing systemic
risk externalities.

While we must be alert for unintended con
sequences and open to learning as we go, we
must also recognize that changes to the scale and
profitability of activities that were artificially
inflated by flaws in the system pre-crisis are not
unintended—they are necessary and intended
consequences of reform.
Living wills and resolution
We have much work still to do to reduce the
cost to society of the failure of large, complex
financial institutions. This is the key to resolving the TBTF problem. Changes to corporate
organization and market practices, along with
deep collaboration between regulators in different jurisdictions, will likely be needed to make
the orderly resolution of internationally active
firms truly credible.
Wholesale funding, market structures,
and OTC derivatives reform
While much has been done over the past few
years to mitigate the structural flaws that make
wholesale funding a point of weakness in the
global financial system, some important issues
and vulnerabilities remain. Tri-party repo reform
still has considerable work to do, including
completion of infrastructure reform and better
contingency planning by market participants—
particularly in the dimension of addressing the
nexus of run risk, fire-sale risk, and resulting
financial instability.

Going forward, we need to look at the larger
issue of the appropriate role of wholesale funding in the financial system. We need to evaluate
how comfortable we should be with a system
in which critical financial activities continue to
be financed with short-term wholesale funding
beyond the scope of the type of lender-of-lastresort facility that reduces the risk of runs and
asset fire sales that can threaten the stability of
the entire financial system.
We also need to press ahead on OTC derivatives reform. The goal is fewer bespoke trades and
more standardized trades. If regulators, financial
market infrastructures, and market participants
make the effort, the financial system will be
safer, more resilient, and more transparent. The
reforms under way, if properly executed, should
over time significantly reduce the shortcomings
in the OTC derivatives market that exacerbated
the financial crisis.
Collaboration at home and internationally
Improved financial stability will also require
more collaboration at home and internationally.
After the crisis, it became evident that the regulatory and supervisory framework had not kept
up with the changes in size, complexity, interconnectedness, and globalization that created
growing systemic risk externalities and widened
the wedge between private and social costs in the
event of stress.
In a globally integrated financial system, it
is essential that we have effective coordination between regulators within and between
countries. Such coordination allows us to better respond to crises and to avoid pernicious
regulatory arbitrage that can foster excessive
risk taking. We can do better through international cooperation and coordination, both

Federal Reserve bank of New York
2012 annual report

on macroeconomic policy and on regulation
and supervision, than by trying to “go it alone.”
In the United States, the creation of the
Financial Stability Oversight Council and
the implementation of the Dodd-Frank Act
strengthen the mandate for coordination across
the U.S. regulatory system on financial sta
bility issues. My Bank colleagues and I are also
involved in international efforts to secure financial stability. These global efforts align with our
efforts at home to strengthen both market infrastructures and the largest financial institutions.
The way forward
The task of securing financial stability will never
be truly complete. A dynamic financial system,

in intermediating between savers and borrowers
and in allowing for efficient capital formation,
will always have the potential to tip toward
instability. As central bankers and regulators, we
will need to continue the work of watching for
symptoms of instability and intervening to correct when things threaten to go awry.
That said, the recent financial crisis carried stiff
costs for society and hard lessons for the central
banking community. We are on the path to
learning from this episode and to addressing our
shortcomings—in understanding the vulnerabilities of wholesale funding and in grappling
with the complexities and costs of too-big-to-fail
institutions. We are not where we need to be
yet, but we are determined to get there.

William C. Dudley
July 2013

Management’s Report
on Internal Control
over Financial Reporting

Federal Reserve bank of New York
2012 annual report
Management’s Report on Internal Control over Financial Reporting

To the Board of Directors of
the Federal Reserve Bank of New York:

March 14, 2013

The management of the Federal Reserve Bank of New York (Bank) is responsible for the
preparation and fair presentation of the Consolidated Statements of Condition as of December 31,
2012 and 2011, the Consolidated Statements of Income and Comprehensive Income, and the
Consolidated Statements of Changes in Capital for the years then ended (the financial statements).
The financial statements have been prepared in conformity with the accounting principles, policies,
and practices established by the Board of Governors of the Federal Reserve System as set forth in the
Financial Accounting Manual for Federal Reserve Banks (FAM), and, as such, include some amounts
that are based on management judgments and estimates. To our knowledge, the financial statements
are, in all material respects, fairly presented in conformity with the accounting principles, policies, and
practices documented in the FAM and include all disclosures necessary for such fair presentation.
The management of the Bank is responsible for establishing and maintaining effective internal
control over financial reporting as it relates to the financial statements. The Bank’s internal control
over financial reporting is designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external reporting purposes in accordance
with the FAM. The Bank’s internal control over financial reporting includes those policies and
procedures that (i) pertain to the maintenance of records that in reasonable detail accurately and fairly
reflect the transactions and dispositions of the Bank’s assets; (ii) provide reasonable assurance that
transactions are recorded as necessary to permit preparation of financial statements in accordance with
the FAM, and that the Bank’s receipts and expenditures are being made only in accordance with
authorizations of its management and directors; and (iii) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition of the Bank’s assets that
could have a material effect on its financial statements.
Even effective internal control, no matter how well designed, has inherent limitations, including
the possibility of human error, and therefore can provide only reasonable assurance with respect to the
preparation of reliable financial statements. Also, projections of any evaluation of effectiveness to
future periods are subject to the risk that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or procedures may deteriorate.
The management of the Bank assessed its internal control over financial reporting based upon the
criteria established in the Internal Control–Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission. Based on this assessment, we believe that the
Bank maintained effective internal control over financial reporting.

William C. Dudley
President

Christine M. Cumming Edward F. Murphy
First Vice President Principal Financial Officer

External Auditor
Independence

Federal Reserve bank of New York
2012 annual report

EXTERNAL AUDITOR INDEPENDENCE
The Board of Governors engaged Deloitte
& Touche LLP (D&T) to audit the 2012
combined and individual financial statements of
the Reserve Banks and those of the consolidated
LLC entities.1 In 2012, D&T also conducted
audits of internal controls over financial
reporting for each of the Reserve Banks, Maiden
Lane LLC, Maiden Lane III LLC, and TALF
LLC. Fees for D&T’s services totaled $7 million,
of which $1 million was for the audits of the

consolidated LLC entities. To ensure auditor
independence, the Board requires that D&T be
independent in all matters relating to the audits.
Specifically, D&T may not perform services
for the Reserve Banks or others that would
place it in a position of auditing its own work,
making management decisions on behalf of the
Reserve Banks, or in any other way impairing its
audit independence. In 2012, the Bank did not
engage D&T for any non-audit services.

1 In addition, D&T audited the Office of Employee Benefits of the Federal Reserve System (OEB), the

Retirement Plan for Employees of the Federal Reserve System (System Plan), and the Thrift Plan for
Employees of the Federal Reserve System (Thrift Plan). The System Plan and the Thrift Plan provide
retirement benefits to employees of the Board, the Federal Reserve Banks, and the OEB.

Consolidated Financial
Statements

Federal Reserve bank of New York
2012 annual report
Independent Auditors’ Report

To the Board of Governors
of the Federal Reserve System
and the Board of Directors
of the Federal Reserve Bank of New York:
We have audited the accompanying consolidated financial statements of the Federal Reserve Bank of
New York and its subsidiaries (collectively “FRB New York”), which are comprised of the consolidated
statements of condition as of December 31, 2012 and 2011, and the related consolidated statements of
income and comprehensive income, and of changes in capital for the years then ended, and the related notes
to the consolidated financial statements. We also have audited the FRB New York’s internal control over
financial reporting as of December 31, 2012, based on criteria established in Internal Control–Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.
Management’s Responsibility
The FRB New York’s management is responsible for the preparation and fair presentation of these
consolidated financial statements in accordance with accounting principles established by the Board
of Governors of the Federal Reserve System (the “Board”) as described in Note 3 to the consolidated
financial statements. The Board has determined that this basis of accounting is an acceptable basis for
the preparation of the FRB New York’s consolidated financial statements in the circumstances. The FRB
New York’s management is also responsible for the design, implementation, and maintenance of internal
control relevant to the preparation and fair presentation of consolidated financial statements that are free
from material misstatement, whether due to fraud or error. The FRB New York’s management is also
responsible for its assertion of the effectiveness of internal control over financial reporting, included in the
accompanying Management’s Report on Internal Control over Financial Reporting.
Auditors’ Responsibility
Our responsibility is to express an opinion on these consolidated financial statements and an opinion on
the FRB New York’s internal control over financial reporting based on our audits. We conducted our
audits of the consolidated financial statements in accordance with auditing standards generally accepted
in the United States of America and in accordance with the auditing standards of the Public Company
Accounting Oversight Board (United States) (“PCAOB”) and we conducted our audit of internal control
over financial reporting in accordance with attestation standards established by the American Institute
of Certified Public Accountants and in accordance with the auditing standards of the PCAOB. Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free from material misstatement and whether effective internal control over financial reporting was maintained in all material respects.
An audit of the consolidated financial statements involves performing procedures to obtain audit
evidence about the amounts and disclosures in the consolidated financial statements. The procedures
selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement
of the consolidated financial statements, whether due to fraud or error. In making those risk assessments,

the auditor considers internal control relevant to the FRB New York’s preparation and fair presentation
of the consolidated financial statements in order to design audit procedures that are appropriate in the
circumstances. An audit of the consolidated financial statements also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by
management, as well as evaluating the overall presentation of the consolidated financial statements. An
audit of internal control over financial reporting involves obtaining an understanding of internal control
over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design
and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our audit opinions.
Definition of Internal Control over Financial Reporting
The FRB New York’s internal control over financial reporting is a process designed by, or under the supervision of, the FRB New York’s principal executive and principal financial officers, or persons performing
similar functions, and effected by the FRB New York’s board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation
of consolidated financial statements for external purposes in accordance with the accounting principles
established by the Board. The FRB New York’s internal control over financial reporting includes those
policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately
and fairly reflect the transactions and dispositions of the assets of the FRB New York; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial
statements in accordance with the accounting principles established by the Board, and that receipts and
expenditures of the FRB New York are being made only in accordance with authorizations of management and directors of the FRB New York; and (3) provide reasonable assurance regarding prevention or
timely detection and correction of unauthorized acquisition, use, or disposition of the FRB New York’s
assets that could have a material effect on the consolidated financial statements.
Inherent Limitations of Internal Control over Financial Reporting
Because of the inherent limitations of internal control over financial reporting, including the possibility
of collusion or improper management override of controls, material misstatements due to error or fraud
may not be prevented or detected and corrected on a timely basis. Also, projections of any evaluation of the
effectiveness of the internal control over financial reporting to future periods are subject to the risk that
the controls may become inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.

Federal Reserve bank of New York
2012 annual report

Opinions
In our opinion, the consolidated financial statements referred to above present fairly, in all material
respects, the financial position of the FRB New York as of December 31, 2012 and 2011, and the results
of its operations for the years then ended in accordance with the basis of accounting described in Note 3
to the consolidated financial statements. Also, in our opinion, the FRB New York maintained, in all
material respects, effective internal control over financial reporting as of December 31, 2012, based on
the criteria established in Internal Control–Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission.
Basis of Accounting
We draw attention to Note 3 to the consolidated financial statements, which describes the basis of
accounting. The FRB New York has prepared these consolidated financial statements in conformity
with accounting principles established by the Board, as set forth in the Financial Accounting Manual for
Federal Reserve Banks, which is a basis of accounting other than accounting principles generally accepted
in the United States of America. The effects on such consolidated financial statements of the differences
between the accounting principles established by the Board and accounting principles generally accepted
in the United States of America are also described in Note 3 to the consolidated financial statements. Our
opinion is not modified with respect to this matter.

March 14, 2013
New York, New York

CONSOLIDATED STATEMENTS OF CONDITION
As of December 31, 2012, and December 31, 2011
(in millions)
ASSETS

2012

2011

Gold certificates
$
3,824
$
3,866
Special drawing rights certificates
1,818
1,818
Coin
90
80
Loans:
Depository institutions
18
9
Term Asset-Backed Securities Loan Facility
(measured at fair value)
560
9,059
System Open Market Account:
Treasury securities, net
(of which $5,124 and $7,032 are lent as of
December 31, 2012 and 2011, respectively)
1,014,329
813,954
Government-sponsored enterprise debt
securities, net (of which $391 and $593 are lent
as of December 31, 2012 and 2011, respectively)
44,560
50,144
Federal agency and government-sponsored enterprise
mortgage-backed securities, net
532,801
394,477
Foreign-currency-denominated assets, net
8,056
7,516
Central bank liquidity swaps
2,867
28,912
Other investments
13
—
Investments held by consolidated variable interest entities
(of which $2,266 and $35,593 are measured at fair
value as of December 31, 2012 and 2011, respectively)
2,750
35,693
Accrued interest receivable
10,612
9,160
Bank premises and equipment, net
471
310
Deferred asset—interest on Federal Reserve notes
—
378
Interdistrict settlement account
—
274,474
Other assets
199
248
Total assets $1,622,968 $1,630,098

The accompanying notes are an integral part of these consolidated financial statements.

Federal Reserve bank of New York
2012 annual report

CONSOLIDATED STATEMENTS OF CONDITION
As of December 31, 2012, and December 31, 2011
(in millions)
LIABILITIES AND CAPITAL 2012
Federal Reserve notes outstanding, net
$ 385,008
System Open Market Account:
Securities sold under agreements to repurchase
60,096
Other liabilities
1,781
Consolidated variable interest entities:
Beneficial interest in consolidated variable
interest entities (measured at fair value)
803
Other liabilities (of which $71 and $106 are measured
at fair value as of December 31, 2012 and 2011, respectively)
415
Deposits:
Depository institutions
917,383
Treasury, general account
92,720
Other deposits
33,744
Interest payable to depository institutions
124
Accrued benefit costs
2,395
Accrued interest on Federal Reserve notes
831
Interdistrict settlement account
110,116
Other liabilities
62
Total liabilities
Capital paid-in
Surplus (including accumulated other
comprehensive loss of $4,475 and $4,541
at December 31, 2012 and 2011, respectively)
Total capital
Total liabilities and capital

2011
$

376,865
46,458
636

9,845
690
1,024,868
85,737
64,850
121
2,577
—
—
97

1,605,478

1,612,744

8,745

8,677

8,745

8,677

17,490

17,354

$1,622,968

$1,630,098

The accompanying notes are an integral part of these consolidated financial statements.

CONSOLIDATED STATEMENTS OF INCOME
AND COMPREHENSIVE INCOME
For the years ended December 31, 2012, and December 31, 2011
(in millions)
INTEREST INCOME
2012 2011
Loans:
Term Asset-Backed Securities Loan Facility
$
80
$ 265
American International Group, Inc., net
—
409
System Open Market Account:
Treasury securities, net 24,774 19,068
Government-sponsored enterprise debt securities, net 1,395 1,365
Federal agency and government-sponsored enterprise
mortgage-backed securities, net 16,671 17,138
Foreign-currency-denominated assets, net
44
72
Central bank liquidity swaps
76
10
Other investments
5
—
Investments held by consolidated variable interest entities 1,110 3,429
Total interest income 44,155 41,756
INTEREST EXPENSE
System Open Market Account:
Securities sold under agreements to repurchase
Beneficial interest in consolidated variable interest entities
Deposits:
Depository institutions
Term Deposit Facility
Total interest expense
Net interest income

77
153

19
285

2,575
2

2,492
3

2,807

2,799

41,348

38,957

The accompanying notes are an integral part of these consolidated financial statements.

Federal Reserve bank of New York
2012 annual report

Consolidated STATEMENTS OF INCOME
And COMPREHENSIVE INCOME
For the years ended December 31, 2012, and December 31, 2011
(in millions)
2012 2011
NONINTEREST INCOME (LOSS)
Term Asset-Backed Securities Loan Facility, unrealized losses
System Open Market Account:
Treasury securities gains, net
Federal agency and government-sponsored enterprise
mortgage-backed securities gains, net
Foreign currency translation gains (losses), net
Consolidated variable interest entities:
Investments held by consolidated variable
interest entities gains (losses), net
Beneficial interest in consolidated variable
interest entities gains (losses), net
Dividends on preferred interests
Income from services
Compensation received for service costs provided
Reimbursable services to government agencies
Other
Total noninterest income (loss)
OPERATING EXPENSES
Salaries and benefits
Occupancy
Equipment
Compensation paid for service costs incurred
Assessments:
Board of Governors operating expenses and currency costs
Bureau of Consumer Financial Protection
Office of Financial Research
Net periodic pension expense
Professional fees related to consolidated
variable interest entities
Other

$ (34)

(84)

7,151

1,050

124
(364)

5
44

7,451

(3,920)

(2,345)
—
82
3
124
14

491
47
75
3
115
73

12,206

(2,101)

592
68
22
32

535
67
25
33

306
123
1
637

267
71
12
513

25
200

71
236

2,006

1,830

Total operating expenses
Net income before interest on Federal Reserve notes
expense remitted to Treasury
Interest on Federal Reserve notes expense
remitted to Treasury
Net income
Change in prior service costs related to benefit plans
Change in actuarial losses related to benefit plans

51,548

35,026

51,023
525
180
(114)

32,432
2,594
32
(1,161)

Total other comprehensive income (loss)

(1,129)

$ 591

$ 1,465

Comprehensive income

The accompanying notes are an integral part of these consolidated financial statements.

Consolidated STATEMENTS OF CHANGES IN CAPITAL
For the years ended December 31, 2012, and December 31, 2011
(in millions, except share data)

Surplus

Accumulated
Net Other
Capital
Income Comprehensive Total Total
Paid-In Retained Income (Loss) Surplus Capital
Balance at December 31, 2010
(153,645,679 shares)

$ 7,682

$11,094

$ (3,412)

$7,682 $15,364

Net change in capital stock issued
(19,895,069 shares) 995
—
— —
995
Comprehensive income:
Net income — 2,594
—
2,594
2,594
Other comprehensive loss —
— (1,129)
(1,129) (1,129)
Dividends on capital stock — (470)
—
(470)
(470)
Net change in capital 995 2,124 (1,129)
995
1,990
Balance at December 31, 2011
(173,540,748 shares)
$8,677 $13,218 $(4,541)
$8,677 $17,354
Net change in capital stock issued
(1,367,438 shares) 68
—
— — 68
Comprehensive income:
Net income —
525
— 525 525
Other comprehensive income —
—
66 66 66
Dividends on capital stock — (523)
— (523)
(523)
Net change in capital 68
2
66 68
136
Balance at December 31, 2012
(174,908,186 shares)
$8,745 $13,220 $(4,475) $8,745 $17,490

The accompanying notes are an integral part of these consolidated financial statements.

Federal Reserve bank of New York
2012 annual report

FEDERAL RESERVE BANK
OF NEW YORK
Notes to Consolidated Financial Statements
1. STRUCTURE
The Federal Reserve Bank of New York (Bank) is part of the Federal Reserve System
(System) and is one of the twelve Federal Reserve Banks (Reserve Banks) created
by Congress under the Federal Reserve Act of 1913 (Federal Reserve Act), which
established the central bank of the United States. The Reserve Banks are chartered
by the federal government and possess a unique set of governmental, corporate, and
central bank characteristics. The Bank serves the Second Federal Reserve District,
which includes the State of New York; the twelve northern counties of New Jersey;
Fairfield County, Connecticut; the Commonwealth of Puerto Rico; and the U.S.
Virgin Islands.
In accordance with the Federal Reserve Act, supervision and control of the Bank
are exercised by a board of directors. The Federal Reserve Act specifies the composition
of the board of directors for each of the Reserve Banks. Each board is composed of nine
members serving three-year terms: three directors, including those designated as chairman and deputy chairman, are appointed by the Board of Governors of the Federal
Reserve System (Board of Governors) to represent the public, and six directors are
elected by member banks. Banks that are members of the System include all national
banks and any state-chartered banks that apply and are approved for membership.
Member banks are divided into three classes according to size. Member banks in each
class elect one director representing member banks and one representing the public.
In any election of directors, each member bank receives one vote, regardless of the
number of shares of Reserve Bank stock it holds.
In addition to the twelve Reserve Banks, the System also consists, in part, of the
Board of Governors and the Federal Open Market Committee (FOMC). The Board
of Governors, an independent federal agency, is charged by the Federal Reserve Act
with a number of specific duties, including general supervision over the Reserve Banks.
The FOMC is composed of members of the Board of Governors, the president of the
Bank and, on a rotating basis, four other Reserve Bank presidents.

2. OPERATIONS AND SERVICES
The Reserve Banks perform a variety of services and operations. These functions
include participating in formulating and conducting monetary policy; participating
in the payment system, including large-dollar transfers of funds, automated clearinghouse (ACH) operations, and check collection; distributing coin and currency; performing fiscal agency functions for the U.S. Department of the Treasury (Treasury),
certain federal agencies, and other entities; serving as the federal government’s bank;
providing short-term loans to depository institutions; providing loans to participants
in programs or facilities with broad-based eligibility in unusual and exigent circumstances; serving consumers and communities by providing educational materials and
information regarding financial consumer protection rights and laws and information
on community development programs and activities; and supervising bank holding
companies, state member banks, savings and loan holding companies, U.S. offices of
foreign banking organizations, and designated financial market utilities pursuant to
authority delegated by the Board of Governors. Certain services are provided to foreign and international monetary authorities, primarily by the Bank.
The FOMC, in conducting monetary policy, establishes policy regarding domestic open market operations, oversees these operations, and issues authorizations and
directives to the Bank to execute transactions. The FOMC authorizes and directs the
Bank to conduct operations in domestic markets, including the direct purchase and
sale of Treasury securities, government-sponsored enterprise (GSE) debt securities,
federal agency and GSE mortgage-backed securities (MBS), the purchase of these
securities under agreements to resell, and the sale of these securities under agreements
to repurchase. The Bank holds the resulting securities and agreements in a portfolio
known as the System Open Market Account (SOMA). The Bank is authorized and
directed to lend the Treasury securities and federal agency and GSE debt securities
that are held in the SOMA.
To counter disorderly conditions in foreign exchange markets or to meet other
needs specified by the FOMC to carry out the System’s central bank responsibilities,
the FOMC has authorized and directed the Bank to execute spot and forward foreign
exchange transactions in fourteen foreign currencies, to hold balances in those currencies, and to invest such foreign currency holdings, while maintaining adequate
liquidity. The FOMC has also authorized the Bank to maintain reciprocal currency
arrangements with the Bank of Canada and the Bank of Mexico in the maximum
amounts of $2 billion and $3 billion, respectively, and to warehouse foreign currencies
for the Treasury and the Exchange Stabilization Fund.

Federal Reserve bank of New York
2012 annual report

Because of the global character of funding markets, the System has at times coordinated with other central banks to provide temporary liquidity. In May 2010, the
FOMC authorized and directed the Bank to establish temporary U.S. dollar liquidity
swap arrangements with the Bank of Canada, the Bank of England, the European
Central Bank, the Bank of Japan, and the Swiss National Bank through January 2011.
Subsequently, the FOMC authorized and directed the Bank to extend these arrangements through February 1, 2013. In December 2012, the FOMC authorized and
directed the Bank to extend these arrangements through February 1, 2014. In addition, in November 2011, as a contingency measure, the FOMC authorized the Bank
to establish temporary bilateral foreign currency liquidity swap arrangements with the
Bank of Canada, the Bank of England, the European Central Bank, the Bank of Japan,
and the Swiss National Bank so that liquidity can be provided to U.S. institutions in
any of their currencies if necessary. In December 2012, the FOMC authorized the
Bank to extend these temporary bilateral foreign currency liquidity swap arrangements
through February 1, 2014.
Although the Reserve Banks are separate legal entities, they collaborate on the
delivery of certain services to achieve greater efficiency and effectiveness. This collaboration takes the form of centralized operations and product or function offices that
have responsibility for the delivery of certain services on behalf of the Reserve Banks.
Various operational and management models are used and are supported by service
agreements between the Reserve Banks. In some cases, costs incurred by a Reserve
Bank for services provided to other Reserve Banks are not shared; in other cases, the
Reserve Banks are reimbursed for costs incurred in providing services to other Reserve
Banks. Major services provided by the Bank on behalf of the System and for which
the costs were not reimbursed by the other Reserve Banks include the management of
SOMA, the Wholesale Product Office, the System Credit Risk Technology Support
function, the Valuation Support team, centralized business administration functions
for wholesale payments services, and three national information technology operations dealing with incident response, remote access, and enterprise search.
3. SIGNIFICANT ACCOUNTING POLICIES
Accounting principles for entities with the unique powers and responsibilities of the
nation’s central bank have not been formulated by accounting standard-setting bodies.
The Board of Governors has developed specialized accounting principles and practices
that it considers to be appropriate for the nature and function of a central bank. These
accounting principles and practices are documented in the Financial Accounting
Manual for Federal Reserve Banks (FAM), which is issued by the Board of Governors.
The Reserve Banks are required to adopt and apply accounting policies and practices
that are consistent with the FAM and the consolidated financial statements have been
prepared in accordance with the FAM.

Limited differences exist between the accounting principles and practices in the
FAM and accounting principles generally accepted in the United States of America
(GAAP), due to the unique nature of the Bank’s powers and responsibilities as part
of the nation’s central bank and given the System’s unique responsibility to conduct
monetary policy. The primary differences are the presentation of all SOMA securities
holdings at amortized cost and the recording of all SOMA securities on a settlementdate basis. Amortized cost, rather than the fair value presentation, more appropriately reflects the Bank’s securities holdings given the System’s unique responsibility
to conduct monetary policy. Although the application of fair value measurements to
the securities holdings may result in values substantially greater or less than their carrying values, these unrealized changes in value have no direct effect on the quantity
of reserves available to the banking system or on the ability of the Reserve Banks, as
the central bank, to meet their financial obligations and responsibilities. Both the
domestic and foreign components of the SOMA portfolio may involve transactions
that result in gains or losses when holdings are sold before maturity. Decisions regarding securities and foreign currency transactions, including their purchase and sale, are
motivated by monetary policy objectives rather than profit. Accordingly, fair values,
earnings, and gains or losses resulting from the sale of such securities and currencies are
incidental to open market operations and do not motivate decisions related to policy
or open market activities. Accounting for these securities on a settlement-date basis,
rather than the trade-date basis required by GAAP, better reflects the timing of the
transaction’s effect on the quantity of reserves in the banking system. The cost bases
of Treasury securities, GSE debt securities, and foreign government debt instruments
are adjusted for amortization of premiums or accretion of discounts on a straight-line
basis, rather than using the interest method required by GAAP. SOMA securities
holdings are evaluated for credit impairment periodically.
In addition, the Bank does not present a Consolidated Statement of Cash Flows
as required by GAAP because the liquidity and cash position of the Bank are not
a primary concern given the Reserve Banks’ unique powers and responsibilities as
a central bank. Other information regarding the Bank’s activities is provided in,
or may be derived from, the Consolidated Statements of Condition, Income and
Comprehensive Income, and Changes in Capital, and the accompanying notes to the
consolidated financial statements. Other than those described above, there are no significant differences between the policies outlined in the FAM and GAAP.

Preparing the consolidated financial statements in conformity with the FAM
requires management to make certain estimates and assumptions that affect the
reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts
of income and expenses during the reporting period. Actual results could differ from
those estimates.

Federal Reserve bank of New York
2012 annual report

Certain amounts relating to the prior year have been reclassified to conform to
the current year presentation. The presentation of “Dividends on capital stock” and
“Interest on Federal Reserve notes expense remitted to Treasury” in the Consolidated
Statements of Income and Comprehensive Income for the year ended December 31,
2011, has been revised to conform to the current year presentation format. In addition,
the presentation of “Comprehensive income” and “Dividends on capital stock” in the
Consolidated Statements of Changes in Capital for the year ended December 31, 2011,
has been revised to conform to the current year presentation format. The revised
presentation of “Dividends on capital stock” and “Interest on Federal Reserve notes
expense remitted to Treasury” better reflects the nature of these items and results in a
more consistent treatment of the amounts presented in the Consolidated Statements
of Income and Comprehensive Income and the related balances presented in the
Consolidated Statements of Condition. As a result of the change to report “Interest
on Federal Reserve Notes expense remitted to Treasury” as an expense, the amount
reported as “Comprehensive income” for the year ended December 31, 2011, has been
revised. Significant accounts and accounting policies are explained below.
a. Consolidation
The consolidated financial statements include the accounts and results of operations
of the Bank as well as several variable interest entities (VIEs), which include Maiden
Lane LLC (ML), Maiden Lane II LLC (ML II), Maiden Lane III LLC (ML III), and
TALF LLC. The consolidation of the VIEs was assessed in accordance with Financial
Accounting Standards Board (FASB) Accounting Standards Codification (ASC)
Topic 810 (ASC 810) Consolidation, which requires a VIE to be consolidated by its
controlling financial interest holder. Intercompany balances and transactions have
been eliminated in consolidation. See Note 6 for additional information on the VIEs.
The consolidated financial statements of the Bank also include accounts and results of
operations of Maiden and Nassau LLC, a Delaware limited-liability company (LLC)
wholly owned by the Bank, which was formed to own and operate the 33 Maiden Lane
building, which was purchased on February 28, 2012. The Bank had been the primary
occupant of the building since 1998, accounting for approximately 74 percent of the
leased space.
The Bank consolidates a VIE if the Bank has a controlling financial interest, which
is defined as the power to direct the significant economic activities of the entity and
the obligation to absorb losses or the right to receive benefits of the entity that could
potentially be significant to the VIE. To determine whether it is the controlling financial interest holder of a VIE, the Bank evaluates the VIE’s design, capital structure, and
relationships with the variable interest holders. The Bank reconsiders whether it has a
controlling financial interest in a VIE, as required by ASC 810, at each reporting date
or if there is an event that requires consideration.

The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010
(Dodd-Frank Act) established the Bureau of Consumer Financial Protection (Bureau)
as an independent bureau within the System that has supervisory authority over
some institutions previously supervised by the Reserve Banks in connection with
those institutions’ compliance with consumer protection statutes. Section 1017 of
the Dodd-Frank Act provides that the financial statements of the Bureau are not to
be consolidated with those of the Board of Governors or the System. Section 152 of
the Dodd-Frank Act established the Office of Financial Research (OFR) within the
Treasury. The Board of Governors funds the Bureau and OFR through assessments on
the Reserve Banks as required by the Dodd-Frank Act. The Reserve Banks reviewed
the law and evaluated the design of and their relationships to the Bureau and the
OFR and determined that neither should be consolidated in the Bank’s consolidated
financial statements.
b. Gold and Special Drawing Rights Certificates
The Secretary of the Treasury is authorized to issue gold and special drawing rights
(SDR) certificates to the Reserve Banks. Upon authorization, the Reserve Banks
acquire gold certificates by crediting equivalent amounts in dollars to the account
established for the Treasury. The gold certificates held by the Reserve Banks are
required to be backed by the gold owned by the Treasury. The Treasury may reacquire the gold certificates at any time and the Reserve Banks must deliver them to the
Treasury. At such time, the Treasury’s account is charged, and the Reserve Banks’ gold
certificate accounts are reduced. The value of gold for purposes of backing the gold
certificates is set by law at $42 2/9 per fine troy ounce. Gold certificates are recorded
by the Banks at original cost. The Board of Governors allocates the gold certificates
among the Reserve Banks once a year based on each Reserve Bank’s average Federal
Reserve notes outstanding during the preceding calendar year.

SDRs are issued by the International Monetary Fund (IMF) to its members in
proportion to each member’s quota in the IMF at the time of issuance. SDRs serve
as a supplement to international monetary reserves and may be transferred from one
national monetary authority to another. Under the law providing for U.S. participation in the SDR system, the Secretary of the Treasury is authorized to issue SDR certificates to the Reserve Banks. When SDR certificates are issued to the Reserve Banks,
equivalent amounts in U.S. dollars are credited to the account established for the
Treasury and the Reserve Banks’ SDR certificate accounts are increased. The Reserve
Banks are required to purchase SDR certificates, at the direction of the Treasury, for
the purpose of financing SDR acquisitions or for financing exchange stabilization
operations. At the time SDR certificate transactions occur, the Board of Governors
allocates the SDR certificates among the Reserve Banks based upon each Reserve
Bank’s Federal Reserve notes outstanding at the end of the preceding calendar year.
SDR certificates are recorded by the Banks at original cost. There were no SDR certificate transactions during the years ended December 31, 2012 and 2011.

Federal Reserve bank of New York
2012 Annual Report

c. Coin
The amount reported as coin in the Consolidated Statements of Condition represents
the face value of all United States coin held by the Bank. The Bank buys coin at face
value from the U.S. Mint in order to fill depository institution orders.
d. Loans
Loans to depository institutions are reported at their outstanding principal balances,
and interest income is recognized on an accrual basis.
The Bank records the Term Asset-Backed Securities Loan Facility (TALF) loans at
fair value in accordance with the fair value option provisions of FASB ASC Topic 825
(ASC 825) Financial Instruments. Unrealized gains (losses) on TALF loans that are
recorded at fair value are reported as “Noninterest income (loss): Term Asset-Backed
Securities Loan Facility, unrealized losses” in the Consolidated Statements of Income
and Comprehensive Income. The interest income on TALF loans is recognized based
on the contracted rate and is reported as a component of “Interest Income: Term
Asset-Backed Securities Loan Facility” in the Consolidated Statements of Income and
Comprehensive Income.
Interest income on the Bank’s loan to American International Group, Inc. (AIG),
was recognized on an accrual basis. See Note 4 for additional information on AIG
loan. Loan administrative and commitment fees were deferred and amortized on a
straight-line basis, rather than using the interest method required by GAAP, over the
term of the loan or commitment period. This method resulted in an interest amount
that approximated the amount determined using the interest method.
Loans, other than those recorded at fair value, are impaired when current information and events indicate that it is probable that the Bank will not receive the principal
and interest that are due in accordance with the contractual terms of the loan agreement. Impaired loans are evaluated to determine whether an allowance for loan loss
is required. The Bank has developed procedures for assessing the adequacy of any
allowance for loan losses using all available information to identify incurred losses.
This assessment includes monitoring information obtained from banking supervisors,
borrowers, and other sources to assess the credit condition of the borrowers and, as
appropriate, evaluating collateral values. Generally, the Bank would discontinue recognizing interest income on impaired loans until the borrower’s repayment performance
demonstrates principal and interest would be received in accordance with the terms of
the loan agreement. If the Bank discontinues recording interest on an impaired loan,
cash payments are first applied to principal until the loan balance is reduced to zero;
subsequent payments are applied as recoveries of amounts previously deemed uncollectible, if any, and then as interest income.

Impaired loans include loans that have been modified in debt restructurings involving borrowers experiencing financial difficulties. The allowance for loan restructuring
is determined by discounting the restructured cash flows using the original effective
interest rate for the loan. Unless the borrower can demonstrate that it can meet the
restructured terms, the Bank discontinues recognizing interest income. Performance
prior to the restructuring, or significant events that coincide with the restructuring,
is considered in assessing whether the borrower can meet the new terms.
e. Securities Purchased under Agreements to Resell, Securities Sold
under Agreements to Repurchase, and Securities Lending
The Bank may engage in purchases of securities with primary dealers under agreements
to resell (repurchase transactions). These repurchase transactions are settled through a
triparty arrangement. In a triparty arrangement, two commercial custodial banks manage the collateral clearing, settlement, pricing, and pledging, and provide cash and securities custodial services for and on behalf of the Bank and counterparty. The collateral
pledged must exceed the principal amount of the transaction by a margin determined
by the Bank for each class and maturity of acceptable collateral. Collateral designated
by the Bank as acceptable under repurchase transactions primarily includes Treasury
securities (including Treasury Inflation-Protected Securities and Separate Trading of
Registered Interest and Principal of Securities [STRIPS] Treasury securities); direct
obligations of several federal and GSE-related agencies, including Federal National
Mortgage Association (Fannie Mae) and Federal Home Loan Mortgage Corporation
(Freddie Mac); and pass-through MBS of Fannie Mae, Freddie Mac, and Government
National Mortgage Association. The repurchase transactions are accounted for as
financing transactions with the associated interest income recognized over the life of
the transaction.

The Bank may engage in sales of securities under agreements to repurchase (reverse
repurchase transactions) with primary dealers and selected money market funds.
The list of eligible counterparties was expanded to include GSEs, effective in July
2011, and bank and savings institutions, effective in December 2011. These reverse
repurchase transactions may be executed through a triparty arrangement as an open
market operation, similar to repurchase transactions. Reverse repurchase transactions
may also be executed with foreign official and international account holders as part
of a service offering. Reverse repurchase agreements are collateralized by a pledge of
an amount of Treasury securities, GSE debt securities, and federal agency and GSE
MBS that are held in the SOMA. Reverse repurchase transactions are accounted for
as financing transactions, and the associated interest expense is recognized over t he
life of the transaction. These transactions are reported at their contractual amounts as
“System Open Market Account: Securities sold under agreements to repurchase” and
the related accrued interest payable is reported as a component of “Other liabilities”
in the Consolidated Statements of Condition.

Federal Reserve bank of New York
2012 Annual Report

Treasury securities and GSE debt securities held in the SOMA may be lent to primary dealers to facilitate the effective functioning of the domestic securities markets.
The amortized cost basis of securities lent continues to be reported as “Treasury securities, net” and “Government-sponsored enterprise debt securities, net,” as appropriate,
in the Consolidated Statements of Condition. Overnight securities lending transactions are fully collateralized by Treasury securities that have fair values in excess of the
securities lent. The Bank charges the primary dealer a fee for borrowing securities, and
these fees are reported as a component of “Noninterest income (loss): Other” in the
Consolidated Statements of Income and Comprehensive Income.
Activity related to securities purchased under agreements to resell, securities sold
under agreements to repurchase, and securities lending is allocated to each of the
Reserve Banks on a percentage basis derived from an annual settlement of the interdistrict settlement account that occurs in the second quarter of each year.
f. Treasury Securities, Government-Sponsored Enterprise Debt Securities, Federal
Agency and Government-Sponsored Enterprise Mortgage-Backed Securities,
Foreign-Currency-Denominated Assets, and Warehousing Agreements
Interest income on Treasury securities, GSE debt securities, and foreign-currencydenominated assets comprising the SOMA is accrued on a straight-line basis. Interest
income on federal agency and GSE MBS is accrued using the interest method and
includes amortization of premiums, accretion of discounts, and gains or losses associated with principal paydowns. Premiums and discounts related to federal agency and
GSE MBS are amortized or accreted over the term of the security to stated maturity,
and the amortization of premiums and accretion of discounts are accelerated when
principal payments are received. Gains and losses resulting from sales of securities are
determined by specific issue based on average cost. Treasury securities, GSE debt securities, and federal agency and GSE MBS are reported net of premiums and discounts
in the Consolidated Statements of Condition and interest income on those securities
is reported net of the amortization of premiums and accretion of discounts in the
Consolidated Statements of Income and Comprehensive Income.
In addition to outright purchases of federal agency and GSE MBS that are held in
the SOMA, the Bank enters into dollar roll transactions (dollar rolls), which primarily involve an initial transaction to purchase or sell “to be announced” (TBA) MBS
for delivery in the current month combined with a simultaneous agreement to sell or
purchase TBA MBS on a specified future date. During the years ended December 31,
2012 and 2011, the Bank executed dollar rolls primarily to facilitate settlement of
outstanding purchases of federal agency and GSE MBS. The Bank accounts for dollar
roll transactions as purchases or sales on a settlement-date basis. In addition, TBA
MBS transactions may be paired off or assigned prior to settlement. Net gains (losses)
resulting from dollar roll transactions are reported as “Noninterest income (loss):

System Open Market Account: Federal agency and government-sponsored enterprise
mortgage-backed securities gains, net” in the Consolidated Statements of Income and
Comprehensive Income.
Foreign-currency-denominated assets, which can include foreign currency deposits, securities purchased under agreements to resell, and government debt instruments,
are revalued daily at current foreign currency market exchange rates in order to report
these assets in U.S. dollars. Foreign currency translation gains and losses that result
from the daily revaluation of foreign-currency-denominated assets are reported as
“Noninterest income (loss): System Open Market Account: Foreign currency translation gains (losses), net” in the Consolidated Statements of Income and Comprehensive
Income.
Activity related to Treasury securities, GSE debt securities, and federal agency and
GSE MBS, including the premiums, discounts, and realized gains and losses, is allocated to each Reserve Bank on a percentage basis derived from an annual settlement
of the interdistrict settlement account that occurs in the second quarter of each year.
Activity related to foreign-currency-denominated assets, including the premiums, discounts, and realized and unrealized gains and losses, is allocated to each Reserve Bank
based on the ratio of each Reserve Bank’s capital and surplus to the Reserve Banks’
aggregate capital and surplus at the preceding December 31.
Warehousing is an arrangement under which the FOMC has approved the
exchange, at the request of the Treasury, of U.S. dollars for foreign currencies held
by the Treasury over a limited period. The purpose of the warehousing facility is to
supplement the U.S. dollar resources of the Treasury for financing purchases of foreign
currencies and related international operations. Warehousing agreements are designated as held-for-trading purposes and are valued daily at current market exchange
rates. Activity related to these agreements is allocated to each Reserve Bank based on
the ratio of each Reserve Bank’s capital and surplus to the Reserve Banks’ aggregate
capital and surplus at the preceding December 31.
The Bank is authorized to hold foreign currency working balances and execute
foreign exchange contracts to facilitate international payments and currency transactions it makes on behalf of foreign central bank and U.S. official institution customers.
These foreign currency working balances and contracts are not related to the Bank’s
monetary policy operations. Foreign currency working balances are reported as a component of “Other assets” in the Consolidated Statements of Condition and the related
foreign currency translation gains and losses that result from the daily revaluation of
the foreign currency working balances and contracts are reported as a component of
“Noninterest income (loss): Other” in the Consolidated Statements of Income and
Comprehensive Income.

Federal Reserve bank of New York
2012 Annual Report

g. Central Bank Liquidity Swaps
Central bank liquidity swaps, which are transacted between the Bank and a foreign
central bank, can be structured as either U.S. dollar liquidity or foreign currency
liquidity swap arrangements.
Central bank liquidity swaps activity, including the related income and expense,
is allocated to each Reserve Bank based on the ratio of each Reserve Bank’s capital
and surplus to the Reserve Banks’ aggregate capital and surplus at the preceding
December 31. The foreign currency amounts associated with these central bank liquidity
swap arrangements are revalued daily at current foreign currency market exchange rates.
U.S. Dollar Liquidity Swaps
At the initiation of each U.S. dollar liquidity swap transaction, the foreign central
bank transfers a specified amount of its currency to a restricted account for the Bank in
exchange for U.S. dollars at the prevailing market exchange rate. Concurrent with this
transaction, the Bank and the foreign central bank agree to a second transaction that
obligates the foreign central bank to return the U.S. dollars and the Bank to return
the foreign currency on a specified future date at the same exchange rate as the initial
transaction. The Bank’s allocated portion of the foreign currency amounts that the
Bank acquires are reported as “System Open Market Account: Central bank liquidity
swaps” in the Consolidated Statements of Condition. Because the swap transaction
will be unwound at the same U.S. dollar amount and exchange rate that were used
in the initial transaction, the recorded value of the foreign currency amounts is not
affected by changes in the market exchange rate.
The foreign central bank compensates the Bank based on the foreign currency
amounts it holds for the Bank. The Bank’s allocated portion of the amount of compensation received during the term of the swap transaction is reported as “Interest income:
System Open Market Account: Central bank liquidity swaps” in the Consolidated
Statements of Income and Comprehensive Income.
Foreign Currency Liquidity Swaps
The structure of foreign currency liquidity swap transactions involves the transfer by
the Bank, at the prevailing market exchange rate, of a specified amount of U.S. dollars
to an account for the foreign central bank in exchange for its currency. The foreign
currency amount received would be reported as a liability by the Bank.

h. Investments Held by Consolidated Variable Interest Entities
The investments held by consolidated VIEs may include investments in federal agency
and GSE MBS, nonagency residential mortgage-backed securities (RMBS), commercial and residential real estate mortgage loans, collateralized debt obligations (CDOs),
short-term investments with maturities of greater than three months and less than
one year, other investment securities, and swap contracts. Investments are reported
as “Investments held by consolidated variable interest entities” in the Consolidated
Statements of Condition. These investments are accounted for and classified as
follows:
n

ML’s investments in debt securities are accounted for in accordance with FASB
ASC Topic 320 (ASC 320) Investments – Debt and Equity Securities and ML
elected the fair value option for all eligible assets and liabilities in accordance
with ASC 825. Other financial instruments, including swap contracts in ML,
are recorded at fair value in accordance with FASB ASC Topic 815 (ASC 815)
Derivatives and Hedging.
ML II and ML III qualify as nonregistered investment companies under the
provisions of FASB ASC Topic 946 (ASC 946) Financial Services – Investment
Companies and, therefore, all investments are recorded at fair value in accordance with ASC 946.
TALF LLC follows the guidance in ASC 320 when accounting for any
acquired ABS investments, and has elected the fair value option for all eligible
assets in accordance with ASC 825.

i. Preferred Interests
The Bank’s preferred interests in American International Assurance Company Ltd.
LLC (AIA) and American Life Insurance Company LLC (ALICO) were paid in
full on January 14, 2011. The 5 percent cumulative dividends accrued by the Bank
on the preferred interests are reported as “Noninterest Income (Loss): Dividends on
preferred interests” in the Consolidated Statements of Income and Comprehensive
Income.
j. Bank Premises, Equipment, and Software
Bank premises and equipment are stated at cost less accumulated depreciation.
Depreciation is calculated on a straight-line basis over the estimated useful lives of
the assets, which range from two to fifty years. Major alterations, renovations, and
improvements are capitalized at cost as additions to the asset accounts and are depreciated
over the remaining useful life of the asset or, if appropriate, over the unique useful
life of the alteration, renovation, or improvement. Maintenance, repairs, and minor
replacements are charged to operating expense in the year incurred.

Federal Reserve bank of New York
2012 Annual Report

Costs incurred for software during the application development stage, whether
developed internally or acquired for internal use, are capitalized based on the purchase
cost and the cost of direct services and materials associated with designing, coding,
installing, and testing the software. Capitalized software costs are amortized on a
straight-line basis over the estimated useful lives of the software applications, which
generally range from two to five years. Maintenance costs related to software are
charged to operating expense in the year incurred.
Capitalized assets, including software, buildings, leasehold improvements, furniture, and equipment, are impaired and an adjustment is recorded when events or
changes in circumstances indicate that the carrying amount of assets or asset groups is
not recoverable and significantly exceeds the assets’ fair value.
k. Interdistrict Settlement Account
At the close of business each day, each Reserve Bank aggregates the payments due to
or from other Reserve Banks. These payments result from transactions between the
Reserve Banks and transactions that involve depository institution accounts held by
other Reserve Banks, such as Fedwire funds and securities transfers and check and
ACH transactions. The cumulative net amount due to or from the other Reserve
Banks is reflected in the “Interdistrict settlement account” in the Consolidated
Statements of Condition.
An annual settlement of the interdistrict settlement account occurs in the second
quarter of each year. As a result of the annual settlement, the balance in each Bank’s
interdistrict settlement account is adjusted by an amount equal to the average balance
in the account during the previous twelve-month period ended March 31. An equal
and offsetting adjustment is made to each Bank’s allocated portion of SOMA assets
and liabilities.
l. Federal Reserve Notes
Federal Reserve notes are the circulating currency of the United States. These notes,
which are identified as issued to a specific Reserve Bank, must be fully collateralized.
All of the Bank’s assets are eligible to be pledged as collateral. The collateral value is
equal to the book value of the collateral tendered with the exception of securities, for
which the collateral value is equal to the par value of the securities tendered. The par
value of securities sold under agreements to repurchase is deducted from the eligible
collateral value.

The Board of Governors may, at any time, call upon a Reserve Bank for additional
security to adequately collateralize outstanding Federal Reserve notes. To satisfy the
obligation to provide sufficient collateral for outstanding Federal Reserve notes, the
Reserve Banks have entered into an agreement that provides for certain assets of the
Reserve Banks to be jointly pledged as collateral for the Federal Reserve notes issued
to all Reserve Banks. In the event that this collateral is insufficient, the Federal Reserve
Act provides that Federal Reserve notes become a first and paramount lien on all
the assets of the Reserve Banks. Finally, Federal Reserve notes are obligations of the
United States government.
“Federal Reserve notes outstanding, net” in the Consolidated Statements of
Condition represents the Bank’s Federal Reserve notes outstanding, reduced by the
Bank’s currency holdings of $93,101 million and $50,541 million at December 31,
2012 and 2011, respectively.
At December 31, 2012 and 2011, all Federal Reserve notes issued to the Reserve
Banks were fully collateralized. At December 31, 2012, all gold certificates, all special
drawing rights certificates, and $1,110 billion of domestic securities held in the SOMA
were pledged as collateral. At December 31, 2012, no investments denominated in
foreign currencies were pledged as collateral.
m. Beneficial Interest in Consolidated Variable Interest Entities
ML, ML II, and ML III have outstanding senior and subordinated financial interests,
and TALF LLC has an outstanding financial interest. The subordinated financial
interests of ML II and ML III include the interest holder’s allocated share of any
residual net proceeds. Upon issuance of the financial interests, ML, ML II, ML III,
and TALF LLC each elected to measure these obligations at fair value in accordance
with ASC 825. Principal, interest, and changes in fair value on the senior financial
interest, which were extended by the Bank, are eliminated in consolidation. The
financial interests are recorded at fair value as “Beneficial interest in consolidated variable interest entities” in the Consolidated Statements of Condition. Interest expense
and changes in fair value of the financial interest are recorded in “Interest expense:
Beneficial interest in consolidated variable interest entities” and “Noninterest income
(loss): Beneficial interest in consolidated variable interest entities gains (losses), net,”
respectively, in the Consolidated Statements of Income and Comprehensive Income.

n. Deposits
Depository Institutions
Depository institutions’ deposits represent the reserve and service-related balances,
such as required clearing balances, in the accounts that depository institutions hold at
the Bank. The interest rates paid on required reserve balances and excess balances are
determined by the Board of Governors, based on an FOMC-established target range
for the federal funds rate. Interest payable is reported as a component of “Interest payable to depository institutions” in the Consolidated Statements of Condition.

Federal Reserve bank of New York
2012 annual report

The Term Deposit Facility (TDF) consists of deposits with specific maturities
held by eligible institutions at the Reserve Banks. The Reserve Banks pay interest on
these deposits at interest rates determined by auction. Interest payable is reported
as a component of “Interest payable to depository institutions” in the Consolidated
Statements of Condition. There were no deposits held by the Bank under the TDF at
December 31, 2012 and 2011.
Treasury
The Treasury general account is the primary operational account of the Treasury and
is held at the Bank.
Other
Other deposits include the Bank’s allocated portion of foreign central bank and foreign government deposits held at the Bank and those in which the Bank has an undivided interest. Other deposits also include GSE deposits held by the Bank.
o. Items in Process of Collection and Deferred Credit Items
Items in process of collection primarily represents amounts attributable to checks that
have been deposited for collection and that, as of the balance sheet date, have not yet
been presented to the paying bank. Deferred credit items is the counterpart liability to
items in process of collection. The amounts in this account arise from deferring credit
for deposited items until the amounts are collected. The balances of items in process of
collection and deferred credit items were not material as of December 31, 2012 and 2011.
p. Capital Paid-in
The Federal Reserve Act requires that each member bank subscribe to the capital stock
of the Reserve Bank in an amount equal to 6 percent of the capital and surplus of the
member bank. These shares are nonvoting, with a par value of $100, and may not be
transferred or hypothecated. As a member bank’s capital and surplus change, its holdings
of Reserve Bank stock must be adjusted. Currently, only one-half of the subscription is
paid-in and the remainder is subject to call. A member bank is liable for Reserve Bank
liabilities up to twice the par value of stock subscribed by it.
By law, each Reserve Bank is required to pay each member bank an annual dividend
of 6 percent on the paid-in capital stock. This cumulative dividend is paid semiannually.
q. Surplus
The Board of Governors requires the Reserve Banks to maintain a surplus equal to the
amount of capital paid-in. On a daily basis, surplus is adjusted to equate the balance
to capital paid-in. Accumulated other comprehensive income is reported as a component of “Surplus” in the Consolidated Statements of Condition and the Consolidated
Statements of Changes in Capital. Additional information regarding the classifications of accumulated other comprehensive income is provided in Notes 9, 10, and 11.

r. Interest on Federal Reserve Notes
The Board of Governors requires the Reserve Banks to transfer excess earnings to the
Treasury as interest on Federal Reserve notes after providing for the costs of operations,
payment of dividends, and reservation of an amount necessary to equate surplus with
capital paid-in. This amount is reported as “Interest on Federal Reserve notes expense
remitted to Treasury” in the Consolidated Statements of Income and Comprehensive
Income. See Note 13 for additional information on interest on Federal Reserve notes.
If earnings during the year are not sufficient to provide for the costs of operations,
payment of dividends, and equating surplus and capital paid-in, remittances to the
Treasury are suspended. A deferred asset is recorded that represents the amount of
net earnings a Reserve Bank will need to realize before remittances to the Treasury
resume. This deferred asset is periodically reviewed for impairment. The deferred asset
is reported as “Deferred asset – interest on Federal Reserve notes” in the Consolidated
Statements of Condition. As of December 31, 2011, no impairment existed.
s. Income and Costs Related to Treasury Services
When directed by the Secretary of the Treasury, the Bank is required by the Federal
Reserve Act to serve as fiscal agent and depositary of the United States government.
By statute, the Treasury has appropriations to pay for these services. During the years
ended December 31, 2012 and 2011, the Bank was reimbursed for substantially all
services provided to the Treasury as its fiscal agent.
t. Income from Services and Compensation Received for Service Costs Provided
The Bank has overall responsibility for managing the Reserve Banks’ provision of
Fedwire funds and securities services and, as a result, reports total System revenue for
these services as “Income from services” in its Consolidated Statements of Income
and Comprehensive Income. The Bank compensates the applicable Reserve Banks for
the costs incurred to provide these services and reports the resulting compensation
paid as “Operating expenses: Compensation paid for service costs incurred” in its
Consolidated Statements of Income and Comprehensive Income.
The Federal Reserve Bank of Atlanta (FRBA) has overall responsibility for managing the Reserve Banks’ provision of check and ACH services to depository institutions
and the Federal Reserve Bank of Chicago (FRBC) has overall responsibility for managing the Reserve Banks’ provision of electronic access services to depository institutions.
The Reserve Bank that has overall responsibility for managing these services recognizes the related total System revenue in its Consolidated Statements of Income and
Comprehensive Income. The Bank is compensated for costs incurred to provide these
services and reports this compensation as “Noninterest income (loss): Compensation
received for service costs provided” in its Consolidated Statements of Income and
Comprehensive Income.

Federal Reserve bank of New York
2012 annual report

u. Assessments
The Board of Governors assesses the Reserve Banks to fund its operations, the operations of the Bureau and, for a two-year period following the July 21, 2010, effective
date of the Dodd-Frank Act, the OFR. These assessments are allocated to each
Reserve Bank based on each Reserve Bank’s capital and surplus balances. The Board of
Governors also assesses each Reserve Bank for expenses related to producing, issuing,
and retiring Federal Reserve notes based on each Reserve Bank’s share of the number
of notes comprising the System’s net liability for Federal Reserve notes on December 31
of the prior year.
During the period before the Bureau transfer date of July 21, 2011, there was no
limit on the funding provided to the Bureau and assessed to the Reserve Banks; the
Board of Governors was required to provide the amount estimated by the Secretary
of the Treasury needed to carry out the authorities granted to the Bureau under the
Dodd-Frank Act and other federal law. The Dodd-Frank Act requires that, after the
transfer date, the Board of Governors fund the Bureau in an amount not to exceed a
fixed percentage of the total operating expenses of the System as reported in the Board
of Governors’ 2009 annual report, which totaled $4.98 billion. The fixed percentage of
total 2009 operating expenses of the System is 10 percent ($498.0 million) for 2011,
11 percent ($547.8 million) for 2012, and 12 percent ($597.6 million) for 2013. After
2013, the amount will be adjusted in accordance with the provisions of the DoddFrank Act. The Bank’s assessment for Bureau funding is reported as “Assessments:
Bureau of Consumer Financial Protection” in the Consolidated Statements of Income
and Comprehensive Income.
The Board of Governors assessed the Reserve Banks to fund the operations of the
OFR for the two-year period ended July 21, 2012, following enactment of the DoddFrank Act; thereafter, the OFR is funded by fees assessed on bank holding companies
and nonbank financial companies that meet the criteria specified in the Dodd-Frank Act.
v. Fair Value
Certain assets and liabilities reported on the Bank’s Consolidated Statements of
Condition are measured at fair value in accordance with ASC 820, including TALF
loans, investments and beneficial interests of the consolidated VIEs, and assets of the
Retirement Plan for Employees of the System. ASC 820 defines fair value as the price
that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 establishes
a three-level fair value hierarchy that distinguishes between assumptions developed
using market data obtained from independent sources (observable inputs) and the
Bank’s assumptions developed using the best information available in the circumstances (unobservable inputs). The three levels established by ASC 820 are described
as follows:

■

Level 1 – Valuation is based on quoted prices for identical instruments traded
in active markets.
Level 2 – Valuation is based on quoted prices for similar instruments in active
markets, quoted prices for identical or similar instruments in markets that
are not active, and model-based valuation techniques for which all significant
assumptions are observable in the market.
Level 3 – Valuation is based on model-based techniques that use significant
inputs and assumptions not observable in the market. These unobservable
inputs and assumptions reflect the Bank’s estimates of inputs and assumptions that market participants would use in pricing the assets and liabilities.
Valuation techniques include the use of option pricing models, discounted cash
flow models, and similar techniques.

The inputs or methodology used for valuing assets and liabilities are not necessarily
an indication of the risk associated with those assets and liabilities.
w. Taxes
The Reserve Banks are exempt from federal, state, and local taxes, except for taxes on
real property. The Bank’s real property taxes were $13 million and $8 million for the
years ended December 31, 2012 and 2011, respectively, and are reported as a component of “Operating expenses: Occupancy” in the Consolidated Statements of Income
and Comprehensive Income.
x. Restructuring Charges
The Reserve Banks recognize restructuring charges for exit or disposal costs incurred
as part of the closure of business activities in a particular location, the relocation of
business activities from one location to another, or a fundamental reorganization that
affects the nature of operations. Restructuring charges may include costs associated
with employee separations, contract terminations, and asset impairments. Expenses
are recognized in the period in which the Bank commits to a formalized restructuring plan or executes the specific actions contemplated in the plan and all criteria for
financial statement recognition have been met.
The Bank had no significant restructuring activities in 2012 and 2011.

y. Recently Issued Accounting Standards
In April 2011, the FASB issued ASU 2011-02, Receivables (Topic 310): A Creditor’s
Determination of Whether a Restructuring Is a Troubled Debt Restructuring, which
clarifies accounting for troubled debt restructurings, specifically clarifying creditor
concessions and financial difficulties experienced by borrowers. This update is effective
for the Bank for the year ended December 31, 2012, and did not have a material effect
on the Bank’s consolidated financial statements.

Federal Reserve bank of New York
2012 annual report

In April 2011, the FASB issued ASU 2011-03, Transfers and Servicing (Topic
860): Reconsideration of Effective Control for Repurchase Agreements, which reconsidered the effective control for repurchase agreements. This update prescribes when the
Bank may or may not recognize a sale upon the transfer of financial assets subject to
repurchase agreements. This determination is based, in part, on whether the Bank has
maintained effective control over the transferred financial assets. This update is effective for the Bank for the year ended December 31, 2012, and did not have a material
effect on the Bank’s consolidated financial statements.
In May 2011, the FASB issued ASU 2011-04, Fair Value Measurement (Topic
820): Amendments to Achieve Common Fair Value Measurement and Disclosure
Requirements in U.S. GAAP and IFRS. This update requires additional disclosures for
fair value measurements categorized as Level 3, including quantitative information
about the unobservable inputs and assumptions used in the fair value measurement,
a description of the valuation policies and procedures, and a narrative description of
the sensitivity of the fair value measurement to changes in unobservable inputs and
the interrelationships between those unobservable inputs. In addition, disclosure of
the amounts and reasons for all transfers in and out of Level 1 and Level 2 is required.
This update is effective for the Bank for the year ended December 31, 2012, and the
required disclosures are included in Note 6.
In December 2011, the FASB issued ASU 2011-11, Balance Sheet (Topic 210):
Disclosures about Offsetting Assets and Liabilities. This update will require a reporting entity to present enhanced disclosures for financial instruments and derivative
instruments that are offset or subject to master netting agreements or similar such
agreements. This update is effective for the Bank for the year ending December 31,
2013, and is not expected to have a material effect on the Bank’s consolidated financial
statements.
In December 2011, the FASB issued ASU 2011-12, Comprehensive Income
(Topic 220): Deferral of the Effective Date for Amendments to the Presentation of
Reclassifications of Items out of Accumulated Other Comprehensive Income in Accounting
Standards Update No. 2011-05. This update indefinitely deferred the requirements
of ASU 2011-05, which required an entity to report the effect of significant reclassifications out of accumulated other comprehensive income on the respective net
income line items. Subsequently, in February 2013, the FASB issued ASU 201302, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of
Accumulated Other Comprehensive Income, which established an effective date for
the requirements of ASU 2011-05 related to reporting of significant reclassification
adjustments from accumulated other comprehensive income. These presentation
requirements of ASU 2011-05 are effective for the Bank for the year ending December 31,
2013, and will be reflected in the Bank’s 2013 consolidated financial statements.

In January 2013, the FASB issued ASU 2013-01, Balance Sheet (Topic 210):
Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities. This update
clarifies that the scope of ASU 2011-11 applies to derivatives accounted for in
accordance with Topic 815. This update is effective for the Bank for the year ending
December 31, 2013, and is not expected to have a material effect on the Bank’s consolidated financial statements.
4. LOANS
Loans to Depository Institutions
The Bank offers primary, secondary, and seasonal loans to eligible borrowers, and each
program has its own interest rate. Interest is accrued using the applicable interest rate
established at least every fourteen days by the Bank’s board of directors, subject to
review and determination by the Board of Governors. Primary and secondary loans
are extended on a short-term basis, typically overnight, whereas seasonal loans may be
extended for a period of up to nine months.
Primary, secondary, and seasonal loans are collateralized to the satisfaction of the
Bank to reduce credit risk. Assets eligible to collateralize these loans include consumer,
business, and real estate loans; Treasury securities; GSE debt securities; foreign sovereign debt; municipal, corporate, and state and local government obligations; assetbacked securities (ABS); corporate bonds; commercial paper; and bank-issued assets,
such as certificates of deposit, bank notes, and deposit notes. Collateral is assigned a
lending value that is deemed appropriate by the Bank, which is typically fair value
reduced by a margin. Loans to depository institutions are monitored daily to ensure
that borrowers continue to meet eligibility requirements for these programs. The
financial condition of borrowers is monitored by the Bank and, if a borrower no longer qualifies for these programs, the Bank will generally request full repayment of the
outstanding loan or, for primary or seasonal loans, may convert the loan to a secondary
credit loan. Collateral levels are reviewed daily against outstanding obligations and
borrowers that no longer have sufficient collateral to support outstanding loans are
required to provide additional collateral or to make partial or full repayment.
Loans to depository institutions were $18 million and $9 million as of December 31,
2012 and 2011, respectively, with a remaining maturity within fifteen days.
At December 31, 2012 and 2011, the Bank did not have any loans that were
impaired, past due, or on nonaccrual status, and no allowance for loan losses was
required. There were no impaired loans during the years ended December 31, 2012
and 2011.

Federal Reserve bank of New York
2012 annual report

TALF
The TALF assisted financial markets in accommodating the credit needs of consumers
and businesses of all sizes by facilitating the issuance of ABS collateralized by a variety
of consumer and business loans. Each TALF loan had an original maturity of three
years, except loans secured by Small Business Administration (SBA) Pool Certificates,
loans secured by SBA Development Company Participation Certificates, or ABS
backed by student loans or commercial mortgage loans, which had an original maturity
of five years if the borrower so elected. The loans are secured by eligible collateral, with
the Bank having lent an amount equal to the value of the collateral, as determined by
the Bank, less a margin. Loan proceeds were disbursed to the borrower contingent on
receipt by the Bank’s custodian of the eligible collateral, an administrative fee, and, if
applicable, a margin.
The TALF loans were extended on a nonrecourse basis. If the borrower does not
repay the loan, the Bank will enforce its rights in the collateral and may sell the collateral to TALF LLC, a Delaware limited-liability company, established on February 4,
2009, for the purpose of purchasing such assets. As of December 31, 2012, the Bank
has not enforced its rights to the collateral because there have been no defaults.
Pursuant to a put agreement with the Bank, TALF LLC has committed to purchase assets that secure a TALF loan at a price equal to the principal amount outstanding plus accrued but unpaid interest, regardless of the fair value of the collateral.
Funding for the TALF LLC’s purchases of these securities is derived first through
the fees received by TALF LLC from the Bank for this commitment and any interest
earned on its investments. In the event that such funding proves insufficient for the
asset purchases that TALF LLC has committed to make under the put agreement, the
Treasury originally committed to lend up to $20 billion, and on March 25, 2009, the
Treasury funded $100 million. In addition to the Treasury’s commitment, the Bank
originally committed, as a senior lender, to lend up to $180 billion to TALF LLC if it
needed the funding to purchase assets pursuant to the put agreement. Subsequently,
the Treasury and Bank commitments to lend to TALF LLC were reduced to $1.4 billion and $2.6 billion, respectively. The termination date of the funding commitments
was originally July 31, 2015. Information regarding further reduction in commitments
is presented in Note 14.
Any Treasury loan to TALF LLC bears interest at a rate of the one-month London
interbank offered rate (Libor) plus 300 basis points. Any loan that the Bank makes to
TALF LLC would be senior to any Treasury loan and would bear interest at a rate
of the one-month Libor plus 100 basis points. To the extent that the Treasury and
the Bank have extended credit to TALF LLC, their loans are secured by all of the
assets of TALF LLC. The Bank is the managing member and the controlling party

of TALF LLC and will remain the controlling party as long as it retains an economic
interest in TALF LLC. After TALF LLC has paid all operating expenses and principal
due to the Bank, the remaining proceeds of the portfolio holdings will be distributed
in the following order: principal due to the Treasury, interest due to the Bank, and
interest due to the Treasury. Any residual cash flows will be shared between the Bank,
which will receive 10 percent, and the Treasury, which will receive 90 percent.
The Bank has elected the fair value option for all TALF loans in accordance with
ASC 825. Recording all TALF loans at fair value, rather than at the remaining principal amount outstanding, improves accounting consistency and provides the most
appropriate presentation on the financial statements by matching the change in fair
value of TALF loans, the related put agreement with TALF LLC, and the valuation of
the beneficial interests in TALF LLC. Information regarding TALF LLC’s assets and
liabilities is presented in Note 6.
TALF loans are classified within Level 3 of the valuation hierarchy. External price
information was not available, so market-based models were used to determine the fair
value of the TALF loans. The fair value of the TALF loans was determined by valuing
the future cash flows from loan interest income and the estimated fair value of the
collateral that may be put to the Bank. The valuation model takes into account a range
of outcomes on TALF loan repayments, market prices of the collateral, risk premiums
estimated using market prices, and the volatilities of market-risk factors. Other methodologies employed or assumptions made in determining fair value could result in an
amount that differs significantly from the amount reported.
The following table presents the TALF loans at fair value as of December 31 by
ASC 820 hierarchy (in millions):
Level 3 fair value

2012
$560

2011
$ 9,059

The following table presents a reconciliation of TALF loans measured at fair value
using significant unobservable inputs (Level 3) during the years ended December 31,
2012 and 2011 (in millions):
TALF Loans
Fair value at December 31, 2010
$ 24,853
Loan repayments and prepayments (15,710)
Total unrealized losses (84)
Fair value at December 31, 2011
$ 9,059

Loan repayments and prepayments (8,465)
Total unrealized losses (34)
Fair value at December 31, 2012
$
560

Federal Reserve bank of New York
2012 annual report

The fair value of TALF loans reported in the Consolidated Statements of
Condition as of December 31, 2012 and 2011, includes $3 million and $37 million in
unrealized gains, respectively. The Bank attributes substantially all changes in fair value
of loans to changes in instrument-specific credit spreads.
Eligible collateral includes U.S. dollar-denominated ABS that are backed by auto
loans, student loans, credit card loans, equipment loans, floorplan loans, insurance
premium financial loans, loans guaranteed by the SBA, residential mortgage servicing advances, or commercial mortgage loans. The following table presents the collateral concentration and remaining maturity distribution measured at fair value as of
December 31, 2012 and 2011 (in millions):
Time to Maturity
Within
91 Days Over 1 Year
1
Collateral Type
90 Days
to 1 Year
to 5 Years Total
December 31, 2012:
Student loan
$ —
$ —
$ 382
$ 382
Credit card
— —
—
—
CMBS
3
—
129
132
Floorplan
—
—
—
—
Auto
—
—
—
—
SBAs
—
—
—
—
2
Other
46
—
—
46
Total
$ 49
$ —
$ 511
$ 560
December 31, 2011:
Student loan
$—
$ 23
$ 1,937
$1,960
Credit card
—
2,326
80
2,406
CMBS
—
578
1,454
2,032
Floorplan
—
533
430
963
Auto
1
374
36
411
SBAs
—
113
221
334
—
426
527
953
Other2
Total
$ 1
$4,373
$4,685
$9,059
1 All credit ratings are AAA unless otherwise indicated.
2 Includes

equipment loans, insurance premium financial loans, and residential mortgage

servicing advances.

The aggregate remaining principal amount outstanding on TALF loans as of
December 31, 2012 and 2011, was $556 million and $9,013 million, respectively
At December 31, 2012 and 2011, no TALF loans were over ninety days past due
or on nonaccrual status.

Earnings reported by the Bank related to the TALF include interest income and
unrealized gains and losses on TALF loans as well as the Bank’s allocated share of the
TALF LLC’s net income. Additional information regarding the income of the
TALF LLC is presented in Note 6. The following table presents the components of
TALF earnings recorded by the Bank for the years ended December 31 (in millions):
2012 2011
Interest income
$ 80
$ 265
Unrealized losses (34) (84)
Subtotal–TALF loans
$ 46
$ 181
Allocated share of TALF LLC (7) (48)
Total TALF
$ 39
$ 133
AIG Loan, Net
In September 2008, the Board of Governors authorized the Bank to lend to AIG.
Under the provisions of the original agreement, the Bank was authorized to lend up
to $85 billion to AIG for two years at the three-month Libor, with a floor of 350 basis
points, plus 850 basis points. In addition, the Bank assessed AIG a one-time commitment fee of 200 basis points on the full amount of the commitment and a fee of
850 basis points per annum on the undrawn credit line.
The Board and the Treasury announced a restructuring of the government’s financial support to AIG in November 2008. As part of the restructuring, the Treasury
purchased $40 billion of newly issued AIG preferred shares under the Troubled Asset
Relief Program (TARP). The majority of the TARP funds was used to pay down AIG’s
debt to the Bank. In addition, the terms of the original credit agreement were modified to reduce the revolving line of credit to $60 billion; reduce the interest rate to the
three-month Libor with a floor of 350 basis points, plus 300 basis points; reduce the
fee on undrawn funds to 75 basis points; and extend the term of the agreement to five
years. Concurrent with the November 2008 restructuring of its financial support to
AIG, the Bank established two LLCs, ML II and ML III, which are discussed further
in Note 6.
On April 17, 2009, the Bank, as part of the U.S. government’s commitment to the
orderly restructuring of AIG over time, in the face of continuing market dislocations,
further restructured the AIG loan by eliminating the 350 basis-point floor on the
Libor used to calculate the interest rate on the loan. After this restructuring, the interest rate on the modified loan was equal to the three-month Libor plus 300 basis points.

On December 1, 2009, the Bank’s commitment to lend to AIG was reduced to
$35 billion from $60 billion when the outstanding balance of the Bank’s loan to AIG was
reduced by $25 billion in exchange for a liquidation preference of nonvoting perpetual
preferred interests in ALICO LLC and AIA LLC. AIG created these two LLCs to

Federal Reserve bank of New York
2012 Annual Report

hold, directly or indirectly, all of the outstanding common stock of ALICO and AIA,
two life insurance holding company subsidiaries of AIG. The Bank was to be paid a
5 percent cumulative dividend on its nonvoting preferred interests through
September 22, 2013, and a 9 percent cumulative dividend thereafter. Although the
Bank had certain governance rights to protect its interests, AIG retained control of the
two LLCs and the underlying operating companies.
On September 30, 2010, AIG announced an agreement with the Treasury, the
Bank, and the trustees of the AIG Credit Facility Trust on a comprehensive recapitalization plan designed to repay all its obligations to American taxpayers. On January 14,
2011, upon closing of the recapitalization plan, the cash proceeds from certain asset
dispositions, specifically the initial public offering of AIA and the sale of ALICO, were
used first to repay in full the revolving line of credit extended to AIG by the Bank,
including accrued interest and fees, and then to redeem a portion of the Bank’s preferred interests in ALICO LLC taken earlier by the Bank in satisfaction of a portion of
the revolving line of credit. The Bank’s remaining preferred interests in ALICO LLC
and AIA LLC, valued at approximately $20 billion, were purchased by AIG through a
draw on the Treasury’s Series F preferred stock commitment and then transferred by
AIG to the Treasury as partial consideration for the transfer to AIG of all outstanding Series F shares. In addition, the Bank’s commitment to lend any funds under the
revolving line of credit was terminated.
5. SYSTEM OPEN MARKET ACCOUNT
a. Domestic Securities Holdings
The Bank conducts domestic open market operations and, on behalf of the Reserve
Banks, holds the resulting securities in the SOMA.
During the years ended December 31, 2012 and 2011, the Bank continued the
purchase of Treasury securities and federal agency and GSE MBS under the large-scale
asset purchase programs authorized by the FOMC. In August 2010, the FOMC
announced that the Federal Reserve would maintain the level of domestic securities
holdings in the SOMA portfolio by reinvesting principal payments from GSE debt
securities and federal agency and GSE MBS in longer-term Treasury securities. In
November 2010, the FOMC announced its intention to expand the SOMA portfolio holdings of longer-term Treasury securities by an additional $600 billion and
completed these purchases in June 2011. In September 2011, the FOMC announced
that the Federal Reserve would reinvest principal payments from the SOMA portfolio
holdings of GSE debt securities and federal agency and GSE MBS in federal agency and
GSE MBS. In June 2012, the FOMC announced that it would continue the existing
policy of reinvesting principal payments from the SOMA portfolio holdings of GSE
debt securities and federal agency and GSE MBS in federal agency and GSE MBS, and
suspended the policy of rolling over maturing Treasury securities into new issues at

auction. In September 2012, the FOMC announced that the Federal Reserve would
purchase additional federal agency and GSE MBS at a pace of $40 billion per month
and maintain its existing policy of reinvesting principal payments from its holdings of
GSE debt securities and federal agency and GSE MBS in federal agency and GSE MBS.
In December 2012, the FOMC announced that the Federal Reserve would purchase
longer-term Treasury securities at a pace of $45 billion per month after its program to
extend the average maturity of its holdings of Treasury securities is completed at the
end of 2012.
During the years ended December 31, 2012 and 2011, the Bank also continued
the purchase and sale of SOMA portfolio holdings under the maturity extension programs authorized by the FOMC. In September 2011, the FOMC announced that the
Federal Reserve would extend the average maturity of the SOMA portfolio holdings of
securities by purchasing $400 billion par value of Treasury securities with maturities of
six to thirty years and selling or redeeming an equal par amount of Treasury securities
with remaining maturities of three years or less by the end of June 2012. In June 2012,
the FOMC announced that the Federal Reserve would continue through the end of
2012 its program to extend the average maturity of securities by purchasing $267 billion par value of Treasury securities with maturities of six to thirty years and selling or
redeeming an equal par amount of Treasury securities with maturities of three-and-aquarter years or less by the end of 2012. In September 2012, the FOMC announced it
would continue its program to extend the average maturity of its holdings of securities
as announced in June 2012.
The Bank’s allocated share of activity related to domestic open market operations
was 56.065 percent and 46.504 percent at December 31, 2012 and 2011, respectively.

Federal Reserve bank of New York
2012 Annual Report

The Bank’s allocated share of Treasury securities, GSE debt securities, and federal agency and GSE MBS, net, excluding accrued interest, held in the SOMA at
December 31 was as follows (in millions):
2012
Total
Unamortized Unaccreted Amortized
Par Premiums Discounts
Cost
Bills
$
—
$
—
$
—
$
—
Notes 622,549 18,240 (399) 640,390
Bonds 311,582 62,434 (77) 373,939
Total Treasury
securities
$ 934,131
$80,674
$ (476)
$ 1,014,329
GSE debt securities
Federal agency and
GSE MBS

$ 43,048

$ 1,516

(4)

$ 519,536

$ 13,662

$ (397)

44,560

$ 532,801

2011

Total
Unamortized Unaccreted Amortized
Par Premiums Discounts
Cost
Bills
$ 8,567
$
—
$
—
$
8,567
Notes 598,206 12,466
(574) 610,098
Bonds 166,801 28,529
(41) 195,289
Total Treasury
securities
$ 773,574
$40,995
$ (615)
$ 813,954
GSE debt securities
Federal agency and
GSE MBS

$ 48,362

$ 1,789

(7)

$ 389,559

$ 5,403

$ (485)

50,144

$ 394,477

The Bank executes transactions for the purchase of securities under agreements to
resell primarily to temporarily add reserve balances to the banking system. Conversely,
transactions to sell securities under agreements to repurchase are executed to temporarily drain reserve balances from the banking system and as part of a service offering
to foreign official and international account holders.
There were no material transactions related to securities purchased under agreements to resell during the years ended December 31, 2012 and 2011. Financial information related to securities sold under agreements to repurchase for the years ended
December 31 was as follows (in millions):
Allocated to the Bank Total SOMA
Contract amount outstanding,
end of year
Average daily amount outstanding,
during the year
Maximum balance outstanding,
during the year
Securities pledged (par value),
end of year
Securities pledged (market value),
end of year

2012

2011

2012

2011

$60,096

$46,458

$107,188

$99,900

49,057

32,647

91,898

72,227

68,703

57,903

122,541

124,512

52,448

40,035

93,547

86,089

60,096

46,458

107,188

99,900

Federal Reserve bank of New York
2012 Annual Report

The remaining maturity distribution of Treasury securities, GSE debt securities,
federal agency and GSE MBS bought outright, and securities sold under agreements
to repurchase that were allocated to the Bank at December 31, 2012 and 2011 was as
follows (in millions):
16 Days 91 Days Over Over
Within
to
to
1 Year to 5 Years to Over 10
15 Days 90 Days 1 Year 5 Years 10 Years
Years Total
December 31, 2012:
Treasury
securities
(par value)
$
— $
3 $
9 $212,194 $ 483,514 $238,411 $ 934,131
GSE debt
securities
(par value)
877 1,567 8,523 29,619 1,146 1,316 43,048
Federal agency
and GSE
MBS (par value)1 —
—
1
1 1,326 518,208 519,536
Securities sold
under
agreements
to repurchase
(contract
amount) 60,096
— —
—
—
— 60,096
December 31, 2011:
Treasury
securities
(par value)
$ 7,555 $12,605 $41,807 $302,138 $ 302,238 $107,231 $ 773,574
GSE debt
securities
(par value) 1,161 2,335 9,159 28,183 6,433 1,091 48,362
Federal agency
and GSE
MBS (par value)1 —
— —
6
16 389,537 389,559
Securities sold
under
agreements
to repurchase
(contract
amount) 46,458
— —
—
—
— 46,458
1 The

par amount shown for federal agency and GSE MBS is the remaining principal balance of

the securities.

Federal agency and GSE MBS are reported at stated maturity in the table above. The
estimated weighted average life of these securities, which differs from the stated maturity
primarily because it factors in scheduled payments and prepayment assumptions, was
approximately 3.3 years and 2.4 years as of December 31, 2012 and 2011, respectively.

The amortized cost and par value of Treasury securities and GSE debt securities
that were loaned from the SOMA at December 31 were as follows (in millions):
Allocated to the Bank Total SOMA
2012
2011
2012
2011
Treasury securities (amortized cost)
$5,124
$7,032
$9,139
$15,121
Treasury securities (par value)
4,743
6,500
8,460
13,978
GSE debt securities (amortized cost)
391
593
697
1,276
GSE debt securities (par value)
379
565
676
1,216
The Bank enters into commitments to buy and sell Treasury securities and records
the related securities on a settlement-date basis. As of December 31, 2012, there were
no outstanding commitments.
The Bank enters into commitments to buy and sell federal agency and GSE MBS
and records the related securities on a settlement-date basis. As of December 31,
2012, the total purchase price of the federal agency and GSE MBS under outstanding
purchase commitments was $118,215 million, of which $10,164 million was related
to dollar roll transactions. The total purchase price of outstanding purchase commitments allocated to the Bank was $66,278 million, of which $5,699 million was related
to dollar roll transactions. As of December 31, 2012, there were no outstanding sales
commitments for federal agency and GSE MBS. These commitments, which had
contractual settlement dates extending through February 2013, are for the purchase
of TBA MBS for which the number and identity of the pools that will be delivered
to fulfill the commitment are unknown at the time of the trade. These commitments
are subject to varying degrees of off-balance-sheet market risk and counterparty credit
risk that result from their future settlement. The Bank requires the posting of cash collateral for commitments as part of the risk management practices used to mitigate the
counterparty credit risk.

Federal Reserve bank of New York
2012 Annual Report

Other investments consist of cash and short-term investments related to the
federal agency and GSE MBS portfolio. Other liabilities, which are related to federal
agency and GSE MBS purchases and sales, include the Bank’s obligation to return cash
margin posted by counterparties as collateral under commitments to purchase and sell
federal agency and GSE MBS. In addition, other liabilities include obligations that
arise from the failure of a seller to deliver securities to the Bank on the settlement date.
Although the Bank has ownership of and records its investments in the MBS as of the
contractual settlement date, it is not obligated to make payment until the securities are
delivered, and the amount included in other liabilities represents the Bank’s obligation
to pay for the securities when delivered. The amount of other investments and other
liabilities allocated to the Bank and held in the SOMA at December 31 was as follows
(in millions):
Allocated to the Bank Total SOMA
2012
2011
2012
2011
Other investments
$ 13
$ —
$ 23
$ —
Other liabilities:
Cash margin
$1,733
$591
$3,092
$1,271
Obligations from MBS
transaction fails
48
45
85
97
Total other liabilities

$ 1,781

$636

$3,177

$1,368

Information about transactions related to Treasury securities, GSE debt securities,
and federal agency and GSE MBS during the years ended December 31, 2012 and
2011, is summarized as follows (in millions):
Allocated to the Bank
Federal
Total Agency
Treasury
GSE Debt
and
Bills Notes Bonds
Securities
Securities
GSE MBS
Balance at December 31, 2010
$ 7,517 $ 320,965 $106,891 $ 435,373
$ 62,421
$ 409,969
Purchases1
107,531
320,871
72,472
500,874
—
19,600
Sales1
—
(64,052)
—
(64,052)
—
—
Realized gains, net2
—
1,050
—
1,050
—
—
Principal payments and maturities (107,534)
(30,362)
—
(137,896)
(19,269)
(87,742)
Amortization of premiums
and accretion of discounts, net
3
(2,011)
(2,251)
(4,259)
(746)
(1,416)
Inflation adjustment on
inflation-indexed securities
—
578
493
1,071
—
—
Annual reallocation adjustment4
1,050
63,059
17,684
81,793
7,738
54,066
Balance at December 31, 2011 $ 8,567 $ 610,098 $195,289 $ 813,954
$ 50,144
$ 394,477
Purchases1
60,210
210,465
140,738
411,413
—
232,087
Sales1
—
(270,524)
(6,310)
(276,834)
—
—
Realized gains, net2
—
6,478
673
7,151
—
—
Principal payments and maturities (70,541)
(35,215)
—
(105,756)
(14,415)
(174,811)
Amortization of premiums
and accretion of discounts, net
3
(2,909)
(4,038)
(6,944)
(603)
(2,845)
Inflation adjustment on
inflation-indexed securities
—
351
572
923
—
—
Annual reallocation adjustment4 1,761 121,646 47,015 170,422 9,434 83,893
Balance at December 31, 2012

—

$ 640,390

$373,939

$1,014,329

$ 44,560

$ 532,801

Year ended December 31, 2011
Supplemental information –
par value of transactions:
Purchases3
Sales3

$107,534
—

$ 312,986
(62,701)

$ 57,126
—

$ 477,646
(62,701)

—
—

$ 19,046
—

Year ended December 31, 2012
Supplemental information –
par value of transactions:
Purchases3
Sales3

$ 60,212
—

$ 202,776
(262,334)

$109,286
(4,897)

$ 372,274
(267,231)

—
—

$ 222,141
—

1 Purchases and sales are reported on a settlement-date basis and may include payments and receipts related to principal, premiums,

discounts, and inflation compensation adjustments to the basis of inflation-indexed securities. The amount reported as sales
includes the realized gains and losses on such transactions. Purchases and sales exclude MBS TBA transactions that are settled
on a net basis.
2 Realized gains, net, offset the amount of realized gains and losses included in the reported sales amount.
3 Includes inflation compensation.
4 Reflects the annual adjustment to the Bank’s allocated portion of the related SOMA securities that results from the annual
settlement of the interdistrict settlement account, as discussed in Note 3k.

Federal Reserve bank of New York
2012 Annual Report

Information about transactions related to Treasury securities, GSE debt securities,
and federal agency and GSE MBS during the years ended December 31, 2012 and
2011, is summarized as follows (in millions):
Total SOMA
Federal
Total Agency
Treasury
GSE Debt
and
Bills Notes Bonds
Securities
Securities
GSE MBS
Balance at December 31, 2010
$ 18,422 $ 786,575 $261,955 $ 1,066,952
$152,972
$ 1,004,695
Purchases1
239,487
731,252
161,876
1,132,615
—
42,145
Sales1
—
(137,733)
—
(137,733)
—
—
Realized gains, net2
—
2,258
—
2,258
—
—
Principal payments and maturities (239,494)
(67,273)
—
(306,767)
(43,466)
(195,413)
Amortization of premiums
and accretion of discounts, net
8
(4,445)
(4,985)
(9,422)
(1,678)
(3,169)
Inflation adjustment
on inflation-indexed securities
—
1,283
1,091
2,374
—
—
Balance at December 31, 2011 $ 18,423 $1,311,917 $ 419,937 $1,750,277
$107,828
$ 848,258
Purchases1
118,886
Sales1
—
Realized gains, net2
—
Principal payments and maturities (137,314)
Amortization of premiums
and accretion of discounts, net
5
Inflation adjustment
on inflation-indexed securities
—

397,999
(507,420)
12,003
(67,462)

263,991
(11,727)
1,252
—

780,876
(519,147)
13,255
(204,776)

—
—
—
(27,211)

431,487
—
—
(324,181)

(5,461)

(7,531)

(12,987)

(1,138)

(5,243)

643

1,047

1,690

—

Balance at December 31, 2012

—

$1,142,219

$666,969

$1,809,188

$ 79,479

$ 950,321

Year ended December 31, 2011
Supplemental information –
par value of transactions:
Purchases3
Sales3

$ 239,494
—

$ 713,878
(134,829)

$127,802
—

$ 1,081,174
(134,829)

—
—

Year ended December 31, 2012
Supplemental information –
par value of transactions:
Purchases3
Sales3

$118,892
—

$ 383,106
(492,234)

$205,115
(9,094)

$ 707,113
(501,328)

—
—

$ 413,160
—

40,955
—

1 Purchases and sales are reported on a settlement-date basis and may include payments and receipts related to principal, premiums,

b. Foreign-Currency-Denominated Assets
The Bank conducts foreign currency operations and, on behalf of the Reserve Banks,
holds the resulting foreign-currency-denominated assets in the SOMA.
The Bank holds foreign currency deposits with foreign central banks and the Bank
for International Settlements and invests in foreign government debt instruments of
Germany, France, and Japan. These foreign government debt instruments are guaranteed as to principal and interest by the issuing foreign governments. In addition,
the Bank enters into transactions to purchase euro-denominated government debt
securities under agreements to resell for which the accepted collateral is the debt instruments issued by the governments of Belgium, France, Germany, Italy, the Netherlands,
and Spain.
The Bank’s allocated share of activity related to foreign currency operations was
32.258 percent and 28.963 percent at December 31, 2012 and 2011, respectively.
Information about foreign-currency-denominated assets, including accrued interest, valued at amortized cost and foreign currency market exchange rates at December 31
was as follows (in millions):
Allocated to the Bank Total SOMA
2012
2011
2012
2011
Euro:
Foreign currency deposits
$2,879
$ 2,713
$ 8,925
$ 9,367
Securities purchased under
agreements to resell
213 — 659
—
German government
debt instruments 703 546 2,178 1,885
French government
debt instruments 797 763 2,470 2,635
Japanese yen:
Foreign currency deposits 1,146
1,154
3,553
3,985
Japanese government
debt instruments 2,318
2,340
7,187
8,078

Total allocated to the Bank $8,056

$7,516

$24,972

$ 25,950

Federal Reserve bank of New York
2012 Annual Report

The remaining maturity distribution of foreign-currency-denominated assets that
were allocated to the Bank at December 31, 2012 and 2011, was as follows (in millions):
Within
16 Days
91 Days Over 1
15
to
to
Year to
Days
90 Days
1 Year
5 Years Total
December 31, 2012:
Euro
$ 2,130
$ 557
$ 698
$ 1,207 $ 4,592
Japanese yen 1,226 158 690 1,390 3,464
Total
$ 3,356
$ 715
$ 1,388
$ 2,597 $8,056
December 31, 2011:
Euro
$ 1,550
$ 849
$ 613
$ 1,010 $ 4,022
Japanese yen 1,211 192 910 1,181 3,494
Total
$ 2,761
$ 1,041
$ 1,523
$ 2,191 $7,516
There were no foreign exchange contracts related to open market operations outstanding as of December 31, 2012.
The Bank enters into commitments to buy foreign government debt instruments
and records the related securities on a settlement-date basis. As of December 31, 2012,
there were no outstanding commitments to purchase foreign government debt instruments. During 2012, there were purchases, sales, and maturities of foreign government
debt instruments of $4,959 million, $0, and $4,840 million, respectively, of which
$1,580 million, $0, and $1,542 million, respectively, were allocated to the Bank.
In connection with its foreign currency activities, the Bank may enter into transactions that are subject to varying degrees of off-balance-sheet market risk and counterparty credit risk that result from their future settlement. The Bank controls these risks
by obtaining credit approvals, establishing transaction limits, receiving collateral in
some cases, and performing daily monitoring procedures.
At December 31, 2012 and 2011, the authorized warehousing facility was
$5 billion, with no balance outstanding.
There were no transactions related to the authorized reciprocal currency arrangements with the Bank of Canada and the Bank of Mexico during the years ended
December 31, 2012 and 2011.
Foreign currency working balances held and foreign exchange contracts executed
by the Bank to facilitate its international payments and currency transactions it made
on behalf of foreign central banks and U.S. official institution customers were not
material as of December 31, 2012 and 2011.

c. Central Bank Liquidity Swaps
U.S. Dollar Liquidity Swaps
The Bank’s allocated share of U.S. dollar liquidity swaps was approximately
32.258 percent and 28.963 percent at December 31, 2012 and 2011, respectively.
The total foreign currency held under U.S. dollar liquidity swaps in the SOMA at
December 31, 2012 and 2011, was $8,889 million and $99,823 million, respectively,
of which $2,867 million and $28,912 million, respectively, were allocated to the Bank.
The remaining maturity distribution of U.S. dollar liquidity swaps that were allocated to the Bank at December 31 was as follows (in millions):
2012

2011

Within 16 Days Within 16 Days
15
to 15
to
Days
90 Days Total Days
90 Days Total
Euro
$ 562
$2,305
$2,867 $ 9,951 $ 14,795 $ 24,746
Japanese yen —
—
— 2,617 1,435 4,052
Swiss franc —
—
— 92 22 114
Total
$562
$2,305
$2,867 $ 12,660 $ 16,252 $ 28,912

Foreign Currency Liquidity Swaps
There were no transactions related to the foreign currency liquidity swaps during the
years ended December 31, 2012 and 2011.
d. Fair Value of SOMA Assets
The fair value amounts presented below are solely for informational purposes.
Although the fair value of SOMA security holdings can be substantially greater than or
less than the recorded value at any point in time, these unrealized gains or losses have
no effect on the ability of the Reserve Banks, as the central bank, to meet their financial
obligations and responsibilities.
The fair value of the fixed-rate Treasury securities, GSE debt securities, federal
agency and GSE MBS, and foreign government debt instruments in the SOMA’s holdings is subject to market risk, arising from movements in market variables such as interest rates and credit risk. The fair value of federal agency and GSE MBS is also affected
by the expected rate of prepayments of mortgage loans underlying the securities. The
fair value of foreign government debt instruments is affected by currency risk. Based
on evaluations performed as of December 31, 2012, there are no credit impairments of
SOMA securities holdings as of that date.

Federal Reserve bank of New York
2012 Annual Report

The following table presents the amortized cost and fair value of the Treasury
securities, GSE debt securities, federal agency and GSE MBS, and foreign-currencydenominated assets, net, held in the SOMA at December 31 (in millions):
Allocated to the Bank
2012
2011

Fair Value
Fair Value

Greater than
Greater than
Amortized Amortized Amortized Amortized
Cost
Fair Value
Cost
Cost
Fair Value
Cost
Treasury securities:
Bills
$
— $
— $
— $
8,567 $
8,567 $
—
Notes
640,390
680,173
39,783
610,098
646,144
36,046
Bonds
373,939
426,735
52,796
195,289
236,565
41,276
GSE debt securities
44,560
47,658
3,098
50,144
53,125
2,981
Federal agency and GSE MBS
532,801
557,285
24,484
394,477
416,444
21,967
Foreign-currencydenominated assets
8,056
8,110
54
7,516
7,564
48
Total SOMA portfolio
securities holdings
$1,599,746 $1,719,961 $120,215 $1,266,091 $1,368,409 $102,318
Memorandum–commitments for:
Purchases of Treasury securities $
— $
— $
— $
1,488 $
1,492 $
Purchases of federal agency and
GSE MBS
66,278
66,380
102
19,301
19,473
Sales of federal agency and
GSE MBS
—
—
—
2,060
2,080
Purchases of foreign government
debt instruments
—
—
—
62
62

4
172
20
—

Fair Value
Fair Value

Greater than
Greater than
Amortized Amortized Amortized Amortized
Cost
Fair Value
Cost
Cost
Fair Value
Cost
Treasury securities:
Bills
$
— $
— $
— $ 18,423 $ 18,423 $
—
Notes
1,142,219 1,213,177
70,958
1,311,917 1,389,429
77,512
Bonds
666,969
761,138
94,169
419,937
508,694
88,757
GSE debt securities
79,479
85,004
5,525
107,828
114,238
6,410
Federal agency and GSE MBS
950,321
993,990
43,669
848,258
895,495
47,237
Foreign-currencydenominated assets
24,972
25,141
169
25,950
26,116
166
Total SOMA portfolio
securities holdings
$2,863,960 $3,078,450 $214,490 $2,732,313 $2,952,395 $220,082
Memorandum–commitments for:
Purchases of Treasury securities $
— $
— $
Purchases of federal agency and
GSE MBS
118,215
118,397
Sales of federal agency and
GSE MBS
—
—
Purchases of foreign
government debt instruments
—
—

— $

3,200 $

3,208

182

41,503

41,873

370

—

4,430

4,473

—

216

—

The fair value of Treasury securities, GSE debt securities, and foreign government
debt instruments was determined using pricing services that provide market consensus
prices based on indicative quotes from various market participants. The fair value
of federal agency and GSE MBS was determined using a pricing service that utilizes
a model-based approach that considers observable inputs for similar securities. The
cost basis of foreign currency deposits adjusted for accrued interest approximates fair
value. The contract amount for euro-denominated securities sold under agreements to
repurchase approximates fair value.
The cost basis of securities purchased under agreements to resell, securities sold
under agreements to repurchase, and other investments held in the SOMA approximate fair value.

Because the Bank enters into commitments to buy Treasury securities, federal
agency and GSE MBS, and foreign government debt instruments and records the related
securities on a settlement-date basis in accordance with the FAM; the related outstanding
commitments are not reflected in the Consolidated Statements of Condition.

Federal Reserve bank of New York
2012 Annual Report

The following table provides additional information on the amortized cost and
fair values of the federal agency and GSE MBS portfolio at December 31 (in millions):
Distribution of MBS
2012
2011
Holdings by Coupon Rate Amortized Cost Fair Value Amortized Cost Fair Value
Allocated to the Bank:
2.0% $
474
$
475
$
— $
—
2.5% 21,060 21,174
—
—
3.0% 90,048 90,690
610
621
3.5% 100,686 103,582
9,029
9,143
4.0% 77,235 81,830 75,096 78,947
4.5% 147,162 158,206 189,024 200,513
5.0% 70,142 74,126 84,869 89,597
5.5% 22,409 23,446 31,063 32,583
6.0% 3,163 3,301 4,256 4,472
6.5% 422 455
530
568

Total $532,801
$557,285
$394,477 $ 416,444
Total SOMA:
2.0% $
845
$
846
$
—
$
—
2.5% 37,562 37,766
—
—
3.0% 160,613 161,757
1,313
1,336
3.5% 179,587 184,752 19,415
19,660
4.0% 137,758 145,955 161,481 169,763
4.5% 262,485 282,182 406,465 431,171
5.0% 125,107 132,213 182,497 192,664
5.5% 39,970 41,819 66,795 70,064
6.0% 5,642 5,888 9,152 9,616
6.5% 752 812 1,140 1,221

Total $950,321
$ 993,990
$848,258
$ 895,495

The following tables present the realized gains and the change in the unrealized
gain position of the domestic securities holdings during the year ended December 31,
2012 (in millions):
Allocated to the Bank Total SOMA

Portfolio
Fair Value Portfolio
Fair Value

Holdings
Changes in
Holdings
Changes in
Realized Unrealized Realized Unrealized

Gains1
Gains2
Gains1
Gains2
Treasury securities
$ 7,151
$ 595
$13,255
$ (1,142)
GSE debt securities
— (468)
— (885)
Federal agency and
GSE MBS
124
(2,142)
241
(3,568)

Total

$ 7,275

$(2,015)

$13,496

$ (5,595)

1 Total portfolio holdings realized gains are reported in “Noninterest income (loss): System

Open Market Account” in the Consolidated Statements of Income and Comprehensive
Income.
2 Because SOMA securities are recorded at amortized cost, unrealized gains (losses) are not
reported in the Consolidated Statements of Income and Comprehensive Income.

The amount of change in unrealized gains, net, related to foreign-currency-
denominated assets was an increase of $3 million for the year ended
December 31, 2012, of which $0.9 million was allocated to the Bank.

Federal Reserve bank of New York
2012 Annual Report

The following tables present the classification of SOMA financial assets at fair value
as of December 31 by ASC 820 hierarchy (in millions):
Allocated to the Bank

2012
2011
Total Total

Fair
Fair
Level 1 Level 2 Level 3 Value Level 1 Level 2 Level 3 Value
Assets:
Treasury securities
$—
GSE debt securities
—
Federal agency and
GSE MBS
—
Foreign government debt
instruments
—
Total assets
$—

$1,106,908
47,658

$—
—

$ 1,106,908
47,658

$—
—

$ 891,276
53,125

557,285

—

557,285

—

416,444

3,872
$1,715,723

—
$—

3,872
$1,715,723

—
$—

3,696
$1,364,541

$ — $ 891,276
—
53,125
—

416,444

—
3,696
$ — $1,364,541

Total SOMA
2012
2011
Total Total
Fair Fair
Level 1 Level 2 Level 3 Value Level 1 Level 2 Level 3 Value
Assets:
Treasury securities
$—
GSE debt securities
—
Federal agency and
GSE MBS
—
Foreign government debt
instruments
—
Total assets
$—

$1,974,315
85,004

$—
—

$ 1,974,315
85,004

$—
—

$ 1,916,545
114,238

993,990

—

993,990

—

895,495

12,003
$3,065,312

—
$—

12,003
$3,065,312

—
$—

12,762
$2,939,040

$ — $ 1,916,545
—
114,238
—

895,495

—
12,762
$ — $2,939,040

The SOMA financial assets are classified as Level 2 in the table above because the
fair values are based on indicative quotes and other observable inputs obtained from
independent pricing services that, in accordance with ASC 820, are consistent with the
criteria for Level 2 inputs. Although information consistent with the criteria for Level 1
classification may exist for some portion of the SOMA assets, all securities in each asset
class were valued using the inputs that are most applicable to the securities in the asset
class. The inputs used for valuing the SOMA financial assets are not necessarily an
indication of the risk associated with those assets.

6. INVESTMENTS HELD BY COnsolIDATED VARIABLE
INTEREST ENTITIES
a. Summary Information for Consolidated Variable Interest Entities
The total assets of consolidated VIEs, including cash, cash equivalents, accrued interest,
and other receivables at December 31, were as follows (in millions):
2012

2011

ML
$ 1,811
$ 7,805
ML II
61 9,257
ML III
22 17,820
TALF LLC 856
811

Total

$2,750

$35,693

The Bank’s approximate maximum exposure to loss at December 31, 2012 and
2011, was $829 million and $24,606 million, respectively. These estimates incorporate
potential losses associated with assets recorded on the Bank’s balance sheet, net of the
fair value of subordinated interests (beneficial interest in consolidated VIEs).
The classification of significant assets and liabilities of the consolidated VIEs at
December 31 was as follows (in millions):
Assets:
2012
2011
CDOs
$ — $17,854
Nonagency RMBS
2 10,903
Federal agency and GSE MBS
1
440
Commercial mortgage loans
466 2,861
Swap contracts
408
657
Residential mortgage loans
—
378
Short-term investments
690 1,076
Other investments
65
282
Subtotal
$1,632 $34,451
Cash, cash equivalents, accrued interest
receivable, and other receivables 1,118 1,242
Total investments held by
consolidated VIEs
$2,750 $35,693
Liabilities:
Beneficial interest in consolidated VIEs
$ 803
$ 9,845

Other liabilities1

$ 415 $

690

1 The amount reported as “Consolidated variable interest entities: Other liabilities” in the

Consolidated Statements of Condition includes $341 million and $554 million related to
cash collateral received on swap contracts at December 31, 2012 and 2011, respectively.
The amount also includes accrued interest and accrued other expenses.

Federal Reserve bank of New York
2012 Annual Report

Total realized and unrealized gains (losses) for the year ended December 31, 2012,
were as follows (in millions):
Total Portfolio Total Portfolio
Holdings
Fair Value Changes
Holdings
Realized Gains Unrealized Gains Realized/Unrealized
(Losses)
(Losses)
Gains (Losses)
CDOs
$ 1,110
$ 4,439
$ 5,549
Nonagency RMBS (334) 2,038 1,704
Federal agency and
GSE MBS 12 (13) (1)
Commercial mortgage
loans1 (101) 394 293
Swap contracts 75 (165) (90)
Residential mortgage
loans1 (326) 322 (4)
Short-term investments —
2
2
Other investments (1) (1) (2)
Total

$ 435

$ 7,016

$7,451

1 Substantially all unrealized gains (losses) on the commercial and residential mortgage loans

are attributable to changes in instrument-specific credit risk.

Total realized and unrealized gains (losses) for the year ended December 31, 2011,
were as follows (in millions):
Total Portfolio Total Portfolio
Holdings
Fair Value Changes
Holdings
Realized Gains Unrealized Gains Realized/Unrealized
(Losses)
(Losses)
Gains (Losses)
CDOs
$ (60)
$ (3,278)
$ (3,338)
Nonagency RMBS 227 (1,084)
(857)
Federal agency and
GSE MBS 1,221
(895)
326
Commercial mortgage
loans1 (368) 407 39
Swap contracts (258) 225 (33)
Residential mortgage
loans1 (312)
263 (49)
Other investments 29
3
32
Other derivatives (51)
11
(40)
Total

$ 428

$ (4,348)

$ (3,920)

1 Substantially

all unrealized gains (losses) on the commercial and residential mortgage loans

are attributable to changes in instrument-specific credit risk.

The net income (loss) attributable to ML, ML II, ML III, and TALF LLC for the
year ended December 31, 2012, was as follows (in millions):
TALF
ML ML II ML III LLC Total
Interest income:
Portfolio interest income
$ 34 $ 52
$1,023
$ 1 $ 1,110
Less: Interest expense
45 7 97
4 153
Net interest income (loss) (11)

Noninterest income:
Portfolio holdings
gains, net
553 1,392
Realized losses on
beneficial interest in
consolidated VIEs
— (453)
Unrealized gains
(losses) on beneficial
interest in consolidated VIEs — 216

926

(3)

5,506

—

(2,905)

—

957

7,451
(3,358)

801

(4)1 1,013

Net noninterest income (loss) 553 1,155 3,402

(4) 5,106

Total net interest income
and noninterest
income (loss)

542

1,200 4,328

(7)

6,063

Less: Professional fees

1 11

—

Net income (loss)
attributable to
consolidated VIEs

$ 529

$(7)2

$6,038

$1,199

$4,317

1 The TALF LLC’s unrealized loss on beneficial interest represents the Treasury’s financial

interest in the net income of TALF LLC for the year ended December 31, 2012.

2 Additional information regarding TALF-related income recorded by the Bank is presented

in Note 4.

Federal Reserve bank of New York
2012 Annual Report

The net income (loss) attributable to ML, ML II, ML III, and TALF for the year
ended December 31, 2011, was as follows (in millions):
TALF
ML ML II ML III LLC Total
Interest income:
Portfolio interest income
$ 808 $ 609
$2,012 $ — $3,429
Less: Interest expense
70 36 175 4 285
Net interest income (loss) 738 573 1,837

(4) 3,144

Noninterest income:
Portfolio holdings
gains (losses), net
434 (991) (3,363)
Unrealized gains
(losses) on beneficial
interest in consolidated VIEs (114) 91 558

(44)1 491

Net noninterest income (loss) 320 (900) (2,805)

(44) (3,429)

Total net interest income
and noninterest
income (loss)
Less: Professional fees
Net income (loss)
attributable to
consolidated VIEs

— (3,920)

1,058

(327) (968)

(48)

(285)

8 20

—

$1,015 $(335)

$ (988)

$ (48)2

$(356)

1 The TALF LLC’s unrealized loss on beneficial interest represents the Treasury’s financial

interest in the net income of TALF LLC for the year ended December 31, 2011.

2 Additional information regarding TALF-related income recorded by the Bank is presented

in Note 4.

Following is a summary of the consolidated VIEs’ subordinated financial interest
for the years ended December 31, 2012 and 2011 (in millions):

ML II

ML Deferred
ML III TALF

Subordinated Purchase Equity
Financial
Loan Price Contribution Interest Total
Fair value,
December 31, 2010 $ 1,201
$ 1,387
$ 6,733
$ 730 $ 10,051
Interest accrued
and capitalized
70
36
175 4
285
Unrealized (gain)/loss
114 (91) (558) 44 (491)
Fair value,
December 31, 2011 $ 1,385

$ 1,332

$ 6,350

$ 778

Interest accrued

and capitalized
$
45
$
7
$
97
$
Realized (gain)/loss
— 453 2,905
Unrealized (gain)/loss
— (216) (801)
Repayments1 (1,430) (1,566) (8,544)
Fair value, at
December 31, 2012 $

—

$ 9,845

4 $
153
— 3,358
4 (1,013)
— (11,540)

$786

803

1 For ML, includes payments of $1,150 million of principal and $280 million of interest.

For ML II, includes payments of $1,000 million of principal, $113 million of interest,
and $453 million of variable deferred purchase price. For ML III, includes payments of
$5,000 million of principal, $639 million of interest, and $2,905 million of excess amounts.

b. Maiden Lane LLC
To facilitate the merger of The Bear Stearns Companies, Inc. (Bear Stearns), and
JPMorgan Chase & Co. (JPMC), the Bank extended credit to ML in June 2008. ML
is a Delaware limited-liability company formed by the Bank to acquire certain assets of
Bear Stearns and to manage those assets over time, in order to maximize the potential
for the repayment of the credit extended to ML and to minimize disruption to the
financial markets. The assets acquired by ML were valued at $29.9 billion as of March 14,
2008, the date that the Bank committed to the transaction, and largely c onsisted of
federal agency and GSE MBS, nonagency RMBS, commercial and residential m
ortgage
loans, and derivatives and associated hedges.
The Bank extended a senior loan of approximately $28.8 billion and JPMC
extended a subordinated loan of $1.15 billion to finance the acquisition of the assets.
The two-year accumulation period that followed the closing date for ML ended on
June 26, 2010. Consistent with the terms of the ML transaction, the distributions of

Federal Reserve bank of New York
2012 Annual Report

the proceeds realized on the asset portfolio held by ML, after payment of certain fees
and expenses, now occur on a monthly basis unless otherwise directed by the Federal
Reserve. On June 14, 2012, the remaining outstanding balance of the senior loan from
the Bank to ML was repaid in full, with interest. On November 15, 2012, the remaining outstanding balance of the subordinated loan from JPMC was repaid in full, with
interest. The interest rate on the JPMC subordinated loan was the primary credit rate
plus 450 basis points. The Bank will continue to sell the remaining assets from the ML
portfolio as market conditions warrant and if the sales represent good value for the
public. In accordance with the ML agreements, proceeds from future asset sales will
be distributed to the Bank as contingent interest after all derivative instruments in ML
have been terminated and paid or sold from the portfolio.
As of December 31, 2012, ML’s investments consisted primarily of commercial
mortgage loans, credit default swaps (CDS), and short-term investments with maturities of greater than three months and less than one year when acquired (primarily consisting of U.S. Treasury bills). The following is a description of the significant holdings
at December 31, 2012, and the associated risk for each holding:
i. Debt Securities
ML has investments in short-term instruments with maturities of greater than three
months and less than one year when acquired. As of December 31, 2012, ML had
approximately $251 million in U.S. Treasury bills. Other investments are primarily
comprised of commercial mortgage-backed securities (CMBS) and various other structured debt instruments.
At December 31, 2012, the ratings breakdown of the $320 million of debt securities, which are recorded at fair value in the ML portfolio as a percentage of aggregate
fair value of all securities in the portfolio, was as follows:
Ratings1, 3
AA+ to A+ to BBB+ to BB+ and Government Not
AAA AA- A- BBB- Lower
/Agency Rated4 Total
Security type:2
Short-term investments 0.0%
Nonagency RMBS 0.0%
Federal agency and
GSE MBS 0.0%
Other investments 0.0%
Total 0.0%

0.0%
0.0%

0.0%
0.5%

78.4%
0.0%

0.0%
0.0%

78.4%
0.5%

0.0%
0.0%
0.0%

0.0%
2.6%
2.6%

0.0%
6.9%
7.4%

0.2%
0.0%
78.5%

0.0%
11.4%
11.4%

0.2%
21.0%
100.0%

1 Lowest of all ratings is used for the purposes of this table if rated by two or more nationally recognized statistical

rating organizations.
This table does not include ML commercial mortgage loans and swap contracts.
3 Rows and columns may not total due to rounding.
4 Not rated by a nationally recognized statistical rating organization as of December 31, 2012.
2

ii. Commercial Mortgage Loans
Commercial mortgage loans are subject to a high degree of credit risk because of exposure to financial loss resulting from failure by a counterparty to meet its contractual
obligations. Default rates are subject to a wide variety of factors, including, but not
limited to, property performance, property management, supply and demand, construction trends, consumer behavior, regional economic conditions, interest rates, and
other factors.
The performance profile for the commercial mortgage loans at December 31, 2012,
was as follows (in millions, except percentage data):
Unpaid
Fair Value as a
Principal Percentage of Unpaid
Balance Fair Value Principal Balance
Commercial mortgage loans:
Performing loans
$176
$144
81.8%
1
Nonperforming/nonaccrual loans 519 322
62.0%
Total

$695

$466

67.1%

1 Nonperforming/nonaccrual loans include loans with payments past due greater than
ninety days.

The following table summarizes the property types of the commercial mortgage
loans held in the ML portfolio at December 31, 2012 (in millions, except percentage data):

Unpaid Principal
Concentration of Unpaid
Property Type Balances Principal Balances
Office1

$ 601

86.4%

Hospitality 86

12.4%

Other2 8

1.2%

Total

$695

100.0%

1 One sponsor represented in the office property type amount accounts for approximately

86 percent of total unpaid principal balance of the commercial mortgage loan portfolio.

No other individual property type comprises more than 5 percent of the total.

Commercial mortgage loans held by ML are composed of different levels of subordination with respect to the underlying properties, and relative to each other. Senior
mortgage loans are secured property loans evidenced by a first mortgage that is senior

Federal Reserve bank of New York
2012 Annual Report

to any subordinate or mezzanine financing. Subordinate mortgage interests, sometimes
known as B Notes, are loans evidenced by a junior note or a junior participation in a
mortgage loan. Mezzanine loans are loans made to the direct or indirect owner of the
property-owning entity. Mezzanine loans are not secured by a mortgage on the property but rather by a pledge of the mezzanine borrower’s direct or indirect ownership
interest in the property-owning entity.
The following table summarizes commercial mortgage loans held by ML at
December 31, 2012 (in millions, except percentage data):
Unpaid Principal
Concentration of Unpaid
Loan Type Balances Principal Balances
Senior mortgage loans
$ 91
Subordinate mortgage interests 38
Mezzanine loans 566
Total $695

13.1%
5.5%
81.4%
100.0%

iii. Derivative Instruments
Derivative contracts are instruments, such as swap contracts, that derive their value
from underlying assets, indexes, reference rates, or a combination of these factors.
The ML portfolio is composed of derivative financial instruments included in a total
return swap (TRS) agreement with JPMC. ML and JPMC entered into the TRS with
reference obligations representing CDS primarily on RMBS and CMBS, with various
market participants, including JPMC. ML, through its investment manager, currently
manages the CDS contracts within the TRS as a runoff portfolio and may unwind,
amend, or novate reference obligations on an ongoing basis.
On an ongoing basis, ML pledges collateral for credit- or liquidity-related shortfalls
based on 20 percent of the notional amount of sold CDS protection and 10 percent of
the present value of future premiums on purchased CDS protection. Failure to post
this collateral constitutes a TRS event of default. Separately, ML and JPMC engage
in bilateral posting of collateral to cover the net mark-to-market (MTM) variations in
the swap portfolio. ML only nets the collateral received from JPMC from the bilateral
MTM posting for the reference obligations for which JPMC is the counterparty.
The values of ML’s cash equivalents, purchased by the rehypothecation of cash
collateral associated with the TRS, were $0.5 billion and $0.8 billion, for the years
ended December 31, 2012 and 2011, respectively. In addition, ML has pledged
$0.2 billion and $0.6 billion of federal agency and GSE MBS and U.S. Treasury notes
to JPMC as of December 31, 2012 and 2011, respectively.

The following risks are associated with the derivative instruments held by ML as
part of the TRS agreement with JPMC:
Market Risk
CDS are agreements that provide protection for the buyer against the loss of principal
and, in some cases, interest on a bond or loan in case of a default by the issuer. The
nature of a credit event is established by the protection buyer and protection seller
at the inception of a transaction, and such events include bankruptcy, insolvency, or
failure to meet payment obligations when due. The buyer of the CDS pays a premium
in return for payment protection upon the occurrence, if any, of a credit event. Upon
the occurrence of a triggering credit event, the maximum potential amount of future
payments the seller could be required to make under a CDS is equal to the notional
amount of the contract. Such future payments could be reduced or offset by amounts
recovered under recourse or by collateral provisions outlined in the contract, including
seizure and liquidation of collateral pledged by the buyer. ML’s derivatives portfolio
consists of purchased and sold credit protection with differing underlying referenced
names that do not necessarily offset.
Credit Risk
Credit risk is the risk of financial loss resulting from failure by a counterparty to meet
its contractual obligations to ML. This can be caused by factors directly related to the
counterparty, such as business or management. Taking collateral is the most common way to mitigate credit risk. ML takes financial collateral in the form of cash and
marketable securities to cover JPMC counterparty risk as part of the TRS agreement
with JPMC. ML remains exposed to credit risk for counterparties, other than JPMC,
related to the swaps that underlie the TRS.
The following table summarizes the notional amounts of derivative contracts
outstanding as of December 31 (in millions, except contract data):

Credit derivatives:
CDS2

Notional Amounts1
2012

2011

$1,755

$3,940

1 These amounts represent the sum of gross long and gross short notional derivative

contracts. The change in notional amounts is representative of the volume of activity
for the year ended December 31, 2012.

2 There were 470 and 979 CDS contracts outstanding as of December 2012 and 2011,

respectively.

Federal Reserve bank of New York
2012 Annual Report

The following table summarizes the fair value of derivative instruments by
contract type on a gross basis as of December 31, 2012 and 2011, which is reported
as a component of “Investments held by consolidated variable interest entities” in the
Consolidated Statement of Condition (in millions):
2012

2011

Gross
Gross
Gross
Gross
Derivative Derivative Derivative Derivative
Assets Liabilities Assets Liabilities
Credit derivatives:
CDS1
$ 816
$(343)
$ 1,630
$ (791)
Counterparty netting (272) 272 (685) 685
Cash collateral (136)
— (288)
—
Total

$ 408

$ (71)

$ 657

$ (106)

1CDS

fair values as of December 31, 2012, for assets and liabilities include interest receivables

of $15 million and payables of $9 million. CDS fair values as of December 31, 2011, for assets
and liabilities include interest receivables of $22 million and payables of $13 million.

The table below summarizes certain information regarding protection sold through
CDS as of December 31, 2012 and 2011 (in millions):

Maximum Potential Payout/Notional
2012

2011

Years to Maturity Fair Value
Fair Value
After After

1 Year 1 Year 3 Years
Credit Ratings of the
or
through through After 5
Reference Obligation Less 3 Years 5 Years Years Total Liability Total Liability
Investment grade
(AAA to BBB-)
$ —
$ —
$—
$ 52 $ 52
$ (5) $ 92 $ (14)
Noninvestment grade
(BB+ or lower) — — — 438 438 (329) 1,154 (763)
Total credit
protection sold
$ —
$ —
$—
$490 $ 490
$(334) $1,246 $ (777)

The table below summarizes certain information regarding protection bought
through CDS as of December 31, 2012 and 2011 (in millions):

Maximum Potential Recovery/Notional
2012

2011

Years to Maturity Fair Value
Fair Value
After After

1 Year 1 Year 3 Years
Credit Ratings of the
or
through through After 5
Reference Obligation Less 3 Years 5 Years Years Total Asset Total Asset
Investment grade
(AAA to BBB-)
$ — $ —
$ 25 $ 125 $ 150 $ 27
$ 170
$ 46
Noninvestment grade
(BB+ or lower) — — 9 1,106 1,115 774 2,525 1,562
Total credit
protection bought $ —
$ —
$ 34 $ 1,231 $1,265 $ 801 $2,695
$1,608
Currency Risk
Currency risk is the risk of financial loss resulting from exposure to changes in
exchange rates between two currencies. Under the terms of the TRS, JPMC may post
cash collateral in the form of either U.S. dollar or euro-denominated currencies to
cover the net MTM variation in the swap portfolio. Starting in December 2012, JPMC
began posting a portion of its collateral in euro currency. This risk is mitigated by daily
variation margin updates that capture the movement in the value of the swap portfolio
in addition to any movement in exchange rates on the swap collateral.
Swap collateral received that is denominated in a foreign currency is translated into
U.S. dollar amounts using the prevailing exchange rate as of the date of the consolidated
financial statements. There is no gain or loss associated with this foreign-denominated
collateral, as the asset and liability positions associated with it are offsetting.
c. Maiden Lane II LLC
Concurrent with the November 2008 restructuring of its financial support to AIG,
the Bank extended credit to ML II, a Delaware limited-liability company formed
to purchase nonagency RMBS from the reinvestment pool of the securities lending
portfolios of several regulated U.S. insurance subsidiaries of AIG. ML II borrowed
$19.5 billion from the Bank and used the proceeds to purchase nonagency RMBS that
had an approximate fair value of $20.8 billion as of October 31, 2008, from AIG’s
domestic insurance subsidiaries. The Bank is the sole and managing member and the

Federal Reserve bank of New York
2012 Annual Report

controlling party of ML II and will remain as the controlling party as long as the Bank
retains an economic interest in ML II. As part of the agreement, the AIG subsidiaries
also received from ML II a fixed deferred purchase price of up to $1.0 billion, plus
interest on any such fixed deferred purchase price outstanding. After repayment in
full of the Bank’s loan and the fixed deferred purchase price (each including accrued
interest), any net proceeds will be distributed as contingent interest to the Bank, which
is entitled to receive five-sixths, and as variable deferred purchase price to the AIG
subsidiaries, which are entitled to receive one-sixth, in accordance with the agreement.
On March 30, 2011, the Federal Reserve announced that the Bank, through its
investment manager, BlackRock Financial Management, Inc., would dispose of the
securities in the ML II portfolio individually and in segments through a competitive
sales process over time as market conditions warrant. During the year ended December 31,
2011, a total of nine bid list auctions were conducted and assets with a total current
face amount of $9.96 billion were sold. On February 28, 2012, the Bank announced
the sale of the remaining securities in the ML II portfolio. On March 1, 2012, the loan
from the Bank to ML II was repaid in full with interest, in accordance with the terms
of the facility. On March 15, 2012, the remaining portion of the fixed deferred purchase price plus interest owed to the AIG subsidiaries was repaid in full. Concurrently,
distributions were made to the Bank and the AIG subsidiaries in the form of contingent
interest and variable deferred purchase price for the amounts of $2.3 billion and
$0.5 billion, respectively.
On March 19, 2012, ML II was dissolved, and the Bank began the wind-up process
in accordance with and as required by Delaware law and the agreements governing
ML II. Winding up requires ML II to pay or make reasonable provision to pay all claims
and obligations of ML II before distributing its remaining assets. While its affairs are
being wound up, ML II is retaining certain assets to meet trailing expenses and other
obligations as required by law. Dissolution costs are not expected to be material.
d. Maiden Lane III LLC
The Bank extended credit to ML III, a Delaware limited-liability company formed
to purchase ABS CDOs from certain third-party counterparties of AIG Financial
Products Corp. ML III borrowed approximately $24.3 billion from the Bank, and AIG
provided an equity contribution of $5.0 billion to ML III. The proceeds were used to
purchase ABS CDOs with a fair value of $29.6 billion. On April 3, 2012, the Bank
revised ML III’s investment objective to allow for asset sales, and began conducting
such sales shortly thereafter. On June 14, 2012, the Bank announced that its loan to
ML III had been repaid in full, with interest. On July 16, 2012, the Bank announced
that net proceeds from additional sales of securities in ML III enabled the full repay-

ment of AIG’s equity contribution plus accrued interest and provided residual profits
to the Bank and AIG. Concurrently, distributions were made to the Bank and AIG in
the form of contingent interest and excess amounts in the amounts of $5.9 billion and
$2.9 billion, respectively. On August 23, 2012, the Bank announced that all remaining securities in ML III were sold. Any remaining proceeds will be divided between
the Bank, which is entitled to receive two-thirds, and AIG (or its assignee), which is
entitled to receive one-third, in accordance with the agreement.
On September 10, 2012, ML III was dissolved, and the Bank began the wind-up
process in accordance with and as required by Delaware law and the agreements
governing ML III. ML III expects the wind-up process to be concluded during 2013.
Winding up requires ML III to pay or make reasonable provision to pay all claims and
obligations of ML III before distributing its remaining assets. While its affairs are being
wound up, ML III is retaining certain assets to meet trailing expenses and other obligations as required by law. Dissolution costs are not expected to be material.
e. TALF LLC
Cash receipts resulting from the put option fees paid to TALF LLC and proceeds from
the Treasury’s loan are invested in the following types of U.S.-dollar-denominated
short-term investments and cash equivalents eligible for purchase by TALF LLC:
(1) U.S. Treasury securities, (2) federal agency securities that are senior, negotiable
debt obligations of Fannie Mae, Freddie Mac, Federal Home Loan Banks, and Federal
Farm Credit Banks, which have a fixed rate of interest, (3) repurchase agreements
that are collateralized by Treasury and federal agency securities and fixed-rate agency
mortgage-backed securities, and (4) money market mutual funds, registered with the
Securities and Exchange Commission and regulated under Rule 2a-7 of the Investment
Company Act, that invest exclusively in U.S. Treasury and federal agency securities.
Cash may also be invested in a demand interest-bearing account held at the Bank of
New York Mellon.
f. Fair Value Measurement
The consolidated VIEs have adopted ASC 820 and ASC 825 and have elected the fair
value option for all securities and commercial and residential mortgages held by ML
and TALF LLC. ML II and ML III qualify as nonregistered investment companies
under the provisions of ASC 946 and, therefore, all investments are recorded at fair
value in accordance with ASC 820. In addition, the Bank has elected to record the
beneficial interests in ML, ML II, ML III, and TALF LLC at fair value.

Federal Reserve bank of New York
2012 Annual Report

The accounting and classification of these investments appropriately reflect the
VIEs’ and the Bank’s intent with respect to the purpose of the investments and most
closely reflect the amount of the assets available to liquidate the entities’ obligations.
i. Determination of Fair Value
The consolidated VIEs value their investments on the basis of the last available bid
prices or current market quotations provided by dealers or pricing services selected
by the Bank’s designated investment managers. To determine the value of a particular
investment, pricing services may use information on transactions in such investments;
quotations from dealers; pricing metrics; market transactions in comparable investments; relationships observed in the market between investments; and calculated yield
measures based on valuation methodologies commonly employed in the market for
such investments.
Market quotations may not represent fair value in circumstances in which the
investment manager believes that facts and circumstances applicable to an issuer, a
seller, a purchaser, or the market for a particular security result in the current market
quotations reflecting an inaccurate measure of fair value. In such cases or when market
quotations are unavailable, the investment manager determines fair value by applying
proprietary valuation models that use collateral performance scenarios and pricing
metrics derived from the reported performance of the universe of investments with
similar characteristics as well as the observable market.
Because of the uncertainty inherent in determining the fair value of investments
that do not have a readily available fair value, the fair value of these investments may
differ significantly from the values that would have been reported if a readily available
fair value had existed for these investments and may differ materially from the values
that may ultimately be realized.
The fair value of the liability for the beneficial interests of consolidated VIEs is
estimated based upon the fair value of the underlying assets held by the VIEs. The holders of these beneficial interests do not have recourse to the general credit of the Bank.
ii. Valuation Methodologies for Level 3 Assets and Liabilities
In certain cases in which there is limited activity around inputs to the valuation, investments are classified within Level 3 of the valuation hierarchy. For example, in valuing
CDOs, certain collateralized mortgage obligations, and commercial and residential
mortgage loans, the determination of fair value is based on collateral performance
scenarios. These valuations also incorporate pricing metrics derived from the reported
performance of the universe of similar investments and from observations and estimates of market data. Because external price information is not available, market-based

models are used to value these securities. Key inputs to the model may include market
spreads or yield estimates for comparable instruments, performance data (i.e., prepayment rates, default rates, and loss severity), valuation estimates for underlying property
collateral, projected cash flows, and other relevant contractual features. Because there
is a lack of observable pricing, securities and investment loans that are carried at fair
value are classified within Level 3.
For the swap agreements, all of which are categorized as Level 3 assets and liabilities,
there are various valuation methodologies. In each case, the fair value of the instrument
underlying the swap is a significant input used to derive the fair value of the swap.
When there are broker or dealer prices available for the underlying instruments, the
fair value of the swap is derived based on those prices. When the instrument underlying
the swap is a market index (i.e., CMBS index), the closing market index price, which
can also be expressed as a credit spread, is used to determine the fair value of the swap.
In the remaining cases, the fair value of the underlying instrument is principally based
on inputs and assumptions not observable in the market (i.e., discount rates, prepayment rates, default rates, and recovery rates).
For ML II, the fair value of the senior loan and the deferred purchase price is determined based on the fair value of the underlying assets held by ML II and the allocation
of ML II’s net investment income or loss and realized gains or losses on investments.
For ML III, the fair value of the senior loan and the equity contribution is determined
based on the fair value of the underlying assets held by ML III and the allocation of
ML III’s net investment income or loss and realized gains or losses on investments.
For TALF LLC, the fair values of the subordinated loan (including the Treasury contingent interest) and the Bank’s contingent interest are determined based on the fair
value of the underlying assets held by TALF LLC and the allocation of TALF LLC’s
gains and losses.

Federal Reserve bank of New York
2012 Annual Report

ML Inputs for Level 3 Assets and Liabilities
The following table presents the valuation techniques and ranges of significant unobservable inputs generally used to determine the fair values of ML’s Level 3 assets and
liabilities as of December 31, 2012 (in millions, except for input values):
Principal

Fair Valuation Unobservable Range of
Instruments Value Technique
Inputs
Input Values
Commercial Discounted Discount rate
6%-20%
mortgage loans $466 cash flows Property

capitalization

rate
6%-10%
Net operating

income growth

rate
3%-7%
2
Discounted Credit spreads
100 bps-6,451 bps
CDS1
$473 cash flows Discount rate
0%-47%

Constant prepayment

rate
0%-20%

Constant default rate
0%-34%
Loss severity
40%-80%
1 Swap assets and liabilities are presented net for the purposes of this table.
2 Implied spread on closing market prices for index positions.

Sensitivity of ML Level 3 Fair Value Measurements to Changes in Unobservable Inputs
The following provides a general description of the impact of a change in an unobservable input on the fair value measurement and the interrelationship of unobservable
inputs.
I. Loans
In general, an increase in isolation in either the discount rate or the property capitalization rate, which is the ratio between the net operating income produced by an asset and
its current fair value, would result in a decrease in the fair value measurement, while
an increase in the net operating income growth rate, in isolation, would result in an
increase in the fair value measurement. For each of the relationships described above,
the inverse would also generally apply.

II. Derivatives
For CDS with reference obligations on CMBS, an increase in credit spreads would
generally result in a higher fair value measurement for protection buyers and a lower
fair value measurement for protection sellers. The inverse would also generally apply to
this relationship given a decrease in credit spreads.
For CDS with reference obligations on RMBS or other ABS assets, changes in the
discount rate, constant prepayment rate, constant default rate, and loss severity would
have an uncertain effect on the overall fair value measurement. This is because, in general, changes in these inputs could potentially affect other inputs used in determining
the fair value measurement. For example, a change in the assumptions used for the
constant default rate will generally be accompanied by a corresponding change in the
assumption used for the loss severity and an inverse change in the assumption used for
constant prepayment rates. Additionally, changes in the fair value measurement based
on variations in the inputs used generally cannot be extrapolated because the relationship between each input is not perfectly correlated.
The following table presents the financial instruments recorded in VIEs at fair value
as of December 31, 2012, by ASC 820 hierarchy (in millions):
2012
Total

Fair
Level 12 Level 22 Level 3 Netting1 Value
Assets:
CDOs
$ —
Nonagency RMBS
—
Federal agency and GSE MBS
—
Commercial mortgage loans
—
Cash equivalents
634
Swap contracts
—
Residential mortgage loans
—
Short-term investments
454
Other investments
—
Total assets
$1,088
Liabilities:
Beneficial interest in
consolidated VIEs
$
Swap contracts
Total liabilities
$

$ —
2
1
—
—
—
—
236
10
$249

—
—
—
466
—
816
—
—
55
$1,337

—
—
—
—
—
(408)
—
—
—
$ (408)

—
2
1
466
634
408
—
690
65
$ 2,266

—
$ 803 $ — $ — $ 803
—
— 343 (272) 71
—
$803
$ 343 $ (272) $ 874

1 Derivative

receivables and payables and the related cash collateral received and paid are

shown net when a master netting agreement exists.

2 There

were no transfers between Level 1 and Level 2 during the year ended

December 31, 2012.

Federal Reserve bank of New York
2012 Annual Report

The following table presents the financial instruments recorded in VIEs at fair value
as of December 31, 2011, by ASC 820 hierarchy (in millions):
2011
Total

Fair
Level 13 Level 23 Level 3 Netting1 Value
Assets:
CDOs
$ — $ 167
Nonagency RMBS
— 5,493
Federal agency and GSE MBS
—
440
Commercial mortgage loans
—
1,464
Cash equivalents
1,171
—
Swap contracts
—
—
Residential mortgage loans
—
—
Short-term investments2
1,076
—
Other investments2
19
126
Total assets
$2,266 $7,690
Liabilities:
Beneficial interest in
consolidated VIEs
$
Swap contracts
Total liabilities
$

— $
—
— $

$ 17,687
5,410
—
1,397
—
1,630
378
—
108
$26,610

— $ 17,854
—
10,903
—
440
—
2,861
—
1,171
(973)
657
—
378
—
1,076
—
253
$(973) $35,593

— $ 9,845 $ — $ 9,845
— 791 (685) 106
— $10,636 $ (685) $ 9,951

1 Derivative

receivables and payables and the related cash collateral received and paid are

shown netted when a master netting agreement exists.

2 Investments

with a fair value of $1,076 million as of December 31, 2011, were recategorized

from “Other investments” to a new line item labeled “Short-term investments” to conform
to the current-year presentation.

3 There

were no significant transfers between Level 1 and Level 2 during the year ended

December 31, 2011.

The table below presents a reconciliation of all assets and liabilities measured at
fair value on a recurring basis using significant unobservable inputs (Level 3) as of
December 31, 2012 (in millions). Unrealized gains and losses related to those assets
still held at December 31, 2012 are reported as a component of “Investments held
by consolidated variable interest entities, net” in the Consolidated Statement of
Condition.

2012

Purchases,
Change in

Sales, Net Unrealized

Issuances, Realized/
Gains (Losses)
Fair Value,
and Unrealized Gross
Gross
Fair Value, Related to Financial
December 31, Settlements, Gains Transfers Transfers December 31, Instruments Held at
2011 Net
(Losses)
In1, 2 Out1, 2
2012 December 31, 2012
Assets:
CDOs
$17,687
$ (23,196)
$ 5,509
$— $
Nonagency RMBS 5,410 (6,347) 937 —
Commercial
mortgage loans 1,397 (1,187) 256 —
Residential
mortgage loans 378 (374) (4) —
Other investments 108
(65)
2 10
Total assets

$24,980

Net swap contracts3 $

839

Liabilities:
Beneficial interest in
consolidated VIEs $ 9,845

—
$ —
$ (2)
— — —
— 466 135
— — (1)
— 55 —

$ (31,169)

$6,700

$ 10

—

$521

$ 132

$ (90)

$—

—

$ 473

$(93)

$ — $(8,460)

$ —

(276)

$ (1,385)

—

1 The amount of transfers is based on the fair values of the transferred assets at the beginning of the reporting period.
2 Beneficial interest in consolidated VIEs, with a December 31, 2011, fair value of $8,460 million, was transferred from Level 3 to

Level 2 because it is valued at December 31, 2012, based on model-based techniques for which all significant inputs are observable
(Level 2). These investments were valued in the prior year on nonobservable model-based inputs (Level 3). There were also certain
other investments for which valuation inputs became less observable during the year ended December 31, 2012, which resulted in
$10 million in transfers from Level 2 to Level 3. There were no other transfers between Level 2 and Level 3 during the current year.

3 Level 3 derivative assets and liabilities are presented net for purposes of this table.

Federal Reserve bank of New York
2012 Annual Report

The following table presents the gross components of purchases, sales, issuances,
and settlements, net, shown for the year ended December 31, 2012 (in millions):
2012
Purchases, Sales,

Issuances, and
Purchases
Sales
Issuances Settlements3 Settlements, Net
Assets:
CDOs
$—
$ (22,206)
$—
$ (990)
$ (23,196)
Nonagency RMBS — (6,221)
—
(126) (6,347)
Commercial mortgage loans — (1,119)
—
(68) (1,187)
Residential mortgage loans —
(370)
—
(4)
(374)
Other investments —
(66)
—
1
(65)
Total assets
Net swap contracts1
Liabilities:
Beneficial interest in
consolidated VIEs

$—

$(29,982)

$—

$ (1,187)

$ (31,169)

$—

(147)

$—

$ (129)

$ 452

—

$—

$ (1,430)

$ (1,385)

(276)

1 Level 3 swap assets and liabilities are presented net for the purposes of this table.
2 Represents accrued and capitalized interest.
3 Includes paydowns.

The table below presents a reconciliation of all assets and liabilities measured at fair value on a recurring basis using
significant unobservable inputs (Level 3) as of December 31, 2011 (in millions). Unrealized gains and losses related to those
assets still held at December 31, 2011, are reported as a component of “Investments held by consolidated variable interest
entities, net” in the Consolidated Statement of Condition.

2011
Purchases,
Change in

Sales, Net Unrealized

Issuances, Realized/
Gains (Losses)
Fair Value,
and Unrealized Gross
Gross
Fair Value, Related to Financial
December 31, Settlements, Gains Transfers Transfers December 31, Instruments Held at
2011 December 31, 2011
2010 Net
(Losses)
In1, 2 Out1, 2
Assets:
CDOs
$ 22,811
$ (1,889) $ (3,351)
$ 116 $
—
$ 17,687
$(3,297)
Nonagency RMBS 6,809 (2,891) (483) 4,066 (2,091) 5,410
(725)
Commercial
mortgage loans 1,931 (626) 92 —
— 1,397
65
Residential
mortgage loans
603 (175) (50) —
—
378
263
Federal agency
and GSE MBS
30 (28)
(2)
—
—
—
—
Other investments
79
(29) (2) 94 (34)
108
(9)
Total assets

$ 32,263

Net swap contracts3 $

970

Liabilities:
Beneficial interest in
consolidated VIEs $ 10,051

$(5,638)

$(3,796)

$4,276 $(2,125)

$ (235)

104

— $

839

$ (491)

— $

— $ 9,845

491

285

$24,980

$ (3,703)

1 The amount of transfers is based on the fair values of the transferred assets at the beginning of the reporting period.
2 Nonagency RMBS, with a December 31, 2010, fair value of $2,091 million, were transferred from Level 3 to Level 2 because they

are valued at December 31, 2011, based on quoted prices in nonactive markets (Level 2). These investments were valued in the prior
year on nonobservable model-based inputs (Level 3). There were also nonagency RMBS, CDOs, and other investments for which
valuation inputs became less observable during the year ended December 31, 2011, which resulted in $4,066 million, $116 million,
and $94 million, respectively, in transfers from Level 2 to Level 3. There were no other significant transfers between Level 2 and
Level 3 during the current year.

3 Level 3 derivative assets and liabilities are presented net for purposes of this table.

Federal Reserve bank of New York
2012 Annual Report

The following table presents the gross components of purchases, sales, issuances,
and settlements, net, shown for the year ended December 31, 2011 (in millions):
2011
Purchases, Sales,

Issuances, and
Purchases
Sales
Issuances Settlements3 Settlements, Net
Assets:
CDOs
$—
$
(6)
$—
$ (1,883)
$ (1,889)
Nonagency RMBS — (1,978)
—
(913) (2,891)
Commercial mortgage loans —
(557)
—
(69)
(626)
Residential mortgage loans —
(97)
—
(78)
(175)
Federal agency and GSE MBS —
(17)
—
(11)
(28)
Other investments 2
(21)
—
(10)
(29)
Total assets
Net swap contracts1
Liabilities:
Beneficial interest in
consolidated VIEs

$ 2

$ (2,676)

$—

$(2,964)

$ (5,638)

$—

(48)

$—

$ (187)

$ (235)

$2852

—

$—

—

285

1 Level 3 swap assets and liabilities are presented net for the purposes of this table.
2 Represents accrued and capitalized interest.
3 Includes paydowns.

g. Professional Fees
The consolidated VIEs have recorded costs for professional services provided, among
others, by several nationally recognized institutions that serve as investment managers,
administrators, and custodians for the VIEs’ assets. The fees charged by the investment
managers, custodians, administrators, auditors, attorneys, and other service providers
are recorded in “Professional fees related to consolidated variable interest entities” in
the Consolidated Statements of Income and Comprehensive Income.

7. BANK PREMISES, EQUIPMENT, AND SOFTWARE
Bank premises and equipment at December 31 were as follows (in millions):

2012 2011
Bank premises and equipment:
Land and land improvements
$ 68
$ 21
Buildings1

500 349
Building machinery and equipment 88
79
Construction in progress 6
4
Furniture and equipment 113 128
Subtotal 775 581
Accumulated depreciation (304) (271)
Bank premises and equipment, net
$ 471
$ 310
Depreciation expense, for the years
ended December 31
$ 37
$ 30
1 The Bank acquired the 33 Maiden Lane building on February 28, 2012. The Bank had been

the primary occupant of the building since 1998, accounting for approximately 74 percent
of the leased space.

The Bank leases space to outside tenants with remaining lease terms ranging from
one to eleven years. Rental income from such leases was $5.8 million and $0 for the
years ended December 31, 2012 and 2011, respectively, and is reported as a component of “Noninterest income: Other” in the Consolidated Statements of Income and
Comprehensive Income. Future minimum lease payments that the Bank will receive
under noncancelable lease agreements in existence at December 31, 2012, are as follows
(in millions):
2013
$ 4
2014 2
2015
2
2016
2
2017
2
Thereafter
8
Total $20
The Bank had capitalized software assets, net of amortization, of $57 million and
$57 million at December 31, 2012 and 2011, respectively. Amortization expense was
$24 million and $21 million for the years ended December 31, 2012 and 2011, respectively. Capitalized software assets are reported as a component of “Other assets” in the
Consolidated Statements of Condition and the related amortization is reported as a
component of “Operating expenses: Other” in the Consolidated Statements of Income
and Comprehensive Income.

Federal Reserve bank of New York
2012 Annual Report

8. COMMITMENTS AND CONTINGENCIES
In conducting its operations, the Bank enters into contractual commitments, normally
with fixed expiration dates or termination provisions, at specific rates and for specific
purposes.
At December 31, 2012, the Bank was obligated under noncancelable leases for
premises and equipment with remaining terms ranging from one to approximately
eight years. These leases provide for increased rental payments based upon increases in
real estate taxes, operating costs, or selected price indexes.
Rental expense under operating leases for certain operating facilities, warehouses,
and data processing and office equipment (including taxes, insurance, and maintenance
when included in rent), net of sublease rentals, was $9 million and $22 million for the
years ended December 31, 2012 and 2011, respectively.
Future minimum rental payments under noncancelable operating leases, net of
sublease rentals, with remaining terms of one year or more, at December 31, 2012, are
as follows (in millions):
Operating Leases
2013
$ 2
2014 2
2015 2
2016 2
2017 2
Thereafter 7
Future minimum rental payments
$ 17
Under the Insurance Agreement of the Reserve Banks, each of the Reserve Banks
has agreed to bear, on a per-incident basis, a share of certain losses in excess of 1 percent
of the capital paid-in of the claiming Reserve Bank, up to 50 percent of the total capital
paid-in of all Reserve Banks. Losses are borne in the ratio of a Reserve Bank’s capital
paid-in to the total capital paid-in of all Reserve Banks at the beginning of the calendar
year in which the loss is shared. No claims were outstanding under the agreement at
December 31, 2012 and 2011.
The Bank is involved in certain legal actions and claims arising in the ordinary
course of business. Although it is difficult to predict the ultimate outcome of these
actions, in management’s opinion, based on discussions with counsel, the legal actions
and claims will be resolved without material adverse effect on the financial position or
results of operations of the Bank.

Other Commitments
In support of financial market stability activities, the Bank entered into commitments
to provide financial assistance to financial institutions. The contractual amounts shown
below are the Bank’s maximum exposures to loss in the event that the commitments
are fully funded and there is a default by the borrower or total loss in value of pledged
collateral. Total commitments at December 31 were as follows (in millions):
2012
2011
Contractual Unfunded Contractual Unfunded
Amount Amount Amount
Amount
Commercial loan
commitments (ML)
Additional loan
commitments (ML)1
Total

$55

$61

—
$55

18
$79

1 Represents additional restricted cash that may be required to be advanced by ML

for property-level expenses or improvements.

The undrawn portion of the Bank’s commercial loan commitments relates to commercial mortgage loan commitments acquired by ML.
9. RETIREMENT AND THRIFT PLANS
Retirement Plans
The Bank currently offers three defined benefit retirement plans to its employees,
based on length of service and level of compensation. Substantially all of the employees
of the Reserve Banks, Board of Governors, and Office of Employee Benefits of the
Federal Reserve System (OEB) participate in the Retirement Plan for Employees
of the Federal Reserve System (System Plan). Under the Dodd-Frank Act, newly
hired Bureau employees are eligible to participate in the System Plan and transferees
from other governmental organizations can elect to participate in the System Plan.
In addition, employees at certain compensation levels participate in the Benefit
Equalization Retirement Plan (BEP) and certain Reserve Bank officers participate in
the Supplemental Retirement Plan for Select Officers of the Federal Reserve Banks
(SERP).

The System Plan provides retirement benefits to employees of the Reserve Banks,
Board of Governors, OEB, and certain employees of the Bureau. The Bank, on behalf
of the System, recognizes the net asset or net liability and costs associated with the
System Plan in its consolidated financial statements. During the years ended December
31, 2012 and 2011, certain costs associated with the System Plan were reimbursed by
the Bureau.

Federal Reserve bank of New York
2012 Annual Report

Following is a reconciliation of the beginning and ending balances of the System
Plan benefit obligation (in millions):
2012

2011

Estimated actuarial present value of projected
benefit obligation at January 1
$ 10,198 $ 8,258
Service cost–benefits earned during the period 349 258
Interest cost on projected benefit obligation 473 461
Actuarial loss 833 1,427
Contributions by plan participants
4 6
Special termination benefits
9 10
Benefits paid (334) (315)
Plan amendments (64) 93
Estimated actuarial present value of projected
benefit obligation at December 31 $11,468 $ 10,198
Following is a reconciliation showing the beginning and ending balances of the
System Plan assets, the funded status, and the accrued pension benefit costs (in millions):
2012 2011
Estimated plan assets at January 1 (of which $7,977
and $6,998 are measured at fair value as of
January 1, 2012 and 2011, respectively)
$ 8,048 $ 7,273
Actual return on plan assets 1,066 649
Contributions by the employer
782 435
Contributions by plan participants
4
6
Benefits paid (334) (315)
Estimated plan assets at December 31 (of which $9,440
and $7,977 are measured at fair value as of
December 31, 2012 and 2011, respectively)
$ 9,566 $ 8,048
Funded status and accrued pension benefit costs

$( 1,902) $(2,150)

Amounts included in accumulated other comprehensive
loss are shown below:
Prior service cost
$ (559) $ (739)
Net actuarial loss (3,784) (3,710)
Total accumulated other comprehensive loss
$(4,343) $(4,449)
The Bank, on behalf of the System, funded $780.0 million and $420.1 million during the years ended December 31, 2012 and 2011, respectively. The Bureau is required
by the Dodd-Frank Act to fund the System Plan for each Bureau employee based on an
established formula. During the years ended December 31, 2012 and 2011, the Bureau
funded contributions of $1.6 million and $14.4 million, respectively.
Accrued pension benefit costs are reported as a component of “Accrued benefit
costs” in the Consolidated Statements of Condition.

The accumulated benefit obligation for the System Plan, which differs from the
estimated actuarial present value of projected benefit obligation because it is based on
current rather than future compensation levels, was $10,035 million and $8,803 million at December 31, 2012 and 2011, respectively.
The weighted-average assumptions used in developing the accumulated pension
benefit obligation for the System Plan as of December 31 were as follows:

Discount rate
Rate of compensation increase

2012

2011

4.00%
4.50%

4.50%
5.00%

Net periodic benefit expenses for the years ended December 31, 2012 and 2011,
were actuarially determined using a January 1 measurement date. The weighted-average
assumptions used in developing net periodic benefit expenses for the System Plan for
the years were as follows:
2012
Discount rate
Expected asset return
Rate of compensation increase

2011

4.50% 5.50%
7.25% 7.25%
5.00% 5.00%

Discount rates reflect yields available on high-quality corporate bonds that would
generate the cash flows necessary to pay the System Plan’s benefits when due. The
expected long-term rate of return on assets is an estimate that is based on a combination of factors, including the System Plan’s asset allocation strategy and historical
returns; surveys of expected rates of return for other entities’ plans; a projected return
for equities and fixed-income investments based on real interest rates, inflation expectations, and equity risk premiums; and surveys of expected returns in equity and fixedincome markets.

Federal Reserve bank of New York
2012 Annual Report

The components of net periodic pension benefit expense for the System Plan for
the years ended December 31 are shown below (in millions):
2012

2011

Service cost–benefits earned during the period
$ 349
$ 258
Interest cost on projected benefit obligation 473 461
Amortization of prior service cost 116 110
Amortization of net loss 292 187
Expected return on plan assets (599) (531)
Net periodic pension benefit expense 631 485
Special termination benefits 9 10
Bureau of Consumer Financial Protection contributions (2) —
Total periodic pension benefit expense $ 638
$ 495
Estimated amounts that will be amortized from accumulated other comprehensive
loss into net periodic pension benefit expense in 2013 are shown below (in millions):
Prior service cost
Net actuarial loss
Total

$103
275
$378

Following is a summary of expected benefit payments, excluding enhanced retirement benefits (in millions):
2013
2014
2015
2016
2017
2018-2022

Total

$ 379
401
425
450
476
2,777
$4,908

The System’s Committee on Investment Performance (CIP) is responsible for
establishing investment policies, selecting investment managers, and monitoring the
investment managers’ compliance with its policies. The CIP is supported by staff in
the OEB in carrying out these responsibilities. At December 31, 2012, the System
Plan’s assets were held in six investment vehicles: two actively managed long-duration
fixed-income portfolios, an indexed U.S. equity fund, an indexed non-U.S. developed
markets equity fund, an indexed long-duration fixed-income portfolio, and a money
market fund.

The diversification of the Plan’s investments is designed to limit concentration of
risk and the risk of loss related to an individual asset class. The two long-duration fixedincome portfolios are separate accounts benchmarked to a custom benchmark of 55 per
cent Barclays Long Credit Index and 45 percent Citigroup 15+ years U.S. Treasury
STRIPS Index, which was selected as a proxy for the liabilities of the Plan. These portfolios are actively managed and the guidelines are designed to limit portfolio deviations
from the benchmark. The indexed long-duration fixed-income portfolio is invested
in two commingled funds and is benchmarked to 55 percent Barclays Long Credit
Index and 45 percent Barclays 20+ STRIPS Index. The indexed U.S. equity fund is
intended to track the overall U.S. equity market across market capitalizations and is
benchmarked to the Dow Jones U.S. Total Stock Market Index. The indexed nonU.S. developed markets equity fund is intended to track the Morgan Stanley Capital
International (MSCI), Europe, Australia, Far East, plus Canada Index, which includes
stocks from twenty-three markets deemed by MSCI to be “developed markets.”
Finally, the money market fund, which invests in high-quality money market securities, is the repository for cash balances and adheres to a constant-dollar methodology.
Permitted and prohibited investments, including the use of derivatives, are defined
in either the trust agreement (for commingled index vehicles) or the investment
guidelines (for the three separate accounts). The CIP reviews the trust agreement and
approves all investment guidelines as part of the selection of each investment to ensure
that the trust agreement is consistent with the CIP’s investment objectives for the
System Plan’s assets.
The System Plan’s policy weight and actual asset allocations at December 31,
by asset category, were as follows:

Actual Asset Allocations
Policy Weight
U.S. equities
International equities
Fixed-income
Cash
Total

2012

2011

35.0%
15.0%
50.0%
0.0%

34.9%
13.6%
50.4%
1.1%

39.0%
13.8%
46.6%
0.6%

100.0%

Employer contributions to the System Plan may be determined using different
assumptions than those required for financial reporting. The System Plan’s anticipatory funding level for 2013 is $900 million. In 2013, the System plans to make
monthly contributions of $75 million and will reevaluate the monthly contributions

Federal Reserve bank of New York
2012 Annual Report

upon completion of the 2013 actuarial valuation. The Bank’s projected benefit obligation, funded status, and net pension expenses for the BEP and the SERP at December 31,
2012 and 2011, and for the years then ended, were not material.
The System Plan’s investments are reported at fair value as required by ASC 820.
ASC 820 establishes a three-level fair value hierarchy that distinguishes between market participant assumptions developed using market data obtained from independent
sources (observable inputs) and the Bank’s assumptions about market participant
assumptions developed using the best information available in the circumstances
(unobservable inputs).
Determination of Fair Value
The System Plan’s investments are valued on the basis of the last available bid prices or
current market quotations provided by dealers, or pricing services. To determine the
value of a particular investment, pricing services may use information on transactions
in such investments; quotations from dealers; pricing metrics; market transactions in
comparable investments; relationships observed in the market between investments;
and calculated yield measures based on valuation methodologies commonly employed
in the market for such investments.
Because of the uncertainty inherent in determining the fair value of investments
that do not have a readily available fair value, the fair value of these investments may
differ significantly from the values that would have been reported if a readily available
fair value had existed for these investments and may differ materially from the values
that may ultimately be realized.
The following table presents the financial instruments recorded at fair value as of
December 31, 2012, by ASC 820 hierarchy (in millions):

2012
1
1
Description Level 1 Level 2 Level 3 Total
Short-term investments
$ 23
$ 25
$—
$ 48
Treasury and federal agency securities 141
1,746
—
1,887
Corporate bonds
—
1,947
—
1,947
Other fixed-income securities
—
352
—
352
Commingled funds
—
5,206
—
5,206
Total
$164
$9,276
$—
$9,440
1

U.S. Treasury STRIPs with a fair value of $1,737 million were transferred from Level 1 to
Level 2 because they were valued based on quoted prices in nonactive markets (Level 2).
There were no other transfers between Level 1 and Level 2 during
the year.

The following table presents the financial instruments recorded at fair value as of
December 31, 2011, by ASC 820 hierarchy (in millions):

2011
Description Level 11 Level 21 Level 3 Total
Short-term investments
$
31
$ 29
$—
$ 60
Treasury and federal agency securities 1,685
14
—
1,699
2
Corporate bonds
—
1,656
—
1,656
Other fixed-income securities2
—
306
—
306
Commingled funds
—
4,256
—
4,256
Total
$1,716
$ 6,261
$—
$7,977
1 There were no transfers between Level 1 and Level 2 during the year.
2 Investments with a fair value of $1,656 million as of December 31, 2011, were recategorized

from “Other fixed-income securities” to a new line item labeled “Corporate bonds” to
conform to the current-year presentation.

The System Plan enters into futures contracts, traded on regulated exchanges, to
manage certain risks and to maintain appropriate market exposure in meeting the
investment objectives of the System Plan. The System Plan bears the market risk that
arises from any unfavorable changes in the value of the securities or indexes underlying
these futures contracts. The use of futures contracts involves, to varying degrees, elements of market risk in excess of the amount recorded in the Consolidated Statements
of Condition. The guidelines established by the CIP further reduce risk by limiting
the net futures positions, for most fund managers, to 15 percent of the market value of
the advisor’s portfolio.
At December 31, 2012 and 2011, a portion of short-term investments was available for futures trading. There were $7 million and $6 million of Treasury securities
pledged as collateral for the years ended December 31, 2012 and 2011, respectively.
Thrift Plan
Employees of the Bank participate in the defined contribution Thrift Plan for
Employees of the Federal Reserve System (Thrift Plan). The Bank matches 100 percent
of the first 6 percent of employee contributions from the date of hire and provides an
automatic employer contribution of 1 percent of eligible pay. The Bank’s Thrift Plan
contributions totaled $25 million and $23 million for the years ended December 31,
2012 and 2011, respectively, and are reported as a component of “Operating expenses:
Salaries and benefits” in the Consolidated Statements of Income and Comprehensive
Income.

100

Federal Reserve bank of New York
2012 Annual Report

10. POSTRETIREMENT BENEFITS OTHER THAN RETIREMENT
PLANS AND POSTEMPLOYMENT BENEFITS
Postretirement Benefits Other Than Retirement Plans
In addition to the Bank’s retirement plans, employees who have met certain age and
length-of-service requirements are eligible for both medical and life insurance benefits
during retirement.
The Bank funds benefits payable under the medical and life insurance plans as due
and, accordingly, has no plan assets.
Following is a reconciliation of the beginning and ending balances of the benefit
obligation (in millions):
2012

2011

Accumulated postretirement benefit obligation at January 1
$ 319
$ 264
Service cost benefits earned during the period 13 9
Interest cost on accumulated benefit obligation 15 15
Net actuarial loss 49 45
Contributions by plan participants 2 2
Benefits paid (17) (17)
Medicare Part D subsidies 1 1
Accumulated postretirement benefit
obligation at December 31
$ 382
$ 319
At December 31, 2012 and 2011, the weighted-average discount rate assumptions used in developing the postretirement benefit obligation were 3.75 percent and
4.50 percent, respectively.
Discount rates reflect yields available on high-quality corporate bonds that would
generate the cash flows necessary to pay the plan’s benefits when due.

101

Following is a reconciliation of the beginning and ending balances of the plan
assets, the unfunded postretirement benefit obligation, and the accrued postretirement benefit costs (in millions):
2012
Fair value of plan assets at January 1
$ —
Contributions by the employer
14
Contributions by plan participants
2
Benefits paid (17)
Medicare Part D subsidies
1

2011
$ —
14
2
(17)
1

Fair value of plan assets at December 31

$ —

Unfunded obligation and accrued postretirement
benefit cost

$ 382

$ 319

Amounts included in accumulated other comprehensive
loss are shown below:
Prior service cost
$ —
$ 1
Net actuarial loss (134) (93)
Total accumulated other comprehensive loss

$(134)

$(92)

Accrued postretirement benefit costs are reported as a component of “Accrued
benefit costs” in the Consolidated Statements of Condition.
For measurement purposes, the assumed health-care cost trend rates at
December 31 were as follows:

Health-care cost trend rate assumed for next year
Rate to which the cost trend rate is assumed
to decline (the ultimate trend rate)
Year that the rate reaches the ultimate trend rate

2012

2011

7.00%

7.50%

5.00%
2018

5.00%
2017

Assumed health-care cost trend rates have a significant effect on the amounts
reported for health-care plans. A one-percentage-point change in assumed health-care
cost trend rates would have the following effects for the year ended December 31,
2012 (in millions):

102

One Percentage- One Percentage Point Increase Point Decrease
Effect on aggregate of service and interest
cost components of net periodic
postretirement benefit costs
$ 5
$ (4)
Effect on accumulated
postretirement benefit obligation
61 (50)

Federal Reserve bank of New York
2012 Annual Report

The following is a summary of the components of net periodic postretirement
benefit expense for the years ended December 31 (in millions):
2012
2011
Service cost–benefits earned during the period
$ 13
$ 9
Interest cost on accumulated benefit obligation 15 15
Amortization of prior service cost — —
Amortization of net actuarial loss 9 5
Net periodic postretirement benefit expense

$37

$ 29

Estimated amounts that will be amortized from accumulated other comprehensive loss into net periodic postretirement benefit expense in 2013 are shown below
(in millions):
Prior service cost
$ —
Net actuarial loss 12
Total

$ 12

Net postretirement benefit costs are actuarially determined using a January 1
measurement date. At January 1, 2012 and 2011, the weighted-average discount
rate assumptions used to determine net periodic postretirement benefit costs were
4.50 percent and 5.25 percent, respectively.
Net periodic postretirement benefit expense is reported as a component of
“Operating expenses: Salaries and benefits” in the Consolidated Statements of Income
and Comprehensive Income.
The Medicare Prescription Drug, Improvement and Modernization Act of 2003
established a prescription drug benefit under Medicare (Medicare Part D) and a federal
subsidy to sponsors of retiree health-care benefit plans that provide benefits that are at
least actuarially equivalent to Medicare Part D. The benefits provided under the Bank’s
plan to certain participants are at least actuarially equivalent to the Medicare Part D
prescription drug benefit. The estimated effects of the subsidy are reflected in actuarial
loss in the accumulated postretirement benefit obligation and net periodic postretirement benefit expense.
Federal Medicare Part D subsidy receipts were $0.9 million and $0.8 million in the
years ended December 31, 2012 and 2011, respectively. Expected receipts in 2013,
related to benefits paid in the years ended December 31, 2012 and 2011, are $0.7 million.

103

Following is a summary of expected postretirement benefit payments (in millions):
Without Subsidy With Subsidy
2013
$ 17
$ 16
2014 18 17
2015 18 17
2016 19 18
2017 20 19
2018-2022 112 104
Total
$ 204
$191
Postemployment Benefits
The Bank offers benefits to former or inactive employees. Postemployment benefit
costs are actuarially determined using a December 31 measurement date and include
the cost of providing disability, medical, dental, and vision insurance, and survivor
income benefits. The accrued postemployment benefit costs recognized by the Bank
at December 31, 2012 and 2011, were $42 million and $39 million, respectively.
This cost is included as a component of “Accrued benefit costs” in the Consolidated
Statements of Condition. Net periodic postemployment benefit expenses included in
2012 and 2011 operating expenses were $7 million and $8 million, respectively, and
are recorded as a component of “Operating expenses: Salaries and benefits” in the
Consolidated Statements of Income and Comprehensive Income.

104

Federal Reserve bank of New York
2012 Annual Report

11. ACCUMULATED OTHER COMPREHENSIVE INCOME AND
OTHER COMPREHENSIVE INCOME
Following is a reconciliation of beginning and ending balances of accumulated other
comprehensive income (loss) as of December 31 (in millions):
2012
2011
Amount Amount
Amount Related to Total Amount Related to Total
Related to Postretirement Accumulated Related to Postretirement Accumulated
Defined Benefits Other Other Defined Benefits Other Other
Benefit
Than Retirement Comprehensive Benefit
Than Retirement Comprehensive
Retirement Plan Plans
Income (Loss) Retirement Plan Plans
Income (Loss)
Balance at January 1

$(4,449)

$(92)

$ (4,541)

$(3,360)

$(52)

$(3,412)

—

(78)

—

(78)

Amortization of
prior service cost

116

—

116

110

—

110

Change in prior
service costs related
to benefit plans

180

—

180

—

(366)

(49)

(415)

(1,308)

(45)

(1,353)

Amortization of net
actuarial loss

292

301

187

192

Change in actuarial
losses related to
benefit plans

(74)

(40)

(114)

(1,121)

(40)

(1,161)

106

(40)

(1,089)

(40)

(1,129)

$(4,343)

$(132)

$ (4,475)

$(4,449)

$(92)

$(4,541)

Change in funded
status of benefit
plans:
Prior service costs
arising during the
year

Net actuarial loss
arising during the
year

Change in funded
status of benefit
plans–other
comprehensive
income (loss)
Balance at
December 31

Additional detail regarding the classification of accumulated other comprehensive
loss is included in Notes 9 and 10.

105

12. BUSINESS RESTRUCTURING CHARGES
The Bank had no significant restructuring activities in 2012 and 2011.
13. DISTRIBUTION OF COMPREHENSIVE INCOME
In accordance with the Board of Governors’ policy, Reserve Banks remit excess earnings, after providing for dividends and the amount necessary to equate surplus with
capital paid-in, to the U.S. Treasury as interest on Federal Reserve notes. The following
table presents the distribution of the Bank’s comprehensive income in accordance with
the Board of Governors’ policy for the years ended December 31 (in millions):
2012
Dividends on capital stock
$ 523
Transfer to surplus–amount required to equate
surplus with capital paid-in
68
Interest on Federal Reserve notes expense remitted to Treasury 51,023
Total distribution
$51,614

2011
$

470

995
32,432
$33,897

14. SUBSEQUENT EVENTS
On January 15, 2013, the Treasury, the Bank, and TALF LLC agreed to eliminate in
their entirety the Treasury’s subordinate funding commitment to TALF LLC and
the Bank’s senior funding commitment to TALF LLC. These commitments were no
longer deemed necessary because the accumulated fees collected through the TALF
program, and currently held in liquid assets in TALF LLC, exceed the amount of
TALF loans outstanding. In addition, the agreement related to distribution of proceeds was amended to limit funding of the cash collateral account to an amount equal
to the outstanding principal plus accrued interest of all TALF loans as of the payment
determination date; all accumulated funding in excess of that amount would then be
distributed according to the distribution priorities described in the agreements governing TALF LLC.
Pursuant to this agreement, TALF LLC repaid in full the outstanding principal
and accrued interest on the subordinated loan to the Treasury, and additional distributions were made to the Treasury and the Bank as contingent interest in the amounts of
$310 million and $35 million, respectively.
There were no other subsequent events that require adjustments to or disclosures
in the financial statements as of December 31, 2012. Subsequent events were evaluated
through March 14, 2013, which is the date the Bank issued the financial statements.

106

Directors of the
Federal Reserve Bank
of New York

107

FEDERAL RESERVE BANK OF NEW YORK
2012 ANNUAL REPORT

CHANGES IN DIRECTORS
2013
Member banks in this District have reelected
GLENN H. HUTCHINS a class B director for
a three-year term beginning January 2013.
Mr. Hutchins, who is Co-Founder of Silver Lake,
New York, N.Y., has been serving as a class B
director since August 2011.

The Board of Governors has designated
EMILY K. RAFFERTY, President, The Metro
politan Museum of Art, New York, N.Y., as Chair
of the Board and Federal Reserve Agent for the
year 2013. Ms. Rafferty has been serving as a
class C director since January 2011.

The Board of Governors has appointed
SARA HOROWITZ, Executive Director, Free
lancers Union, Brooklyn, N.Y., a class C director
for a three-year term beginning January 2013.
Ms. Horowitz succeeds Lee C. Bollinger,
President, Columbia University, New York, N.Y.,
who served as a class C director since January
2007 and Chair and Federal Reserve Agent since
January 2011.

The Board of Governors has also redesignated
KATHRYN S. WYLDE, President and Chief
Executive Officer, Partnership for New York
City, New York, N.Y., as Deputy Chair for the
year 2013. Ms. Wylde has been serving as a class C
director since July 2009 and Deputy Chair since
January 2011.

109

FEDERAL RESERVE BANK OF NEW YORK
2012 ANNUAL REPORT

DIRECTORS OF THE FEDERAL RESERVE BANK
OF NEW YORK
DIRECTORS

TERM EXPIRES DEC. 31

CLASS

JAMES DIMON
Chairman and Chief Executive Officer
JPMorgan Chase & Co., New York, N.Y.

2012

RICHARD L. CARRIÓN
Chairman, President, and Chief Executive Officer
Popular, Inc., San Juan, P.R.

2013

PAUL P. MELLO
President and Chief Executive Officer
Solvay Bank, Solvay, N.Y.

2014

GLENN H. HUTCHINS
Co-Founder
Silver Lake, New York, N.Y.

2012

ALPHONSO O’NEIL-WHITE
President and Chief Executive Officer
HealthNow New York Inc., Buffalo, N.Y.

2013

TERRY J. LUNDGREN
Chairman, President, and Chief Executive Officer
Macy’s, Inc., New York, N.Y.

2014

LEE C. BOLLINGER, Chair and Federal Reserve Agent
President
Columbia University, New York, N.Y.

2012

KATHRYN S. WYLDE, Deputy Chair
President and Chief Executive Officer
Partnership for New York City, New York, N.Y.

2013

EMILY K. RAFFERTY
President
The Metropolitan Museum of Art, New York, N.Y.

2014

111

Advisory
Groups

113

FEDERAL RESERVE BANK OF NEW YORK
2012 ANNUAL REPORT

ADVISORY gROUPS
ADVISORY COUNCIL ON
SMALL BUSINESS AND
AGRICULTURE

COMMUNITY DEPOSITORY INSTITUTIONS
ADVISORY COUNCIL

Richard Stewart
Brunhouse, Jr.
President
A&A Company, Inc.
South Plainfield, N.J.

MICHAEL J. CASTELLANA
President and Chief Executive Officer
SEFCU
Albany, N.Y.

FRANK A. KISSEL
Chairman
Peapack-Gladstone Bank
& Peapack-Gladstone Financial Corp.
Bedminster, N.J.

ROBERT G. ALLEN
President and Chief Executive Officer
Teachers Federal Credit Union
Hauppauge, N.Y.

MARY D. MADDEN
President and Chief Executive Officer
Hudson Valley Federal Credit Union
Poughkeepsie, N.Y.

JOHN R. BURAN
President and Chief Executive Officer
Flushing Savings & Flushing
Financial Corp.
Lake Success, N.Y.

THOMAS J. SHARA
President and Chief Executive Officer
Lakeland Bank & Lakeland Bancorp, Inc.
Oak Ridge, N.J.

William Byrne
Chairman of the Board
Byrne Dairy, Inc.
Weedsport, N.Y.
Mso-Chi Chen
Executive Vice President
Crystal Window & Door Systems Ltd.
Flushing, N.Y.
JORGE COLÓN-GERENA
President and Chief Executive Officer
Wendco of Puerto Rico, Inc.
San Juan, P.R.
GALE EPSTEIN
President/Creative Director
Hanky Panky
New York, N.Y.
KENNETH M. FRANASIAK
Chairman and Chief Executive Officer
Calamar
Wheatfield, N.Y.
LISA HIRSH
President and Chief Executive Officer
Accurate Box Company, Inc.
Paterson, N.J.

Chair

JOSÉ RAFAEL FERNÁNDEZ
President, Chief Executive Officer,
and Vice Chairman
Oriental Bank and Trust & Oriental
Financial Group, Inc.
San Juan, P.R.

JOHN F. TRENTACOSTA
President and Chief Executive Officer
Newtown Savings Bank
Newtown, Conn.

SALEEM IQBAL
President and Chief Executive Officer
Habib American Bank
New York, N.Y.

PETER MAGLATHLIN
Chief Executive Officer
MBI, Inc.
Norwalk, Conn.
MICHAEL MUZYK
President
Baldor Specialty Foods, Inc.
Bronx, N.Y.
DARYL ROTH
President
Daryl Roth Productions
New York, N.Y.
Edward J. Tregurtha
President
Moran Towing Corporation
New Canaan, Conn.

115

Economic Advisory
Panel

FEDWIRE SECURITIES CUSTOMER
ADVISORY GROUP

ROBERT BARRO
Harvard University

Michael Albanese
Executive Director

ALAN S. BLINDER
Princeton University
MARTIN FELDSTEIN
Harvard University
JEFFREY FRANKEL
Harvard University
JACOB A. FRENKEL
JPMorgan Chase
MARK GERTLER
New York University
MARVIN GOODFRIEND
Carnegie Mellon University
AUSTAN GOOLSBEE
University of Chicago
JAN HATZIUS
Goldman Sachs
PETER HOOPER
Deutsche Bank Securities
GLENN HUBBARD
Columbia University
ANIL KASHYAP
University of Chicago
N. GREGORY MANKIW
Harvard University
CATHERINE L. MANN
Brandeis University
FREDERIC MISHKIN
Columbia University
KENNETH ROGOFF
Harvard University
MICHAEL WOODFORD
Columbia University

116

JPMorgan Chase Bank, N.A.
Charles Austin
Vice President
The Bank of New York Mellon
John Axelson
Vice President
US Bank
Al Barbieri
Senior Vice President
Fannie Mae
Brent Blake
Vice President
State Street Bank and Trust Company
Terry Bouthilet
Vice President
Wells Fargo
Kevin Caffrey
Managing Director
The Bank of New York Mellon
Janice Hamilton
Senior Vice President
Northern Trust
Chris Harper
Director
Federal Home Loan Banks

Elke Jakubowski
Vice President
The Depository Trust & Clearing
Corporation
Lyndon James
Senior Vice President
Citibank, N.A.
Richard Kalb
Director
Citibank, N.A.
Chad Ohmann
Settlements Supervisor
US Bank
Alain Pakabomba
Senior Director
Freddie Mac
Rob Raymond
Vice President
Bank of America/Merrill Lynch
David Rosengarten
Executive Director
JPMorgan Chase Bank, N.A.
Dara Seaman
Assistant Commissioner
U.S. Department of the Treasury

FEDERAL RESERVE BANK OF NEW YORK
2012 ANNUAL REPORT

FEDERAL ADVISORY
COUNCIL
Second District Member
JAMES P. GORMAN
Chairman and Chief Executive Officer
Morgan Stanley
New York, N.Y.

INTERNATIONAL ADVISORY COMMITTEE
LLOYD C. BLANKFEIN
Chairman and Chief Executive Officer
The Goldman Sachs Group, Inc.
New York, N.Y.
DAVID BONDERMAN
Founding Partner
TPG Capital LP
Fort Worth, Tex.
WILLIAM J. BRODSKY
Chairman and Chief Executive Officer
CBOE Holdings, Inc., and
Chicago Board Options Exchange, Inc.
(CBOE)
Chicago, Ill.

MARIE-JOSEE KRAVIS
Senior Fellow and Vice Chair
of the Board of Trustees
Hudson Institute
New York, N.Y.
SALLIE L. KRAWCHECK
Former President
Global Wealth and Investment Management
Bank of America
New York, N.Y.
DONALD H. LAYTON
Chief Executive Officer
Freddie Mac
McLean, Va.

STANLEY F. DRUCKENMILLER
Chairman and Chief Executive Officer
Duquesne Family Office
New York, N.Y.

DR. THE HONORABLE DAVID K. P. LI
Chairman and Chief Executive
The Bank of East Asia, Limited
Hong Kong

FRANCISCO GONZALEZ
Chairman and Chief Executive Officer
Banco Bilbao Vizcaya Argentaria, S.A.
Madrid, Spain

MICHEL J. D. PEBEREAU
Honorary Chairman
BNP Paribas
Paris, France

LIC. ROBERTO HERNANDEZ
RAMIREZ
Chairman of the Board
Banco Nacional de Mexico, S.A.
Mexico DF, Mexico

ROBERTO SETUBAL
President and Chief Executive Officer
Itau Unibanco S.A.
Sao Paulo, Brazil

HO CHING
Executive Director and
Chief Executive Officer
Temasek Holdings (Private) Limited
Singapore
HENRY KAUFMAN
President
Henry Kaufman & Company, Inc.
New York, N.Y.

KURT F. VIERMETZ
Former Vice Chairman
J.P. Morgan & Co., Inc.
New York, N.Y., and
Former Chairman
Deutsche Boerse AG
Frankfurt, Germany

117

Investor Advisory Committee on Financial Markets
Nicole Arnaboldi
Vice Chairman, Asset Management
Credit Suisse Group

Garth Friesen
Principal, Co-Chief Investment Officer
III Associates

Michael Novogratz
Principal
Fortress Investment Group LLC

Louis Bacon
Chairman, Chief Executive Officer,
and Founder
Moore Capital Management, LP

Joshua Harris
Managing Partner
Apollo Management L.P.

Rick Rieder
Chief Investment Officer and Co-Head
of Fixed Income
BlackRock, Inc.

James Chanos
Founder and President
Kynikos Associates
Mohamed El-Erian
Chief Executive Officer and Co-Chief
Investment Officer
PIMCO
Mary Callahan Erdoes
Chief Executive Officer
J.P. Morgan Asset Management

118

Alan Howard
Founder
Brevan Howard
Scott Malpass
Vice President and Chief
Investment Officer
University of Notre Dame
Sir Deryck Maughan
Partner and Head of Financial
Services Group
Kohlberg Kravis Roberts & Co.

Lawrence M.v.D. Schloss
Chief Investment Officer and
Deputy Comptroller for Pensions
New York City Retirement Systems
Morgan Stark
Managing Member
Ramius LLC
David Tepper
Founder and President
Appaloosa Management L.P.

FEDERAL RESERVE BANK OF NEW YORK
2012 ANNUAL REPORT

Monetary Policy
Advisory Panel
Markus Brunnermeier
Princeton University
Mark Gertler
New York University
Christopher Sims
Princeton University
Michael Woodford
Columbia University

UPSTATE NEW YORK REGIONAL ADVISORY BOARD
Chair
THOMAS D’AMBRA
Chairman and Chief Executive Officer
Albany Molecular Research, Inc.
Albany, N.Y.
IRWIN DAVIS
Economic Development Consultant
BAL DIXIT
Chairman
Newtex Industries, Inc.
Victor, N.Y.
PHILIP FARACI
President and Chief Operating Officer
Eastman Kodak Company
Rochester, N.Y.
William Gisel
President and Chief Executive Officer
Rich Products Corporation
Buffalo, N.Y.
JAMES P. LAURITO
President
Central Hudson Gas
and Electric Corporation
Poughkeepsie, N.Y.

ROBERT S. SANDS
President and Chief Executive Officer
Constellation Brands, Inc.
Victor, N.Y.
BRENT SAUNDERS
Chief Executive Officer
Bausch & Lomb Incorporated
Rochester, N.Y.
JULIE SHIMER
President and Chief Executive Officer
Welch Allyn Inc.
Skaneateles Falls, N.Y.
ROBERT L. STEVENSON
President and Chief Executive Officer
Eastman Machine Company
Buffalo, N.Y.
Hamdi Ulukaya
President and Chief Executive Officer
Chobani, Inc.
Norwich, N.Y.
Carlos Unanue
President
Goya de Puerto Rico, Inc.
Bayamon, P.R.

Martin Mucci
President and Chief Executive Officer
Paychex Inc.
Rochester, N.Y.

119

WHOLESALE CUSTOMER ADVISORY GROUP
Michael Bellacosa
Director
The Bank of New York Mellon

Thomas Halpin
Senior Vice President
HSBC Bank USA

Mary Kate Savini
Assistant Vice President
State Street

Mitchell Christensen
Executive Vice President
Wells Fargo Bank

Marie-Jude Maignan
Director
UBS

Vito Sabatelli
Director
Deutsche Bank

Jeffrey Dunn
Vice President
US Bank Corporation

James Kenny
Director
Bank of America

Megan Short
Senior Product Manager
KeyBank

Steve Fullenkamp
Vice President
JPMorgan Chase

Michael Knorr
Director
Citigroup

Debbie Wise
Group Vice President
SunTrust Bank

Miguel Guerrero
Vice President
PNC Bank

120

Officers of the
Federal Reserve Bank
of New York

121

Federal Reserve bank of New York
2012 annual report

Officers of the Federal Reserve Bank
of New York
As of December 31, 2012
WILLIAM C. DUDLEY
President
CHRISTINE M. CUMMING
First Vice President

THOMAS C. BAXTER, JR.
General Counsel
and Executive Vice President
Legal

JAMES J. McANDREWS
Director of Research
and Executive Vice President
Research and Statistics

TERRENCE J. CHECKI
Executive Vice President
Emerging Markets
and International Affairs

SUSAN W. MINK
Executive Vice President
Human Resources

WILLIAM T. CHRISTIE
Executive Vice President
Technology Services
SARAH J. DAHLGREN
Executive Vice President
Financial Institution Supervision

JOSEPH S. TRACY
Senior Advisor to the President
Executive Office
CARL W. TURNIPSEED
Executive Vice President
Financial Services

EDWARD F. MURPHY
Executive Vice President
Corporate
SIMON M. POTTER
Executive Vice President
Markets

KRISHNA R. GUHA
Executive Vice President
Communications

EDWARD C. SMITH
General Auditor
and Executive Vice President
Audit

SANDRA C. KRIEGER
Executive Vice President
Credit and Payments Risk

ROSEANN STICHNOTH
Executive Vice President
Special Investments Management

123

AUDIT GROUP

COMMUNICATIONS
GROUP

EDWARD C. SMITH
General Auditor
and Executive Vice President

KRISHNA R. GUHA
Executive Vice President

CLIVE W. BLACKWOOD
Vice President

Digital and Multimedia
Communications

ANN M. HERON
Vice President

ISAAC SMITH, JR.
Assistant Vice President

DONA M. WONG
Assistant Vice President

ZACHERY R. BRICE
BPE Officer

AUDREY A. FOSTER
Audit Officer

SETH W. FEASTER
Communications Officer

JOSEPH R. COVELLO
BPE Officer

DONNA M. GALLO
Audit Officer

ANDREW GIANNELLI
Communications Officer

Corporate Staff

RALPH W. HESSLER
Audit Officer

Economic Education

JOSEPH J. MARRACCINO
Assistant Vice President

JANE P. KATZ
Economic Education Officer

Corporate Group Strategy and
Operations Staff (CGSO)

Internal Communication

CHRISTINA S. KITE
Senior Vice President

NICHOLAS BALAMACI
Vice President
EDWARD CHENEY
Communications Officer
Media Relations and Public Affairs
JACK GUTT
Vice President
JONATHAN A. FREED
Media Relations Officer
ANDREA R. PRIEST
Media Relations Officer

124

CORPORATE GROUP
EDWARD F. MURPHY
Executive Vice President
Business Process Excellence

DANIEL F. HULSE
Vice President
THOMAS P. REILLY
Vice President
KENT BAI N
Assistant Vice President
JOSEPH D. J. DeMARTINI
Assistant Vice President
AILEEN R. GRIFFITH
Assistant Vice President

Regional and Community Outreach

RICHARD L. PRISCO
Assistant Vice President

KAUSAR HAMDANI
Senior Vice President

JANE W. THOMAS
Assistant Vice President

RAE D. ROSEN
Assistant Vice President

CHRISTIAN A. FACQ
CGSO Officer

CLAIRE V. KRAMER
Regional and Community
Outreach Officer

MARC S. LEMBERG
CGSO Officer
JOHN D. MILUSICH
CGSO Officer

Federal Reserve bank of New York
2012 annual report

CREDIT AND PAYMENTS RISK GROUP
JOHN F. SEARS
CGSO Officer

SANDRA C. KRIEGER
Executive Vice President

MARK A. SLAGUS
CGSO Officer

CRM Technology Support

Enterprise Data Management
ELIZABETH S. IRWINMcCAUGHEY
Senior Vice President
MARIA C. MASSEI-ROSATO
Assistant Vice President
Financial Management
MARIA GRACE C. AMBROSIO
Senior Vice President
CHRISTINA X. MILLER
Vice President
JOSEPH MEMMOLO
Assistant Vice President
ROBERT M. POFSKY
Assistant Vice President
TAMRA J. WHEELER
Assistant Vice President

Risk Analysis and Reporting
ADAM B. ASHCRAFT
Senior Vice President

MELANIE L. HEINTZ
Vice President

DONALD V. DAVIS
Assistant Vice President

JHANKHNA N. VARMA
Assistant Vice President

ERIC L. PARSONS
Assistant Vice President

Group Support

STEVEN SCHOEN
Assistant Vice President

GLEN J. SNAJDER
Risk Support Officer
Payments Policy
LAWRENCE M. SWEET
Senior Vice President
MARSHA K. TAKAGI
Vice President
MARILYN ARBUTHNOTT
Assistant Vice President
BRIAN J. BEGALLE
Assistant Vice President

PATRICK J. COYNE
Risk Officer
RITA J. CSEJTEY
Risk Officer
Risk Analytics
JOSHUA ROSENBERG
Senior Vice President
RACHEL LU
Risk Officer

MICHELE BRAUN
Payments Policy Officer

CHRISTOPHER GRANDICH
Financial Management Officer
PAUL R. HAMATY
Financial Management Officer
GEORGE P. PEREIRA
Financial Management Officer
Strategic Investment and Risk
Assessment Office
LOLA S. JUDGE
Senior Vice President
DEBRA L. GRUBER
Vice President
TAMARA S. DAUGHDRILL
Assistant Vice President

125

EMERGING MARKETS
AND INTERNATIONAL
AFFAIRS GROUP
TERRENCE J. CHECKI
Executive Vice President
Development Studies
and Foreign Research
JOHN J. CLARK, JR.
Senior Vice President
IDANNA APPIO
Vice President
MATTHEW D. HIGGINS
Vice President

EXECUTIVE OFFICE
WILLIAM C. DUDLEY
President
CHRISTINE M. CUMMING
First Vice President

DIANE T. ASHLEY
Chief Diversity Officer
and Vice President

Chief of Staff ’s Office

ANIKA D. PRATT
Diversity Officer

JOSEPH S. TRACY
Senior Advisor to the President

Wholesale Product Office

LANCE W. AUER
Vice President
JAMES P. BERGIN
Chief of Staff and Vice President

HUNTER L. CLARK
International Officer

ROBERT P. ALLER
Deputy Chief of Staff for Operations
and Assistant Vice President

Financial Markets and Institutions

RANIA C. PERRY
Deputy Chief of Staff
and First‑Level Officer

B. GERARD DAGES
Senior Vice President
JENNIFER S. CRYSTAL
Vice President
TRICIA E. KISSINGER
International Officer
International Affairs
MICHELE S. GODFREY
Senior Vice President
HOWARD J. HOWE
Assistant Vice President

Equal Employment
Opportunity Office
F. CHRISTOPHER CALABIA
Senior Vice President
TAMRA J. WHEELER
Assistant Vice President
Financial Stability
and Regulatory Policy
MARGARET M. McCONNELL
Director and Senior Vice President
SARAH BELL
Deputy Director
and Assistant Vice President

126

Office of Diversity and Inclusion

RICHARD P. DZINA
Senior Vice President
and Wholesale Product Manager
JAMES D. NARRON
Senior Vice President
SARINA PANG
Senior Vice President
ROBYN A. BRANDOW
Vice President
CARLOS FUENTES
Vice President
ANDREW B. GERSON
Vice President
KENNETH S. ISAACSON
Vice President

Federal Reserve bank of New York
2012 annual report

FINANCIAL INSTITUTION SUPERVISION GROUP
SARAH J. DAHLGREN
Executive Vice President

JAN H. VOIGTS
Vice President

CHRISTOPHER R. HUNTER
Examining Officer

Complex Financial Institutions

JAMES B. WALL
Vice President

ANNA IACUCCI
Examining Officer

PAUL D. WHYNOTT
Vice President

WILLIAM E. KELLY
Examining Officer

WILLIAM J. CARLUCCI
Assistant Vice President

THEONILLA LEE-CHAN
Examining Officer

STEPHANIE J. CHALY
Assistant Vice President

ANNE M. MacEWEN
Examining Officer

LaVERNE CORNWELL
Assistant Vice President

TAMARA MARCOPULOS
Examining Officer

DANIEL E. ELDER
Assistant Vice President

BRIAN O’HALLORAN
Examining Officer

HAMPTON FINER
Assistant Vice President

GLEN J. REPPY
Examining Officer

MAYRA GONZALEZ
Assistant Vice President

KATHERINE L. TILGHMAN HILL
Examining Officer

MICHAEL S. KOH
Assistant Vice President

JANE WAKEFIELD
Examining Officer

R. SUSAN STIEHM
Assistant Vice President

Cross-Firm Perspective and Analytics

LUCINDA M. BRICKLER
Senior Vice President
WILLIAM J. BRODOWS
Senior Vice President
F. CHRISTOPHER CALABIA
Senior Vice President
MARTHA CUMMINGS
Senior Vice President
DIANNE K. DOBBECK
Senior Vice President
CAROLINE FRAWLEY
Senior Vice President
LAUREN A. HARGRAVES
Senior Vice President
STEVEN J. MANZARI
Senior Vice President
DANIEL A. MUCCIA
Senior Vice President
JONATHAN I. POLK
Senior Vice President
BRUCE T. RICHARDS
Senior Vice President
MICHAEL F. SILVA
Senior Vice President
ANDREW M. DANZIG
Vice President
ALEJANDRO A. La TORRE
Vice President
JOHN RICKETTI
Vice President
RONALD P. STROZ
Vice President

TODD M. WASZKELEWICZ
Assistant Vice President
SUKHPAL BHATTI
Examining Officer
KEVIN COFFEY
Examining Officer
PETER R. DRAKE
Examining Officer
JUDITH J. GRUTTMAN
Examining Officer
JOHN A. HEINZE
Examining Officer
WARREN HRUNG
Examining Officer

MICHAEL J. ALIX
Senior Vice President
JOHN E. KAMBHU
Vice President
DINA M. MAHER
Assistant Vice President
STACY L. MANUEL
Assistant Vice President
SUMMER M. COLE
Examining Officer
MICHAEL E. HOLSCHER
Examining Officer
EMILY G. YANG
Examining Officer

127

Financial Market Infrastructure
JEANMARIE DAVIS
Senior Vice President
LISA M. JONIAUX
Vice President

JACQUELINE M. McCORMACK
Financial Institution Supervision Officer
Foreign Financial Institutions

DENISE B. SCHMEDES
Vice President

ZAHRA EL-MEKKAWY
Senior Vice President

VIKEN CHAKRIAN
Assistant Vice President

DANA ROY GREEN
Vice President

THOMAS FERLAZZO
Assistant Vice President

JACQUELINE M. LOVISA
Assistant Vice President

ANN E. MINER
Assistant Vice President

RALPH T. SANTASIERO
Examining Officer

WENDY NG
Assistant Vice President

SHIVAJI C. VOHRA
Examining Officer

KEITH PULSIFER
Assistant Vice President

Group Operations

ROGER R. GRAHAM
Examining Officer
JOHANNA M. SCHWAB
Examining Officer
LILY THAM
Examining Officer
CHRISTOPHER T. TSUBOI
Examining Officer
Financial Institution Supervision
Executive Office
JAMES R. HENNESSY
Senior Vice President
HOMER C. HILL
Chief Operating Officer
and Senior Vice President
JEFFREY C. BLYE
Vice President

128

BETTYANN L. GRIFFITH
Assistant Vice President

SCOTT R. GURBA
Senior Vice President
JOONHO LEE
Vice President
GARY J. KAPLAN
Assistant Vice President
GRACE Y. SONE
Assistant Vice President
MARGARET E. BRUSH
Financial Institution Supervision Officer
PAUL R. COPPOLA
Financial Institution Supervision Officer
MARK C. SCAPP
Examining Officer
BARBARA L. TOMSEY
Financial Institution Supervision Officer

Regional and Community
Banking Organizations
and Consumer Compliance
PATRICIA T. MEADOW
Vice President
LAURENCE C. BONNEMERE
Assistant Vice President
ROBERT G. GUTIERREZ
Assistant Vice President
MARYANN CAMPBELL
Examining Officer
MEINRAD A. DANZER
Examining Officer
WILMA SABADO
Examining Officer
Risk and Policy
ARTHUR G. ANGULO
Senior Vice President
RONALD CATHCART
Senior Vice President
JEFFREY INGBER
Senior Vice President
JAINARYAN SOOKLAL
Senior Vice President
STACY L. COLEMAN
Vice President
JAMES M. MAHONEY
Vice President
SARAH P. ADELSON
Assistant Vice President
ERIC A. CABAN
Assistant Vice President
KAREN R. KAHRS
Assistant Vice President

Federal Reserve bank of New York
2012 annual report

STEVEN A. MIRSKY
Assistant Vice President

JAMES DeFALCO
Examining Officer

WING Y. OON
Assistant Vice President

BRIAN E. EARLY
Examining Officer

KAREN Y. SCHNECK
Assistant Vice President

ROSEANNE T. FARLEY
Examining Officer

DANIEL SULLIVAN
Assistant Vice President

MARK E. GLEASON
Examining Officer

BARBARA J. YELCICH
Assistant Vice President

BRIAN F. HEFFERLE
Examining Officer

STEVEN R. BLOCK
Examining Officer

IRENE C. KRAULAND
Examining Officer

LOUIS E. BRAUNSTEIN
Examining Officer

MARTIN LORD
Examining Officer

VICTOR F. BULZACCHELLI
Examining Officer

ARTHUR H. MAYCOCK
Examining Officer

COLLEEN A. BURKE
Examining Officer

LUCETTE PECORARO
Examining Officer

ARI R. COHEN
Examining Officer

JOHN F. REYNOLDS
Examining Officer

Supervisory Policy
HELEN e. MUCCIOLO
Senior Vice President
MARC R. SAIDENBERG
Senior Vice President
STEIN E. BERRE
Vice President
ETHAN S. BUYON
Assistant Vice President
CHARLES C. GRAY
Assistant Vice President
ALEXANDRA MERLE-HUET
Assistant Vice President
KRISTIN H. MALCARNEY
Examining Officer

MARY ELLEN CRAIG
Examining Officer

129

FINANCIAL SERVICES GROUP
CARL W. TURNIPSEED
Executive Vice President

MARGARET SAXENIAN
Vice President

Cash and Custody

ROBERT C. GALLO
Assistant Vice President

DAVID A. DUTTENHOFER, JR.
Senior Vice President
ROBERT G. KRAUS
Vice President
CHRISTOPHER D. ARMSTRONG
Assistant Vice President
EILEEN M. GOODMAN
Assistant Vice President

MARK S. HARRIS
Electronic Payments Officer
SARAH L. WEAN
Electronic Payments Officer
BELINDA S. WILLIAMS
Electronic Payments Officer
Government Wide Accounting

HUMAN RESOURCES
GROUP
SUSAN W. MINK
Executive Vice President
EVELYN E. KENDER
Vice President
LOUIS J. SCENTI, JR.
Vice President
GERALD L. STAGG, M.D.
Medical Director and Vice President
JOHN ESPOSITO
Assistant Vice President

LISA M. BASILE
Cash Officer

DONNA J. CROUCH
Vice President

SUSAN F. FALBE
Assistant Vice President

RONALD G. HENRY
Cash Officer

Group Support Services

DANIELLE N. LEVITT
Assistant Vice President

JOHN M. HILL
Cash Officer
Electronic Payments
GAIL R. ARMENDINGER
Vice President
CARL P. LUNDGREN
Vice President

KEVIN D. KRUEGER
Financial Services Officer
International Treasury Services
PATRICIA HILT
Vice President
BRIAN JACK
Assistant Vice President

KAREN P. LYNCH
Assistant Vice President
NICHOLAS C. MARLIN
Assistant Vice President
JENNIFER C. ROTH
Assistant Vice President
MATTHEW S. WAGNER
Assistant Vice President
DAN DIAZ
Human Resources Officer
MARGARET M. MULLINS
Human Resources Officer
TIMOTHY O’KEEFE
Human Resources Officer
STEVEN E. WALKER
Human Resources Officer

130

Federal Reserve bank of New York
2012 annual report

LEGAL GROUP
THOMAS C. BAXTER, JR.
General Counsel
and Executive Vice President

TINA M. STINSON-DaCRUZ
Compliance Officer

Bank Applications

MICHAEL A. HELD
Corporate Secretary, Deputy General
Counsel, and Senior Vice President

JOYCE M. HANSEN
Deputy General Counsel
and Senior Vice President

Corporate Secretary’s Office

IVAN J. HURWITZ
Vice President

RONA B. STEIN
Assistant Corporate Secretary
and Vice President

ROSALIE YEE
Assistant Vice President

ROSEMARY A. LAZENBY
Curating Officer

BRIAN S. STEFFEY
Bank Applications Officer

Federal Reserve Law
Enforcement Unit

Compliance

THOMAS H. ROCHE
Deputy General Counsel
and Senior Vice President

MARTIN C. GRANT
Chief Compliance and Ethics Officer
and Senior Vice President
BARRY M. SCHINDLER
Compliance and Ethics Officer
and Vice President
MARINA I. ADAMS
Assistant Vice President
EDWARD E. SILVA
Assistant Vice President
AJAY BADYAL
Compliance Officer
DAVID K. CLUNE
Compliance and Ethics Officer
AZISH E. FILABI
Compliance Officer
KENNETH H. JONES
Compliance Officer
TERRENCE I. SMITH
Compliance Officer

NICHOLAS L. PROTO
Chief Investigator
and Senior Vice President
ROBERT N. SAMA
Vice President
CHARLES P. DUFFY
LEU Officer
WILLIAM N. SCHAEFER
LEU Officer
Legal
JOYCE M. HANSEN
Deputy General Counsel
and Senior Vice President
MICHAEL A. HELD
Corporate Secretary, Deputy General
Counsel, and Senior Vice President
STEPHANIE A. HELLER
Deputy General Counsel
and Senior Vice President

THOMAS H. ROCHE
Deputy General Counsel
and Senior Vice President
HAERAN KIM
Assistant General Counsel
and Senior Vice President
SHARI D. LEVENTHAL
Assistant General Counsel
and Senior Vice President
MICHAEL S. NELSON
Assistant General Counsel
and Senior Vice President
NICHOLAS L. PROTO
Chief Investigator
and Senior Vice President
GREGORY CAVANAGH
Counsel and Vice President
RICHARD E. CHARLTON
Counsel and Vice President
RAYMOND B. CHECK
Counsel and Vice President
YOON HI GREENE
Counsel and Vice President
DAVID L. GROSS
Counsel and Vice President
MICHELE H. KALSTEIN
Counsel and Vice President
SEAN O’MALLEY
Deputy Chief Investigator–Enforcement
and Vice President
MICHAEL SCHUSSLER
Counsel and Vice President
DEBRA F. STONE
Counsel and Vice President

131

VALERIE S. WILDE
Counsel and Vice President

SOPHIA R. VICKSMAN
Counsel and Assistant Vice President

SANDRA LEE
Counsel

JENNIFER WOLGEMUTH
Counsel and Vice President

ROBERTO G. AMENTA
Investigator and Assistant Vice President

DAVID G. SEWELL
Counsel

MICHAEL V. CAMPBELL
Counsel and Assistant Vice President

JORDAN AVNI
Legal Automation
Assistant Vice President

SHAWEI WANG SO
Counsel

CANDACE M. JONES
Counsel and Assistant Vice President
CATHERINE KUNG
Counsel and Assistant Vice President
ROSEANN NOTARO
Counsel and Assistant Vice President
BRETT S. PHILLIPS
Counsel and Assistant Vice President
SHAWN E. PHILLIPS
Counsel and Assistant Vice President
JOSEPH H. SOMMER
Counsel and Assistant Vice President
JANINE M. TRAMONTANA
Counsel and Assistant Vice President

132

MARY L. COLON
Legal Administrative
Assistant Vice President
SAHIL T. GODIWALA
Counsel
MARK GOLD
Investigative Officer
TODD R. GREENBERG
Contracts Officer
ERIN P. KELLY
Counsel
KATHERINE S. LANDY
Counsel

JOSEPH R. TORREGROSSA
Counsel
Records Management
MARTIN C. GRANT
Chief Compliance and Ethics Officer
and Senior Vice President
ROSE PATRUNO
Assistant Vice President

Federal Reserve bank of New York
2012 annual report

MARKETS GROUP
SIMON M. POTTER
Executive Vice President

Central Bank and International
Account Services

DAVID L. CARANGELO
Markets Officer

PATRICIA C. MOSSER
Senior Advisor and Senior Vice President

TIMOTHY J. FOGARTY
Senior Vice President

DAVID A. JONES
Markets Officer

MICHELE R. WALSH
Chief of Staff and Vice President
MATTHEW S. LIEBER
Assistant Vice President
PATRICIA A. ZOBEL
Assistant Vice President

AMELIA R. MONCAYO
Assistant Vice President
ANNMARIE S. ROWE-STRAKER
Assistant Vice President
ROSE M. UGARTE-GEE
Assistant Vice President

MATTHEW D. RASKIN
Markets Officer
Market Operations Monitoring
and Analysis
SUSAN E. McLAUGHLIN
Senior Policy Advisor
and Senior Vice President

Business Technology

ORSON F. KEEYS
Markets Officer

MICHAEL J. RECUPERO
Senior Vice President

CATHERINE LOMAX
Markets Officer

MICHAEL J. BURK
Vice President

MATTHEW NEMETH
Markets Officer

CHRISTOPHER R. BURKE
Vice President

PAUL R. KOWALENKO
Vice President

PETER ROETHEL
Markets Officer

STEVEN M. FRIEDMAN
Vice President

THOMAS I. PIDERIT
Vice President

Group Shared Services

JOSHUA L. FROST
Vice President

OLEG KOZHUKHOV
Assistant Vice President
DEBRA M. YOUNG
Assistant Vice President
LARISSA EZRA
Markets Officer
RYAN L. HIRSCHEY
Markets Officer

ANNE F. BAUM
Senior Vice President
LEON W. TAUB
Senior Vice President
RANDALL B. BALDUCCI
Vice President
HOWARD B. FIELDS
Vice President
ANGELA L. O’CONNOR
Vice President

MAX HRABROV
Markets Officer

SUZANNE BENVENUTO
Assistant Vice President

ANTHONY J. LIGUORI
Markets Officer

DENLEY Y. S. CHEW
Assistant Vice President

PETER J. SEIGEL
Markets Officer

SCOTT NEWMAN
Assistant Vice President

KEVIN J. STIROH
Senior Vice President

CHERYL A. GLEASON
Vice President
LORIE K. LOGAN
Vice President
ALLAN M. MALZ
Vice President
ANNA NORDSTROM
Vice President
JULIE A. REMACHE
Vice President
JANET S. RESELE-TIDEN
Vice President
NATHANIEL J. WUERFFEL
Vice President

THOMAS R. BREEN
Markets Officer

KATHRYN B. CHEN
Assistant Vice President

JOSEPH M. BURKE
Markets Officer

DAVID L. FINKELSTEIN
Assistant Vice President

133

RESEARCH AND STATISTICS GROUP
OLIVER A. GIANNOTTI
Assistant Vice President
JEFFREY W. HUTHER
Assistant Vice President

Macroeconomic and Monetary Studies

Capital Markets

MARCO DEL NEGRO
Assistant Vice President

FRANK M. KEANE
Assistant Vice President

TOBIAS ADRIAN
Vice President

KARIN J. KIMBROUGH
Assistant Vice President

MICHAEL J. FLEMING
Vice President

DEBORAH L. LEONARD
Assistant Vice President

ERNST SCHAUMBURG
Research Officer

DINA T. MARCHIONI
Assistant Vice President

Financial Intermediation

PATRICIA A. ZOBEL
Assistant Vice President
ELIZABETH CAVINESS
Markets Officer
SAMUEL B. CHEUN
Markets Officer
PATRICK O. DWYER
Markets Officer
MICHELLE L. EZER
Markets Officer
JOHN R. FAULKNER
Markets Officer
ROBERT H. LERMAN
Markets Officer
JOHN McGOWAN
Markets Officer
JEFFREY M. MOORE
Markets Officer
JOHN C. PARTLAN
Markets Officer
ROMAN SHIMONOV
Markets Officer

134

JAMES J. McANDREWS
Director of Research
and Executive Vice President

DEANNA SONG
Markets Officer

RICHARD W. PEACH
Senior Vice President

GAUTI B. EGGERTSSON
Assistant Vice President
ROBERT W. RICH
Assistant Vice President
ARGIA M. SBORDONE
Assistant Vice President

BEVERLY J. HIRTLE
Senior Vice President

MARC P. GIANNONI
Research Officer

LINDA S. GOLDBERG
Vice President

Microeconomic and Regional Studies

JOÃO A. SANTOS
Vice President
HAMID MEHRAN
Assistant Vice President
DONALD P. MORGAN
Assistant Vice President
STAVROS C. PERISTIANI
Assistant Vice President

GIORGIO TOPA
Vice President
HENDRIKUS W. VAN DER KLAAUW
Vice President
OLIVIER ARMANTIER
Assistant Vice President
AYSEGUL SAHIN
Assistant Vice President
Money and Payments Studies

NICOLA CETORELLI
Research Officer

KENNETH D. GARBADE
Senior Vice President

TANJU YORULMAZER
Research Officer

ANTOINE MARTIN
Assistant Vice President

International Research

ASANI SARKAR
Assistant Vice President

THOMAS KLITGAARD
Vice President
MYNYRE AMITI
Assistant Vice President

Federal Reserve bank of New York
2012 annual report

SPECIAL INVESTMENTS
MANAGEMENT GROUP
Office of Director

Research Services

DEBORAH A. PERELMUTER
Senior Vice President

WILLIAM G. SELICK
Assistant Vice President

ANDREW F. HAUGHWOUT
Vice President

JOSEPH P. HEANEY
Research Officer

JONATHAN P. McCARTHY
Vice President

Statistics

ROSEANN STICHNOTH
Executive Vice President
ROBERT GALLETTA
Vice President
ZACHARY S. TAYLOR
Vice President

KENNETH P. LAMAR
Senior Vice President

ANNA CHANG
Assistant Vice President

Publications

ANTHONY O. CIRILLO
Assistant Vice President

NATASHA M. ZABKA
Assistant Vice President

VALERIE D. LaPORTE
Research Officer

RICHARD E. MOLLOY
Assistant Vice President

GERALD M. McCRINK
Investment Support Officer

MICHAEL A. DeMOTT
Research Officer

PATRICIA SELVAGGI
Assistant Vice President

WENDY Y. WONG
Investment Support Officer

Regional Analysis

SANDRA Y. GALVAN
Statistics Officer

LINDA YEE
Investment Support Officer

PAOLO A. PESENTI
Vice President

ERICA L. GROSHEN
Vice President
RICHARD M. DEITZ
Assistant Vice President

RICHARD ROBERTS
Statistics Officer

JAMES A. ORR
Assistant Vice President

135

TECHNOLOGY SERVICES GROUP
WILLIAM T. CHRISTIE
Executive Vice President
Application Development

Governance and Strategic Planning
MATTHEW D. LARSON
Senior Vice President

LEE ALEXANDER
Senior Vice President

JEFFREY P. WEINSTEIN
Senior Vice President

YUET-MING CHAN
Vice President

ROBERT M. BEYER
Vice President

MICHAEL KANE
Vice President

DAVID CAPPS
Technology Services Officer

PANKAJ LUTHRA
Vice President

Information Security

RICHARD A. WHITE
Vice President

ROY D. THETFORD, JR.
Senior Vice President
and Information Security Officer

HARRY M. ZIMBALIST
Vice President

JEFFREY KLEIN
Vice President

NAHLA S. ALY
Assistant Vice President

DAVID B. DROSSMAN
Assistant Vice President

DAVID ARZT
Assistant Vice President

JAMIE BERNSTEIN
Technology Services Officer

ROBERT GOODMAN
Assistant Vice President

Program Management Office

IRVING MYONES
Assistant Vice President
COLIN W. WYND
Assistant Vice President
TAMARA GOLDBURT
Technology Services Officer
JOHN T. LINES
Technology Services Officer
SHARONA NOE
Technology Services Officer

JAMES J. LEARY
Assistant Vice President
PETER MORREALE
Assistant Vice President
DIANE PILINKO
Assistant Vice President
PERRY SANTACECILIA
Assistant Vice President
JILL TALIANO
Assistant Vice President
TRACEY A. TERRY
Assistant Vice President
SALVATORE TIDONA
Assistant Vice President
PAMELA W. YIP
Assistant Vice President
JOHN G. BARRA
Technology Services Officer

KATHRYN SMITH
Senior Vice President

SUSAN R. CHASE
Technology Services Officer

IRA KAHNER
Vice President

NELL M. COTE
Technology Services Officer

THOMAS KLEIN
Vice President

AMY C. LIU
Technology Services Officer

BENNY E. NISSAN
Vice President

SREEDEVI MANDALAPU
Technology Services Officer

ISAAC B. OBSTFELD
Vice President

KENNETH T. NORCROSS
Technology Services Officer

JEAN M. STOLOFF
Vice President
RONALD J. ZOLDY
Vice President

136

NADEEM A. KAYANI
Assistant Vice President

Federal Reserve bank of New York
2012 annual report

Technology Engineering and
Computing Services (TECS)

DANNY BRANDO
Assistant Vice President

JOHN J. MOSQUERA
Technology Services Officer

SEAN G. MAHON
Senior Vice President

PAUL R. SANS
Assistant Vice President

SHLOMO ORBACH
Technology Services Officer

RICHARD I. BARRETT
Vice President

ANGELA JORDAN
Technology Services Officer

AMBROSE M. STAFYLERAS
Technology Services Officer

ANAT GOURJI
Vice President

RAFAEL KOSCIALKOWSKI
Technology Services Officer

NICOLAE STANESCU
Vice President

JOSEPH D. LEONARD
Technology Services Officer

137

Map of the Second
Federal Reserve District

139

Federal Reserve bank of New York
2012 annual report

The Second federal reserve District
CLINTON

ST. LAWRENCE

NEW YORK

FRANKLIN

W
ESSEX

JEFFERSON

LEWIS

HAMILTON
WARREN

OSWEGO
NIAGARA

ONEIDA

ORLEANS
MONROE

WAYNE
ONONDAGA

GENESEE
ONTARIO
ERIE

WYOMING
LIVINGSTON

YATES SENECA

CATTARAUGUS

ALLEGANY

OTSEGO

CHEMUNG

TIOGA

SARATOGA

ALBANY
SCHOHARIE

CORTLAND

STEUBEN

WASHINGTON
FULTON

MONTGOMERY
SC'NECT'Y

MADISON

CAYUGA

TOMPKINS
SCHUYLER
CHAUTAUQUA

HERKIMER

RENSSELAER

CHENANGO
GREENE

DELAWARE

COLUMBIA

BROOME
ULSTER

PUTNAM
ORANGE
SUSSEX

HUNTERDON

NEW JERSEY

FAIRFIELD

WESTCHESTER
ROCKLAND

PASSAIC

SUFFOLK

BERGEN

WARREN

CONN.

DUTCHESS

SULLIVAN

EROC

MORRIS

BRONX
ESSEX HUDSON

QUEENS

UNION
SOMERSET

NASSAU

KINGS
RICHMOND

MIDDLESEX

MONMOUTH

HEAD OFFICE
(NEW YORK)

PUERTO RICO

U.S. VIRGIN ISLANDS

141