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2013 ANNUAL REPORT

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Federal Reserve Bank
of New York
Annual Report
For the year ended
December 31, 2013

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
2013 ANNUAL REPORT

June 2014

To the Depository Institutions in
the Second Federal Reserve District:

It is my pleasure to send you the ninety-ninth annual report of the Federal Reserve Bank
of New York, covering the year 2013.
Following the “Letter from the President,” the 2013 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

Advisory Groups

105

Officers of the Federal Reserve Bank of New York

113

Map of the Second Federal Reserve District

131

Letter from
the President

FEDERAL RESERVE BANK OF NEW YORK
2013 ANNUAL REPORT

LETTER FROM THE PRESIDENT

he year 2013 marked the centennial of
the Federal Reserve System. During the
year, the Federal Reserve Bank of New York
continued a long tradition of executing its mission in the interest of the public that it serves. In
particular, the New York Fed made significant
progress in strengthening the financial system,
creating new tools and processes to support
monetary policy normalization, modernizing
the payments system, and conducting highquality analysis and outreach in areas important
to the public.

the Tier 1 Leverage Ratio and the Net Stable
Funding Ratio, and to the Financial Stability
Board’s work on resolution. The Bank also
contributed to the international financial stability agenda through its work on the Committee
on the Global Financial System (which I chair)
and the Standing Committee on Assessment of
Vulnerabilities.

In this letter, I will highlight some of these
initiatives and reflect on our centennial year,
offering my thoughts on the challenges that lie
ahead for the New York Fed and the System.

We also worked with market participants
to make important progress in reducing the
reliance on intraday credit in order to reduce
systemic risk in the tri-party repo market.
Additional work is needed to ensure that risk
management practices in this market are more
robust to a broad range of possible events and
outcomes.

Strengthening the Financial System:
Capital Planning, Standards, and
Reform of the Tri-Party Repo Market

Policy Normalization: Testing,
Operational Readiness, a Counterparty
Pilot Program

In 2013, we made substantial contributions to
the Federal Reserve System’s efforts to ensure
that the largest, most systemic supervised institutions have robust, forward-looking capital
planning processes, sound liquidity risk
management practices, and sufficient resolution
planning.
Our support for efforts to strengthen the
financial system also extended internationally:
The Bank contributed to the setting of international standards under Basel III, including

We made substantial analytical and operational
contributions in 2013 that will ultimately support the Federal Reserve in a more normalized monetary policy environment. As part of
these efforts, we began testing a fixed-rate, overnight reverse repurchase facility to support the
Federal Open Market Committee’s (FOMC)
longer-run planning for the implementation of
monetary policy. The operations are available to
a broad range of counterparties, and the facility could help the Fed tighten its control over
money market rates.

In 2013, we also launched a one-year pilot
program with small broker-dealers in an effort to
examine options for further broadening access
to the Federal Reserve’s monetary policy operations. The program permits a select number of
small firms to participate as counterparties in
outright purchases and sales of U.S. Treasury
securities for the System Open Market Account
portfolios.

As part of the Bank’s
analysis and research
work, we introduced
the Survey of Consumer
Expectations (SCE).
Conducted monthly, the
SCE has yielded a wealth
of data on U.S. consumers’
expectations regarding
inflation, home prices,
job prospects, and
earnings growth.

Analysis and Outreach: The Survey of
Consumer Expectations
As part of the Bank’s analysis and research work,
we introduced the Survey of Consumer
Expectations (SCE). Conducted monthly, the
SCE has yielded a wealth of data on U.S. consumers’ expectations regarding inflation, home
prices, job prospects, and earnings growth, as
well as their expectations about future spending
and access to credit. Through this type of tool,
the Bank is providing the public with unique
insight into the perceptions and economic ac
tivity of consumers.

Payments: Wholesale Financial Services
and the Future of Payments
The Bank also undertook an important modernization of our payment products. In particular,
we made substantial contributions to updating
the Fedwire Funds Service and the Fedwire
Securities Service, and provided key leadership
in preparing for the next generation of payment systems in support of the Federal Reserve
Financial Services Strategic Plan. Moreover,
the Bank completed a successful infrastructure
migration to a new operating platform—another
step to ensure that our services remain worldclass and responsive to the needs of customers,
financial markets, policymakers, and the industry into the future.

The Fed’s 100th Anniversary, a Time
to Reflect and Look Ahead
The year 2013 marked the 100th anniversary of
the establishment of the Federal Reserve System,
an essential contributor to American economic
prosperity and stability. The New York Fed has
played an integral role within the System and
will continue to do so as we confront the challenges that lie ahead. This anniversary represents
an appropriate time to reflect on those challenges
and what it will take to address them effectively going forward. The Museum of American
Finance hosted “The Fed at 100,” an exhibit
commemorating the Fed’s centennial, and at the
opening of that exhibit last September, I posed
the following as some of the most salient challenges for the year ahead.

Challenges on a Number of Fronts:
Monetary Policy, Regulation, Financial
Stability, and Human Capital
The first challenge we foresee is on the monetary
policy front. The Federal Reserve has engaged
in a set of unconventional monetary policies in
recent years. These policies have been necessary
because the FOMC could not ease monetary
policy further by conventional means; additional reductions in the target range for the
federal funds rate were constrained by the socalled “zero lower bound.” Exit from this unconventional set of policies is certainly feasible: the
ability to pay interest on excess reserves gives us
a viable tool to manage monetary policy even
with an enlarged balance sheet, and the New
York Fed is prepared to execute this mission.
However, there will undoubtedly be operational
and communications challenges and unexpected
consequences. We will need to be sufficiently

FEDERAL RESERVE BANK OF NEW YORK
2013 ANNUAL REPORT

agile so that we can best achieve our dual mandate of maximum sustainable employment in
the context of price stability.
The second challenge for us at the New
York Fed, and within the regulatory community
more generally, will be in staying the course and
implementing a regulatory regime in which no
institutions are too big to fail (TBTF). TBTF
is wrong for several reasons. It creates an unfair
disparity between large and small institutions.
In addition to being unfair, it creates greater
risks to financial stability by encouraging greater
size and complexity. We have made considerable
progress toward ending TBTF—raising capital
and liquidity requirements for the largest, most
systemic banks—but we still have a way to go.
In particular, significant barriers to achieving a
cross-border resolution remain, and there are
still insufficient incentives in place for firms to
take corrective action early on to prevent their
failure in the first place.
The third challenge for the Federal Reserve
is to put financial stability on par with monetary policy. As our experience from 2007 to
2009 has demonstrated, monetary policy cannot
work properly when there is financial instability.
Financial instability disturbs market functioning and can impair bank balance sheets in a way
that disrupts banks’ financial intermediation
function, constraining the availability of credit
for households and businesses. Such outcomes,
in turn, can lead to further reductions in aggregate demand, placing additional stress on the
weakened financial system. For these reasons,
financial stability cannot be subordinated to any
other priority.
The fourth challenge is to sustain and
enhance the capabilities of the New York Fed.

This task requires at the outset that we continue
to attract, develop, and retain the best people.
But it also requires tending to the culture of the
institution—for example, ensuring that good
ideas rise to the top no matter where they originate, and that people feel comfortable challenging the conventional wisdom.

Unique Attributes of the New York Fed
I am confident that what makes the New York
Fed unique will allow us to play an effective role
within the System in facing these, and any new,
challenges successfully.
We are a bank within government. That
means we not only have researchers, supervisors, and market analysts, but we also provide banking services and possess significant
operational capabilities. We accept deposits,
make loans, and operate the System Open
Market Account for the Federal Open Market
Committee. When exigent and unusual circumstances require extraordinary operations, be
it in a financial crisis or to implement unconventional monetary policies, our operational
capabilities complement our more conventional
central bank policy role.

The Bank also
undertook an important
modernization of our
payment products. In
particular, we made
substantial contributions
to updating the Fedwire
Funds Service and the
Fedwire Securities
Service, and provided key
leadership in preparing
for the next generation of
payment systems.

In addition, the New York Fed, as a vital
component of the international functions performed by the Federal Reserve System, has a
unique understanding of and credibility in the
global financial system. This can be seen in our
Central Bank International Account Services
business line, in our supervisory responsibility
over many of the largest foreign banking operations in the United States, and in our active
participation in global forums, including the
Basel Committee and the Financial Stability
Board. This international expertise was very
much in evidence during the crisis as we

egotiated foreign exchange swap agreements
n
with a number of foreign central banks and then
operationalized the provision of dollar liquidity
worldwide through a coordinated system of
dollar auctions.
Perhaps most importantly, we have a
remarkably talented and dedicated group of
people working at the Bank who are committed to promoting the mission of the institution
and serving the public interest. Our staff has
proved itself willing to do what is necessary to

William C. Dudley
June 6, 2014

identify, develop, and execute the right plan of
action. While this spirit of dedication was most
clearly and publicly evident during the Bank’s
response to the financial crisis—when we played
a key role within the System in preventing a
financial panic from turning into a worldwide
depression—it informs our work each day and
will help us and the System meet the important
challenges ahead.
We look forward to continuing to play a critical role in the economic well-being of our nation.

Management’s Report
on Internal Control
over Financial Reporting

FEDERAL RESERVE BANK OF NEW YORK
2013 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, 2014

The management of the Federal Reserve Bank of New York (Bank) is responsible
for the preparation and fair presentation of the Statements of Condition as of December 31,
2013 and 2012, the Statements of Income and Comprehensive Income, and the 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 (1992) 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
First Vice President

Michael Strine
Principal Financial Officer

External Auditor
Independence

FEDERAL RESERVE BANK OF NEW YORK
2013 ANNUAL REPORT

EXTERNAL AUDITOR INDEPENDENCE
The Board of Governors engaged Deloitte
& Touche LLP (D&T) to audit the 2013
combined and individual financial statements of
the Reserve Banks and those of the consolidated
LLC entities.1 In 2013, D&T also conducted
audits of internal controls over financial reporting for each of the Reserve Banks. 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 2013, 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
2013 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, 2013 and 2012, 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, 2013, based on criteria established in Internal Control –
Integrated Framework (1992) 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
2013 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, 2013 and 2012, 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, 2013, based on
the criteria established in Internal Control – Integrated Framework (1992) 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, 2014
New York, New York

CONSOLIDATED STATEMENTS OF CONDITION
As of December 31, 2013, and December 31, 2012
(in millions)
ASSETS

2013

2012

Gold certificates
$
3,925
$
3,824
Special drawing rights certificates
1,818
1,818
Coin 82 90
Loans:
Depository institutions
10
18
Term Asset-Backed Securities Loan Facility
(measured at fair value)
98
560
System Open Market Account:
Treasury securities, net
(of which $9,512 and $5,124 is lent as of
December 31, 2013 and 2012, respectively)
1,308,403
1,014,329
Government-sponsored enterprise debt
securities, net (of which $609 and $391 is lent
as of December 31, 2013 and 2012, respectively)
32,786
44,560
Federal agency and government-sponsored enterprise
mortgage-backed securities, net
850,588
532,801
Foreign currency denominated investments, net
7,583
8,023
Central bank liquidity swaps
87
2,867
Accrued interest receivable
13,007
10,645
Other investments
1
13
Investments held by consolidated variable interest entities
(of which $1,774 and $2,266 is measured at fair
value as of December 31, 2013 and 2012, respectively)
1,926
2,750
Prepaid pension benefit costs
332
—
Bank premises and equipment, net
466
471
Interdistrict settlement account
166,886
—
Other assets
212
199
Total assets

$ 2,388,210

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

$1,622,968

FEDERAL RESERVE BANK OF NEW YORK
2013 ANNUAL REPORT

CONSOLIDATED STATEMENTS OF CONDITION
As of December 31, 2013, and December 31, 2012
(in millions)
LIABILITIES AND CAPITAL 2013

2012

Federal Reserve notes outstanding, net
$ 475,077
$ 385,008
System Open Market Account:
Securities sold under agreements to repurchase 175,193
60,096
Other liabilities
738
1,781
Consolidated variable interest entities:
Beneficial interest in consolidated variable
interest entities (measured at fair value)
116
803
Other liabilities (of which $73 and $71 is measured
at fair value as of December 31, 2013 and 2012, respectively)
158
415
Deposits:
Depository institutions
1,518,974
917,383
Treasury, general account
162,399
92,720
Other deposits
33,962
33,744
Interest payable to depository institutions
70
124
Accrued benefit costs
444
2,395
Accrued remittances to Treasury
3,328
831
Interdistrict settlement account
— 110,116
Other liabilities
61
62
Total liabilities
Capital paid-in
Surplus (including accumulated other
comprehensive loss of $2,452 and $4,475
at December 31, 2013 and 2012, respectively)
Total capital
Total liabilities and capital

2,370,520

1,605,478

8,845

8,745

8,845

8,745

17,690

17,490

$ 2,388,210

$1,622,968

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, 2013, and December 31, 2012
(in millions)
INTEREST INCOME
2013
2012
Loans:
Term Asset-Backed Securities Loan Facility
$
6
$
80
System Open Market Account:
Treasury securities, net 28,691 24,774
Government-sponsored enterprise debt securities, net 1,206 1,395
Federal agency and government-sponsored enterprise
mortgage-backed securities, net 20,368 16,671
Foreign currency denominated assets, net
31
44
Central bank liquidity swaps
7
76
Other investments
-
5
Investments held by consolidated variable interest entities
6 1,110
Total interest income 50,315 44,155
INTEREST EXPENSE
System Open Market Account:
Securities sold under agreements to repurchase
34
77
Beneficial interest in consolidated variable interest entities
-
153
Deposits:
Depository institutions 3,713 2,575
Term Deposit Facility
7
2
Total interest expense
Net interest income

3,754

2,807

46,561

41,348

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

FEDERAL RESERVE BANK OF NEW YORK
2013 ANNUAL REPORT

CONSOLIDATED STATEMENTS OF INCOME
AND COMPREHENSIVE INCOME
For the years ended December 31, 2013, and December 31, 2012
(in millions)
2013 2012
NONINTEREST INCOME
System Open Market Account:
Treasury securities gains, net
$
$ 7,151
Federal agency and government-sponsored enterprise
mortgage-backed securities gains, net
28
124
Foreign currency translation losses, net
(402)
(364)
Consolidated variable interest entities gains (losses), net
Investments held by consolidated variable
interest entities gains, net
183
7,451
Beneficial interest in consolidated variable
interest entities losses, net
(2,345)
Income from services
90
82
Compensation received for service costs provided
3
3
Reimbursable services to government agencies
120
124
Other
18
(20)
Total noninterest income

12,206

OPERATING EXPENSES
Salaries and benefits
607
Occupancy
70
Equipment
18
Compensation paid for service costs incurred
37
Net periodic pension expense
619
Other
202
Assessments:
Board of Governors operating expenses and currency costs
324
Bureau of Consumer Financial Protection
180
Office of Financial Research
Total operating expenses

592
68
22
32
637
225
306
123
1

2,057

2,006

Net income before providing for remittances to Treasury
Earnings remittances to Treasury
Net (loss) income
Change in prior service costs related to benefit plans
Change in actuarial gains (losses) related to benefit plans

44,544
45,941
(1,397)
104
1,919

51,548
51,023
525
180
(114)

Total other comprehensive income

2,023

Comprehensive income

$ 626 $

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

591

CONSOLIDATED STATEMENTS OF CHANGES IN CAPITAL
For the years ended December 31, 2013, and December 31, 2012
(in millions, except share data)

Surplus

Accumulated

Net
Other
Capital
Income Comprehensive Total
Paid-In
Retained
Loss
Surplus

Total
Capital

Balance at December 31, 2011
(173,540,748 shares)

$17,354

$ 8,677 $13,218

Net change in capital stock issued
(1,367,438 shares)
Comprehensive income:
Net income
Other comprehensive income
Dividends on capital stock
Net change in capital
Balance at December 31, 2012
(174,908,186 shares)

$(4,541) $8,677

−

−
−
−
68

525
−
(523)
2

−

− 525
66 66
−
(523)
66
68

525
66
(523)
136

$8,745 $13,220 $(4,475)

$ 8,745

$17,490

Net change in capital stock issued
(1,991,511 shares) 100
−
− −
100
Comprehensive income:
Net income
− (1,397)
−
(1,397)
(1,397)
Other comprehensive income
−
− 2,023 2,023 2,023
Dividends on capital stock
−
(526)
− (526)
(526)
Net change in capital 100 (1,923) 2,023 100 200
Balance at December 31, 2013
(176,899,697 shares)
$8,845
$11,297
$(2,452)
$ 8,845
$17,690

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

FEDERAL RESERVE BANK OF NEW YORK
2013 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 is
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,
and 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 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 in the maximum amount of $5 billion.

FEDERAL RESERVE BANK OF NEW YORK
2013 ANNUAL REPORT

Because of the global character of bank funding markets, the System has at times
coordinated with other central banks to provide liquidity. The FOMC authorized and
directed the Bank to establish temporary U.S. dollar liquidity swap lines with the Bank
of Canada, the Bank of England, the European Central Bank, the Bank of Japan, and
the Swiss National Bank. In addition, as a contingency measure, the FOMC authorized and directed the Bank to establish temporary foreign currency liquidity swap
arrangements with these five central banks to allow for the System to access liquidity,
if necessary, in any of the foreign central banks’ currencies. On October 31, 2013, the
Federal Reserve and five other central banks agreed to convert their existing temporary
liquidity swap arrangements to standing agreements that will remain in effect until
further notice.
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 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. 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, adjusted for credit impairment, if any, and the recording of
all SOMA securities on a settlement-date 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.
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
2013 ANNUAL REPORT

In 2013, the description of certain line items presented in the Consolidated
Statements of Income and Comprehensive Income and the Consolidated Statements
of Condition have been revised to better reflect the nature of these items. Amounts
related to these line items were not changed from the prior year, only the nomenclature for the line item was revised, as further noted below:
n

The line item, “Accrued interest on Federal Reserve notes” has been revised
in the Consolidated Statements of Condition to “Accrued remittances to
Treasury.”
The line item, “Net income before interest on Federal Reserve notes expense
remitted to Treasury” has been revised in the Consolidated Statements of
Income and Comprehensive Income to “Net income before providing for
remittances to Treasury.”
The line item, “Interest on Federal Reserve notes expense remitted to Treasury”
has been revised in the Consolidated Statements of Income and Comprehensive
Income to “Earnings remittances to Treasury.”

Certain amounts relating to the prior year have been reclassified in the Consolidated
Statements of Condition to conform to the current year presentation. The amount
reported as “System Open Market Account: Accrued interest receivable” for the year
ended December 31, 2012 ($10,645 million) was previously reported as a component of “System Open Market Account: Foreign currency denominated assets, net”
($33 million) and “Accrued interest receivable” ($10,612 million).
Certain immaterial amounts relating to the prior year have been reclassified in the
Consolidated Statements of Income and Comprehensive Income to conform to the
current year presentation. Thirty-four million dollars previously reported for the year
ended December 31, 2012, as “Non-interest income (loss): Term Asset Back Securities
Loan Facility, unrealized losses” have been reclassified to “Non-interest income (loss):
Other,” and $25 million previously reported as “Operating expenses: Professional fees
related to consolidated variable interest entities” have been reclassified to “Operating
expenses: Other.”
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 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. The Board of
Governors funds the Bureau through assessments on the Reserve Banks as required
by the Dodd-Frank Act. Section 152 of the Dodd-Frank Act established the Office of
Financial Research (OFR) within the Treasury and required the Board of Governors
to fund the OFR for the two-year period ended July 21, 2012. 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 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 twelve months.

FEDERAL RESERVE BANK OF NEW YORK
2013 ANNUAL REPORT

Special drawing rights (SDR) 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 exchangestabilization 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, 2013 and 2012.
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 has elected the fair value option for all Term Asset-Backed Securities
Loan Facility (TALF) loans in accordance with ASC 825. Recording all TALF loans
at fair value, rather than at the remaining principal amount outstanding, 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 the TALF LLC’s
assets and liabilities is presented in Note 6. Unrealized losses on TALF loans that are
recorded at fair value are reported as a component of “Non-interest income: Other”
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
“Interest Income: Term Asset-Backed Securities Loan Facility” in the Consolidated
Statements of Income and Comprehensive Income.
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, are
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 tri-party arrangement. In a tri-party 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), Federal Home Loan Mortgage
Corporation (Freddie Mac), and Federal Home Loan Banks; and pass-through f ederal
agency and GSE MBS. The repurchase transactions are accounted for as financing
transactions with the associated interest income recognized over the life of the transaction. These transactions are reported at their contractual amounts as “System Open
Market Account: Securities purchased under agreements to resell” and the related
accrued interest receivable is reported as a component of “System Open Market
Account: Accrued interest receivable” in the Consolidated Statements of Condition.

FEDERAL RESERVE BANK OF NEW YORK
2013 ANNUAL REPORT

The Bank may engage in sales of securities under agreements to repurchase (reverse
repurchase transactions) with primary dealers and with the set of expanded counterparties which includes banks, savings associations, GSEs, and domestic money market
funds. These reverse repurchase transactions, when arranged as open market operations, are settled through a tri-party arrangement, 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 the 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.
Treasury securities and GSE debt securities held in the SOMA may be lent to primary dealers, typically overnight, 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. 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 “Non-interest income: 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 included in 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, 2013
and 2012, the Bank executed dollar rolls primarily to facilitate settlement of outstanding
purchases of federal agency and GSE MBS. The Bank accounts for dollar rolls 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 resulting from these MBS transactions
are reported as “Non-interest income: 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
“Non-interest income: System Open Market Account: Foreign currency translation
losses, net” in the Consolidated Statements of Income and Comprehensive Income.
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.
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.

FEDERAL RESERVE BANK OF NEW YORK
2013 ANNUAL REPORT

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 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 “Non-interest income: Other” in the Consolidated Statements of Income and
Comprehensive Income.
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 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 amount outstanding
and the rate under the swap agreement. 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 consist primarily of cash and cash
equivalents, short-term investments with maturities of greater than three months
and less than one year, commercial mortgage loans, 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
asset-backed securities (ABS) investments and has elected the fair value option
for all eligible assets in accordance with ASC 825.

i. 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

FEDERAL RESERVE BANK OF NEW YORK
2013 ANNUAL REPORT

life of the alteration, renovation, or improvement. Maintenance, repairs, and minor
replacements are charged to operating expense in the year incurred.
Costs incurred to acquire software are capitalized based on the purchase price.
Costs incurred during the application development stage to develop internal-use
software are capitalized based on 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.
j. 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.
k. 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 $38,515 million and $93,101 million at December 31,
2013 and 2012, respectively.
At December 31, 2013 and 2012, all Federal Reserve notes outstanding, reduced
by the Reserve Bank’s currency holdings, were fully collateralized. At December 31,
2013, all gold certificates, all special drawing rights certificates, and $1,182 billion of
domestic securities held in the SOMA were pledged as collateral. At December 31,
2013, no investments denominated in foreign currencies were pledged as collateral.
l. Beneficial Interest in Consolidated Variable Interest Entities
ML and TALF LLC have outstanding financial interests, and ML II and ML III have
outstanding senior and subordinated financial interests. 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 “Non-interest income: Beneficial interest in consolidated variable interest
entities losses, net,” respectively, in the Consolidated Statements of Income and
Comprehensive Income.

m. Deposits
Depository Institutions
Depository institutions’ deposits represent the reserve and service-related 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
2013 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,
2013 and 2012.
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 cash collateral and GSE deposits held by the Bank.
n. 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 represents 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 in both
accounts can fluctuate significantly. The balances of items in process of collection and
deferred credit items were not material as of December 31, 2013 and 2012.
o. 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 changes, 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.

p. 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.
q. Remittances to Treasury
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. Currently, remittances to Treasury are made on a weekly basis.
This amount is reported as “Earnings remittances to Treasury” in the Consolidated
Statements of Income and Comprehensive Income. The amount due to the Treasury
is reported as “Accrued remittances to Treasury” in the Consolidated Statements
of Condition. 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.
r. 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, 2013 and 2012, the Bank was reimbursed for substantially all
services provided to the Treasury as its fiscal agent.
s. Income from Services, Compensation Received for Service Costs Provided, and
Compensation Paid for Service Costs Incurred
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.

FEDERAL RESERVE BANK OF NEW YORK
2013 ANNUAL REPORT

The Federal Reserve Bank of Atlanta has overall responsibility for managing
the Reserve Banks’ provision of check and ACH services to depository institutions,
and the Federal Reserve Bank of Chicago 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 by the Reserve Banks responsible for managing these services and reports this
compensation as “Noninterest income: Compensation received for service costs provided” in its Consolidated Statements of Income and Comprehensive Income.
t. 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.
The Dodd-Frank Act requires that, after the transfer date of July 21, 2011, 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 operating expenses of the System for the years ended December 31, 2013 and 2012 was
12 percent ($597.6 million) and 11 percent ($547.8 million), respectively. After 2013,
the amount will be adjusted in accordance with the provisions of the Dodd-Frank
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.
u. 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 threelevel 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.
v. 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 $14 million and $13 million for the
years ended December 31, 2013 and 2012, respectively, and are reported as a component of “Operating expenses: Occupancy” in the Consolidated Statements of Income
and Comprehensive Income.
w. 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 2013 and 2012.

FEDERAL RESERVE BANK OF NEW YORK
2013 ANNUAL REPORT

x. Recently Issued Accounting Standards
In December 2011, the FASB issued Accounting Standards Update (ASU) 2011-11,
Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities. This
update requires 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. 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. These updates are
effective for the Bank for the year ended December 31, 2013, and the required
disclosures are included in Note 6.
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 2013‑02, 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. This update improves
the transparency of changes in other comprehensive income and items reclassified out
of accumulated other comprehensive income in the consolidated financial statements.
These presentation requirements of ASU 2011-05 and the required disclosures in
ASU 2013-02 are effective for the Bank for the year ending December 31, 2013, and
are reflected in the Bank’s 2013 consolidated financial statements and Note 11.
In April 2013, the FASB issued ASU 2013-07, Presentation of Financial Statements
(Topic 205): Liquidation Basis of Accounting. This update clarifies when entities
in liquidation should apply the liquidation basis of accounting and provides guidance on financial statement presentation. This update is effective for an entity that
determines liquidation is imminent during annual reporting periods beginning after
December 15, 2013. During 2012, ML II and ML III sold their remaining portfolio
assets; however, the financial statement presentations for ML II and ML III were not
modified to the liquidation basis as the standard does not apply to entities whose
liquidation follows a plan for liquidation that was specified in the entity’s governing
documents at inception.

In June 2013, the FASB issued ASU 2013-08, Financial Services–Investment
Companies (Topic 946): Amendments to the Scope, Measurement, and Disclosure
Requirements. This update changes the assessment of whether an entity is an investment company by developing a new two-tiered approach for that assessment, which
requires an entity to possess certain fundamental characteristics while allowing judgment in assessing other typical characteristics. This update, which is applicable to
ML II and ML III, is effective for the Bank for the year ending December 31, 2014 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;
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. 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 $10 million and $18 million as of
December 31, 2013 and 2012, respectively, with a remaining maturity within fifteen days.
At December 31, 2013 and 2012, the Bank did not have any loans that were
impaired, restructured, 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, 2013 and 2012.

FEDERAL RESERVE BANK OF NEW YORK
2013 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.
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 for the purpose
of purchasing such assets. As of December 31, 2013, 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 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 proved 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 to lend up to $180 billion to TALF LLC if it needed the funding to purchase assets pursuant to the put agreement and provided that the Treasury
had fully funded its commitment. Subsequently, the Treasury and Bank commitments
to lend to TALF LLC were eliminated, because the cash equivalents and short-term
investments held by TALF LLC exceeded the remaining amount of TALF loans outstanding, and the credit protection from the Treasury was no longer deemed necessary.
The TALF remains a joint Treasury–Federal Reserve program, and the Treasury and
Federal Reserve will continue to consult on the administration of the program.
TALF LLC has repaid in full the outstanding principal and accrued interest on the
initial funding previously provided by the Treasury. The Board of Governors has also
authorized TALF LLC to begin distributions from the accumulated fees and income
earned by TALF LLC since inception to the Treasury and the Bank in the amount
by which such accumulated fees and income exceeds the current outstanding TALF
loan balance plus funds reserved for future expenses of TALF LLC. Treasury receives
90 percent of the distributions, and the Bank receives 10 percent.

As of December 31, 2013, TALF loans were classified within Level 2 of the valuation hierarchy. TALF loans were transferred from Level 3 to Level 2 because they were
valued at December 31, 2013 using model-based techniques for which all significant
inputs were considered observable (Level 2). Previously, TALF loans were valued using
significant unobservable inputs (Level 3).
The following table presents the TALF loans at fair value as of December 31 by
ASC 820 hierarchy (in millions):
Level 2
Level 3
Total fair value

2013

2012

$98
—

$ —
560

$98

$560

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,
2013 and 2012 (in millions):
TALF Loans
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
Gross transfers out1 (560)
Fair value at December 31, 2013
$
—
1 The amount of transfers is based on fair values of the transferred assets at the beginning of

the reporting period.

The fair value of TALF loans reported in the Consolidated Statements of
Condition as of December 31, 2013 and 2012, includes $1 million and $3 million in
unrealized gains, respectively. The Bank attributes substantially all changes in fair value
of loans to changes in instrument-specific credit spreads.

FEDERAL RESERVE BANK OF NEW YORK
2013 ANNUAL REPORT

Eligible collateral includes U.S. dollar-denominated ABS that are backed by
student loans, insurance premium financial loans, or commercial mortgage loans. The
following table presents the collateral concentration and remaining maturity distribution
measured at fair value as of December 31, 2013 and 2012 (in millions):
Time to Maturity
91 Days
Over 1 Year
to 1 Year
to 5 Years

Within
Collateral Type1
90 Days
December 31, 2013:
Student loan $ — $ 14
$ 33
CMBS — 51 —
Total $ — $ 65 $ 33
December 31, 2012:
Student loan $ — $
CMBS 3
Other2 46
Total $ 49 $

—
$382
— 129
— —
— $511

Total
$ 47
51
$ 98
$382
132
46
$560

1 All credit ratings are AAA unless otherwise indicated.
2 Includes insurance premium financial loans.

The aggregate remaining principal amount outstanding on TALF loans as of
December 31, 2013 and 2012, was $97 million and $556 million, respectively.
At December 31, 2013 and 2012, 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 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):
2013 2012
Interest income
$ 6
$ 80
Realized and unrealized losses (3) (34)
Subtotal–TALF loans
$ 3
$ 46
Allocated share of TALF LLC — (7)
Total TALF
$ 3
$ 39

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, 2013 and 2012, 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 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. 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. In December 2012, the FOMC announced that the Federal Reserve would
purchase longer-term Treasury securities initially at a pace of $45 billion per month
after its program to extend the average maturity of its holdings of Treasury securities
was completed at the end of 2012. In December 2012, the FOMC announced that the
Federal Reserve would continue the policy of rolling over maturing Treasury securities
into new issues at auction.
During the year ended December 31, 2012, 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-a-quarter years
or less by the end of 2012.
The Bank’s allocated share of activity related to domestic open market operations
was 55.454 percent and 56.065 percent at December 31, 2013 and 2012, respectively.

FEDERAL RESERVE BANK OF NEW YORK
2013 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):
2013
Total
Unamortized Unaccreted
Amortized
Par
Premiums
Discounts
Cost
Notes
$ 813,750
$18,513
$(3,160)
$ 829,103
Bonds 411,108 71,281
(3,089)
479,300
Total Treasury

securities
$1,224,858
$89,794
$ (6,249)
$ 1,308,403
GSE debt securities
Federal agency and
GSE MBS

31,732

$ 1,055

(1)

$ 826,355

$24,833

$ (600)

32,786

$ 850,588

2012
Total
Unamortized Unaccreted
Amortized
Par
Premiums
Discounts
Cost
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

The Bank enters into transactions for the purchase of securities under agreements
to resell and transactions to sell securities under agreements to repurchase as part of
its monetary policy activities. In addition, transactions to sell securities under agreements to repurchase are entered into 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, 2013 and 2012. 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
2013
Contract amount outstanding,
end of year
$175,193
Average daily amount outstanding,
during the year
55,441
Maximum balance outstanding,
during the year
175,193
Securities pledged (par value),
end of year
172,158
Securities pledged (market value),
end of year
174,626

2012

Total SOMA
2013

2012

$60,096

$315,924 $107,188

49,057

99,681 91,898

68,703

315,924

122,541

52,448

310,452 93,547

60,096

314,901

107,188

FEDERAL RESERVE BANK OF NEW YORK
2013 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, 2013 and 2012 was as
follows (in millions):
16 Days 91 Days Over
Over
Within
to
to
1 Year to 5 Years to
15 Days 90 Days 1 Year 5 Years 10 Years

Over 10
Years

Total

December 31, 2013:
Treasury
securities
(par value)
$
— $ 165 $
98 $423,297 $ 479,513 $321,785 $ 1,224,858
GSE debt
securities
(par value)
1,281 4,197 4,806 20,112
34 1,302
31,732
Federal agency
and GSE
MBS (par value)1 —
— —
3 1,413 824,939 826,355
Securities sold
under
agreements
to repurchase
(contract
amount)
175,193
— —
—
—
— 175,193
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
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 6.5 and 3.3 years as of December 31, 2013 and 2012, 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
2013
Treasury securities (amortized cost) $9,512
Treasury securities (par value)
8,566
GSE debt securities (amortized cost) 609
GSE debt securities (par value)
585

2012
$5,124
4,743
391
379

Total SOMA
2013
2012
$17,153
$ 9,139
15,447 8,460
1,099 697
1,055
676

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, 2013, 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, 2013,
the total purchase price of the federal agency and GSE MBS under outstanding purchase commitments was $59,350 million, of which $479 million was related to dollar
rolls. The total purchase price of outstanding purchase commitments allocated to the
Bank was $32,912 million, of which $265 million was related to dollar roll transactions.
As of December 31, 2013, there were no outstanding sales commitments for federal
agency and GSE MBS. These commitments, which had contractual settlement dates
extending through February 2014, 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
2013 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, includes 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 includes 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):

Other investments
Other liabilities:

Allocated to the Bank
2013
2012
$
1
$ 13

Total SOMA
2013
2012
$
2
$ 23

Cash margin

$ 732

$1,733

$1,320

$3,092

Obligations from MBS
transaction fails
Total other liabilities

6
$ 738

48
$1,781

11 85
$1,331
$3,177

Accrued interest receivable on domestic securities holdings was $23,405 million
and $18,924 million as of December 31, 2013 and 2012, respectively, of which
$12,979 million and $10,610 million, respectively, was allocated to the Bank. These
amounts are reported as a component of “System Open Market Account: Accrued
interest receivable” in the Consolidated Statements of Condition.

Information about transactions related to Treasury securities, GSE debt securities,
and federal agency and GSE MBS during the years ended December 31, 2013 and
2012, 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, 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

Purchases1
Sales1
Realized gains, net2
Principal payments and maturities
Amortization of premiums
and accretion of discounts, net
Inflation adjustment on
inflation-indexed securities
Annual reallocation adjustment4
Balance at December 31, 2013

—

$ 640,390

$373,939

$1,014,329

$ 44,560

$ 532,801

—
—
—
—

199,534
—
—
(12)

114,741
—
—
—

314,275
—
—
(12)

—
—
—
(10,877)

481,230
—
—
(152,484)

—

(3,351)

(5,285)

(8,636)

(442)

(3,898)

—
—

158
(7,616)

357
(4,452)

515
(12,068)

—
(455)

—
(7,061)

—

$ 829,103

$479,300

$1,308,403

$ 32,786

$ 850,588

Year-ended December 31, 2012
Supplemental information–
par value of transactions:
Purchases3
$ 60,212 $ 202,776 $ 109,286 $ 372,274
$
Sales3
— (262,334) (4,897) (267,231)
Year-ended December 31, 2013
Supplemental information–
par value of transactions:
Purchases3
$
Sales3

—
$ 222,141
—
—

— $ 198,450 $ 102,885 $ 301,335
$
—
$ 466,157
—
— —
— — —

1 Purchases and sales 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 3j.

FEDERAL RESERVE BANK OF NEW YORK
2013 ANNUAL REPORT

Total SOMA
Federal

Total Agency

Treasury
GSE Debt
and
Bills
Notes
Bonds
Securities
Securities
GSE MBS
Balance at December 31, 2011
$ 18,423
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
—

$ 1,311,917 $ 419,937
397,999
263,991
(507,420)
(11,727)
12,003
1,252
(67,462)
—

Balance at December 31, 2012

Purchases1
Sales1
Realized gains, net2
Principal payments and maturities
Amortization of premiums
and accretion of discounts, net
Inflation adjustment
on inflation-indexed securities
Balance at December 31, 2013

—

$ 1,750,277
780,876
(519,147)
13,255
(204,776)

$107,828
—
—
—
(27,211)

$ 848,258
431,487
—
—
(324,181)

(1,138)

(5,243)

(5,461)

(7,531)

(12,987)

643

1,047

1,690

—

$1,142,219 $666,969

$1,809,188

$ 79,479

$ 950,321

—
—
—
—

358,656
—
—
(21)

206,208
—
—
—

564,864
—
—
(21)

—
—
—
(19,562)

864,537
—
—
(273,990)

—

(6,024)

(9,503)

(15,527)

(795)

(7,008)

—

285

645

930

—

$1,495,115 $864,319

$ 2,359,434

$ 59,122

$1,533,860

—

Year-ended December 31, 2012
Supplemental information –
par value of transactions:
Purchases3
$118,892 $ 383,106 $ 205,115 $ 707,113
$
Sales3
— (492,234) (9,094) (501,328)
Year-ended December 31, 2013
Supplemental information –
par value of transactions:
Purchases3
$
— $ 356,766 $ 184,956 $ 541,722 $
Sales3
—
— —
—

—
$ 413,160
— —

—
$ 837,490
— —

1 Purchases

and sales may include payments and receipts related to principal, premiums, discounts, and inflation compensation

b. Foreign-Currency-Denominated Investments
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
31.964 percent and 32.258 percent at December 31, 2013 and 2012, respectively.
Information about foreign-currency-denominated investments valued at amortized cost and foreign currency market exchange rates at December 31 was as follows
(in millions):
Allocated to the Bank
2013

2012

Total SOMA
2013

2012

Euro:
Foreign currency deposits
$2,407
$ 2,879
$ 7,530
$ 8,925
Securities purchased under
agreements to resell 815 213 2,549
659
German government
debt instruments 766 688 2,397 2,132
French government
debt instruments 766 780 2,397 2,422
Japanese yen:
Foreign currency deposits 935
1,146
2,926
3,553
Japanese government
debt instruments 1,894 2,317 5,925 7,182

Total

$7,583

$8,023

$23,724

$ 24,873

Accrued interest receivable on foreign-currency-denominated assets was
$88 million and $99 million as of December 31, 2013 and 2012, respectively, of which
$28 million and $33 million, respectively, was allocated to the Bank. These amounts
are reported as a component of “System Open Market Account: Accrued interest
receivable” in the Consolidated Statements of Condition.

FEDERAL RESERVE BANK OF NEW YORK
2013 ANNUAL REPORT

The remaining maturity distribution of foreign-currency-denominated investments that were allocated to the Bank at December 31, 2013 and 2012, was as follows
(in millions):

December 31, 2013:
Euro
Japanese yen
Total

Within
15
Days

16 Days
to
90 Days

91 Days
to
1 Year

Over 1
Year to
5 Years

$ 2,249
996
$3,245

$ 576 $ 691 $ 1,238
$ 4,754
121
598 1,114 2,829
$ 697
$ 1,289
$ 2,352 $ 7,583

December 31, 2012:
Euro
Japanese yen
Total

$2,126
1,226
$3,352

$ 557 $ 694
$ 1,183
$ 4,560
158
690 1,389 3,463
$ 715 $1,384
$2,572 $ 8,023

Total

There were no foreign exchange contracts related to open market operations outstanding as of December 31, 2013.
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, 2013,
there were no outstanding commitments to purchase foreign government debt instruments. During 2013, there were purchases, sales, and maturities of foreign government
debt instruments of $3,539 million, $0, and $3,431 million, respectively, of which
$1,133 million, $0, and $1,098 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, 2013 and 2012, there was no balance outstanding under the
authorized warehousing facility.
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, 2013 and 2012.

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, 2013 and 2012.
c. Central Bank Liquidity Swaps
U.S. Dollar Liquidity Swaps
The Bank’s allocated share of U.S. dollar liquidity swaps was approximately
31.964 percent and 32.258 percent at December 31, 2013 and 2012, respectively.
The total foreign currency held under U.S. dollar liquidity swaps in the SOMA
at December 31, 2013 and 2012, was $272 million and $8,889 million, respectively,
of which $87 million and $2,867 million, respectively, was 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):
2013

Euro

Within
15
Days
$ 36

16 Days
Within
to 15
90 Days
Total
Days
$ 51
$ 87
$ 562

2012
16 Days
to
90 Days
$2,305

Total
$ 2,867

Foreign Currency Liquidity Swaps
There were no transactions related to the foreign currency liquidity swaps during the
years ended December 31, 2013 and 2012.
d. Fair Value of SOMA Assets
The fair value amounts below are presented 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 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 also affected by currency risk. Based
on evaluations performed as of December 31, 2013, there are no credit impairments of
SOMA securities holdings.

FEDERAL RESERVE BANK OF NEW YORK
2013 ANNUAL REPORT

The following table presents the amortized cost and fair value of and cumulative
unrealized gains (losses) on the Treasury securities, GSE debt securities, and federal
agency and GSE MBS, net held in the SOMA at December 31 (in millions):
Allocated to the Bank
2013

2012

Cumulative Cumulative
Unrealized Unrealized
Amortized
Gains
Amortized Gains
Cost
Fair Value
(Losses)
Cost
Fair Value (Losses)
Treasury securities:
Notes
$ 829,103 $ 831,257 $ 2,154 $ 640,390 $ 680,173 $ 39,783
Bonds
479,300
467,110 (12,190)
373,939
426,735
52,796
Total Treasury securities
$ 1,308,403 $ 1,298,367 $(10,036) $ 1,014,329 $ 1,106,908 $ 92,579
GSE debt securities
32,786
34,513
1,727
44,560
47,658
3,098
Federal agency and GSE MBS
850,588
829,356 (21,232)
532,801
557,285 24,484
Total domestic SOMA
portfolio securities
holdings
$2,191,777 $2,162,236 $(29,541) $1,591,690 $1,711,851 $120,161
Memorandum–Commitments for:
Purchases of Treasury securities $
Purchases of Federal agency and
GSE MBS
Sales of Federal agency and
GSE MBS

— $

—

32,912

32,789

(123)

66,278

66,380

102

—

Total SOMA
2013
2012
Cumulative Cumulative
Unrealized Unrealized
Amortized
Gains
Amortized
Gains
Cost
Fair Value (Losses)
Cost
Fair Value
(Losses)
Treasury securities:
Notes
$ 1,495,115 $ 1,499,000 $ 3,885 $ 1,142,219 $ 1,213,177 $ 70,958
Bonds
864,319
842,336 (21,983)
666,969
761,138
94,169
Total Treasury securities
$ 2,359,434 $ 2,341,336 $(18,098) $ 1,809,188 $ 1,974,315 $ 165,127
GSE debt securities 59,122 62,236
3,114 79,479 85,004 5,525
Federal agency and GSE MBS
1,533,860 1,495,572 (38,288)
950,321
993,990
43,669
Total domestic SOMA
portfolio securities
holdings
$3,952,416 $3,899,144 $(53,272) $2,838,988 $3,053,309 $214,321
Memorandum–Commitments for:
Purchases of Treasury securities $
Purchases of Federal agency and
GSE MBS
Sales of Federal agency and
GSE MBS

— $

—

59,350

59,129

(221)

118,215

118,397

182

—

The fair value of Treasury securities and GSE debt securities 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.
At December 31, 2013 and 2012, the fair value of foreign-currency-denominated
investments was $23,802 million and $25,042 million, respectively, of which
$7,608 million and $8,078 million, respectively, was allocated to the Bank. The fair
value of 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 foreign currency deposits and securities purchased under
agreements to resell was determined by reference to market interest rates.
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.
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
2013
2012
Holdings by Coupon Rate Amortized Cost Fair Value Amortized Cost Fair Value
Allocated to the Bank:
2.0% $ 7,869
$ 7,502
$
474 $
475
2.5% 68,670 65,690 21,060 21,174
3.0% 289,364 268,551 90,048 90,690
3.5% 193,917 187,633 100,686 103,582
4.0% 127,686 128,162 77,235 81,830
4.5% 103,048 108,402 147,162 158,206
5.0% 46,188 48,782 70,142 74,126
5.5% 11,921 12,598 22,409 23,446
6.0% 1,692 1,788 3,163 3,301
6.5% 233 248 422 455

Total $850,588
$829,356
$532,801 $ 557,285

FEDERAL RESERVE BANK OF NEW YORK
2013 ANNUAL REPORT

Distribution of MBS
2013
2012
Holdings by Coupon Rate Amortized Cost Fair Value Amortized Cost Fair Value
Total SOMA:
2.0% $
14,191 $ 13,529
$
845
$
846
2.5% 123,832 118,458 37,562 37,766
3.0% 521,809 484,275 160,613 161,757
3.5% 349,689 338,357 179,587 184,752
4.0% 230,256 231,113 137,758 145,955
4.5% 185,825 195,481 262,485 282,182
5.0% 83,290 87,968 125,107 132,213
5.5% 21,496 22,718 39,970 41,819
6.0% 3,051 3,225 5,642 5,888
6.5% 421 448 752 812

Total
$1,533,860 $1,495,572
$950,321 $993,990
Because SOMA securities are recorded at amortized cost, the change in the cumulative unrealized gains (losses) is not reported in the Consolidated Statements of Income
and Comprehensive Income. The following tables present the realized gains (losses)
and the change in the cumulative unrealized gains (losses), presented as “Fair value
changes unrealized gains (losses),” of the domestic securities holdings during the years
ended December 31, 2013 and 2012 (in millions):
Allocated to Bank
2013
Total
Portfolio
Fair Value
Holdings
Changes in
Realized
Unrealized
Gains1
Losses

2012
Total
Portfolio
Holdings
Realized
Gains1

Treasury securities
$
GSE debt securities
Federal agency and
GSE MBS

28 (45,481)

Total

Fair Value
Changes in
Unrealized
Gains
(Losses)

—
$ (101,571)
$ 7,151
$
595
— (1,339)
— (468)

$(148,391)

124 (2,142)

$ 7,275

$ (2,015)

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

Open Market Account” in the Consolidated Statements of Income and Comprehensive
Income.

Total SOMA

2013
2012
Total Total
Portfolio
Fair Value
Portfolio
Fair Value
Holdings
Changes in
Holdings
Changes in
Realized
Unrealized
Realized
Unrealized
Gains1
Losses
Gains1
Losses

Treasury securities
$
GSE debt securities
Federal agency and
GSE MBS

51 (81,957)

Total

—
$ (183,225)
$ 13,255
$ (1,142)
— (2,411)
— (885)

$(267,593)

241 (3,568)

$ 13,496

$ (5,595)

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

Open Market Account” in the Consolidated Statements of Income and Comprehensive
Income.

The amount of change in unrealized gains position, net, related to foreign-currencydenominated assets was a decrease of $90 million and an increase of $3 million for the
years ended December 31, 2013 and 2012, respectively, of which $29 million and
$0.9 million, respectively, were allocated to the Bank.
Treasury securities, GSE debt securities, federal agency and GSE MBS, and foreign
government debt instruments are classified as Level 2 within the ASC 820 hierarchy
because the fair values are based on indicative quotes and other observable inputs
obtained from independent pricing services. The fair value hierarchy level of SOMA
financial assets is 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):
2013

2012

ML
$ 1,732
$ 1,811
ML II
63
61
ML III
22
22
TALF LLC 109
856

Total

$1,926

$2,750

FEDERAL RESERVE BANK OF NEW YORK
2013 ANNUAL REPORT

The Bank’s approximate maximum exposure to loss at December 31, 2013 and
2012, was $1,089 million and $829 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:
Short-term investments
Commercial mortgage loans
Swap contracts
Nonagency RMBS
Other investments1
Subtotal
Cash, cash equivalents, accrued interest
receivable, and other receivables
Total investments held by
consolidated VIEs

2013

2012

$ 530
507
158
8
2
$1,205

$ 690
466
408
2
66
$1,632

721

1,118

$1,926

$2,750

Liabilities:
Beneficial interest in consolidated VIEs
$ 116
Other liabilities2
$ 158

$ 803
$ 415

1 Investments with a fair value of $1 million as of December 31, 2012 were recategorized from

“Federal agency and GSE MBS” to “Other investments” to conform to the current year
presentation.

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

Consolidated Statements of Condition includes $82 million and $341 million related to
cash collateral received on swap contracts at December 31, 2013 and 2012, respectively.
The amount also includes accrued interest and accrued other expenses.

Total realized and unrealized gains (losses) for the year ended December 31, 2013,
were as follows (in millions):
Total Portfolio
Holdings
Fair Value Changes
Realized Gains
Unrealized Gains
(Losses)
(Losses)

Commercial mortgage
loans1
$
Swap contracts
Nonagency RMBS
Residential mortgage
loans1
CDOs
Other investments
Total

Total Portfolio
Holdings
Realized/Unrealized
Gains (Losses)

28 $ 176
$ 204
83 (136) (53)
10
1 11
(1) 1 —
2 (2) —
9 12 21

$131

$ 183

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, 2012,
were as follows (in millions):
Total Portfolio
Holdings
Fair Value Changes
Realized Gains
Unrealized Gains
(Losses)
(Losses)

Total Portfolio
Holdings
Realized/Unrealized
Gains (Losses)

Short-term investments
$ — $
2
$
2
Commercial mortgage
loans1 (101) 394
293
Swap contracts 75 (165)
(90)
Nonagency RMBS (334) 2,038
1,704
Residential mortgage
loans1
(326) 322 (4)
CDOs 1,110 4,439
5,549
Other investments2 11 (14)
(3)
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.

2 Investments with realized gains of $12 million, unrealized losses of $13 million, and total

realized/unrealized losses of $1 million as of December 31, 2012 were recategorized from
“Federal agency and GSE MBS” to “Other investments” to conform to the current year
presentation.

FEDERAL RESERVE BANK OF NEW YORK
2013 ANNUAL REPORT

The net income (loss) attributable to ML, ML II, ML III, and TALF LLC for the
year ended December 31, 2013, was as follows (in millions):
TALF
ML ML II
ML III
LLC
Total
Interest income:
Portfolio interest income
$ 2
$ 4
$—
$—
$ 6
Less: Interest expense
— —
— — —
Net interest income

Noninterest income:
Portfolio holdings
gains, net 183
—
Realized losses on
beneficial interest in
consolidated VIEs
—
—
Unrealized gains
(losses) on beneficial
interest in consolidated VIEs — (1)

—

—
183

—

(573)1

(573)

—

5741 573

Net noninterest income (loss) 183 (1) —

1 183

Total net interest income
and noninterest
income

185

3 —

189

Less: Professional fees

1 —

Net income
attributable to
consolidated VIEs

$179

$ —2

$181

$ 2

$—

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

financial interest in the net income of TALF LLC for the year ended December 31, 2013.

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

in Note 4.

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) 45 926

(3) 957

Noninterest income:
Portfolio holdings
gains, net
553 1,392
5,506
Realized losses on
beneficial interest in
consolidated VIEs
— (453) (2,905)
Unrealized gains
(losses) on beneficial
interest in consolidated VIEs — 216 801

(4)1 1,013

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

(4) 5,106

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

—
—1

7,451
(3,358)

542

1,200 4,328

(7)

6,063

1 11

—

$ 529 $1,199

$4,317

$ (7)2 $6,038

1 The TALF LLC’s realized and 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
2013 ANNUAL REPORT

Following is a summary of the consolidated VIEs’ subordinated financial interest
for the years ended December 31, 2013 and 2012 (in millions):

ML II

ML
Deferred
ML III
TALF

Subordinated Purchase
Equity
Financial

Loan
Price Contribution Interest
Total
Fair value,
December 31, 2011 $ 1,385
$ 1,332 $ 6,350
$ 778 $ 9,845
Interest accrued
and capitalized
45
7
97 4
153
Realized loss
— 453 2,905 — 3,358
Unrealized gain/(loss)
— (216) (801) 4 (1,013)
1
Payments
(1,430) (1,566) (8,544) — (11,540)
Fair value,
December 31, 2012 $

—

Interest accrued
and capitalized
$
—
$
Realized loss
—
Unrealized (gain)/loss
—
1
Payments
—

— $
—
1
—

Fair value, at
December 31, 2013 $

—

786

803

—
$ — $
—
— 573
573
— (574) (573)
—
(687) (687)
7

116

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

For ML II includes payments of $1,000 million of principal, $113 million of accrued interest,
and $453 million of variable deferred purchase price. For ML III includes payments of $5,000
million of principal, $639 million of accrued interest, and $2,905 million of excess amounts.
For TALF LLC includes payments of $100 million of principal, $13 million of accrued interest,
and $574 million of contingent interest.

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. 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 consisted of federal agency and GSE MBS, nonagency residential mortgagebacked securities (RMBS), commercial and residential mortgage 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. 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
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.
The following is a description of the significant holdings at December 31, 2013,
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, 2013, ML’s shortterm instruments consisted of approximately $530 million in U.S. Treasury bills.
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, 2013,
was as follows (in millions):

Unpaid
Fair Value as a

Principal
Percentage of Unpaid

Balance Fair Value Principal Balance
Commercial mortgage loans:
Performing loans
$ 28
$ 28
99.6%
1
Nonperforming/nonaccrual loans 512 479
93.5%
Total

$ 540

$ 507

93.8%

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

FEDERAL RESERVE BANK OF NEW YORK
2013 ANNUAL REPORT

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 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. As of December 31, 2013, ML had
unpaid principal balances of approximately $12 million in senior mortgage loans and
$528 million in mezzanine loans.
As of December 31, 2013, the property types of commercial mortgage loans were
concentrated in the office sector with one sponsor representing all of the total unpaid
principal balance.
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 credit default swaps (CDS) primarily on commercial
mortgage-backed securities (CMBS) and RMBS, with various market participants,
including JPMC.
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 re-hypothecation of cash
collateral associated with the TRS, were $149 million and $477 million, for the
years ended December 31, 2013 and 2012, respectively. In addition, ML has pledged
$124 million and $231 million U.S. Treasury notes to JPMC as of December 31, 2013
and 2012, 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.
ML has entered into an International Swaps and Derivatives Association, Inc.
master netting agreement with JPMC in connection with the TRS. This agreement
provides ML with the right to liquidate securities held as collateral and to offset receivables and payables with JPMC in the event of default. This agreement also establishes
the method for determining the net amount of receivables and payables that ML is
entitled to receive from or owes to each counterparty to the swaps that underlie the
TRS based upon the relevant fair value of the CDS.
For the derivative balances reported in the Consolidated Statements of Condition,
ML offsets its asset and liability positions held with the same counterparty. In addition, ML offsets the cash collateral held with JPMC against any net liabilities of
JPMC with ML under the TRS. As of December 31, 2013 and 2012, there were no
amounts subject to an enforceable master netting agreement that were not offset in the
Consolidated Statements of Condition.

FEDERAL RESERVE BANK OF NEW YORK
2013 ANNUAL REPORT

The following table summarizes the fair value and notional amounts of derivative
instruments by contract type on a gross basis as of December 31, 2013 and 2012, which
is reported as a component of “Investments held by consolidated variable interest
entities” in the Consolidated Statements of Condition (in millions, except contract data):
20132013
20122012
GrossGross Gross
Gross
Gross
Gross Gross
Gross
Derivative
Derivative
Notional
Derivative
Derivative
Notional
Derivative
Derivative
Notional
Derivative
Derivative
Notional
3
3
3Assets
3
Assets
Amounts
Amounts
AssetsLiabilities
Liabilities
Amounts
AssetsLiabilities
Liabilities
Amounts

Credit derivatives:
CDS1,2
$ 345$ 345 $(193)
$ (193) $899$899 $ 816
$ 816 $ (343)
$ (343)$ 1,755
$ 1,755
Amounts offset in the
Consolidated
Statements of
Condition:
Counterparty
netting
(120) 120 272 272

(120) 120 272 272
Cash (67)
collateral (67)
—
(136)
—
(136) — —
Net amount in the
Consolidated
Statements
of

Condition
$ 158

$ 158 $ (73)
$ (73) $ 408
$ 408 $ (71)
$ (71)
1CDS

fair values as of December 31, 2013 for assets and liabilities include interest receivables of $15 million

and payables of $2 million. CDS fair values as of December 31, 2012 for assets and liabilities includes interest
receivables of $15 million and payables of $9 million.

2 There were 269 and 470 CDS contracts outstanding as of December 31, 2013 and 2012, respectively.
3 Represents 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, 2013.

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

Maximum Potential Payout/Notional
2013

2012

Years to Maturity Fair Value
Fair Value
After
After

1 Year 1 Year 3 Years
Credit Ratings of the
or
through through After 5
Asset/
Reference Obligation
Less 3 Years 5 Years Years Total (Liability) Total Liability
Investment grade
(AAA to BBB-)
$ —
$ —
$—
$ 13 $ 13
$ (3) $ 52 $ (5)
Noninvestment grade
(BB+ or lower) — — — 293 293 (188) 438 (329)
Total credit
protection sold
$ —
$ —
$—
$306 $ 306
$(191) $ 490 $ (334)

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

Maximum Potential Recovery/Notional
2013

2012

Years to Maturity Fair Value
Fair Value
After
After

1 Year 1 Year 3 Years
Credit Ratings of the
or
through through After 5
Asset/
Reference Obligation
Less 3 Years 5 Years Years Total (Liability) Total
Asset
Investment grade
(AAA to BBB-)
$ —
$ —
$ 5
$ 51 $ 56
$ 2 $ 150
$ 27
Noninvestment grade
(BB+ or lower) — — 9 528 537 327 1,115 774
Total credit
protection bought $ —
$ —
$ 14
$579 $ 593
$ 329 $1,265
$ 801

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 collateral in euro currency. This risk is mitigated by daily variation m
argin
updates that capture the movement in the value of the swap portfolio in a ddition 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
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 American International
Group, Inc. (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 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.

FEDERAL RESERVE BANK OF NEW YORK
2013 ANNUAL REPORT

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. Any remaining proceeds will be divided between the Bank,
which is entitled to receive five-sixths, and the AIG subsidiaries, which are entitled to
receive one-sixth. 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 collateralized debt obligations (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 s ecurities
in ML III enabled the full repayment of AIG’s equity contribution plus accrued
interest and provided residual profits to the Bank and AIG. During 2012, 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.
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. Winding up requires ML III to pay or make reasonable provision
to pay all claims and obligations. 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. 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 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.
Proceeds from the Treasury’s loan were also invested in these short-term investments
and cash equivalents until the outstanding principal on the loan was repaid in full as
described below.
On January 15, 2013, the Treasury and the Bank eliminated the Treasury’s and
the Bank’s funding commitments to TALF LLC. These commitments were no longer
deemed necessary because the cash equivalents and short-term investments held by
TALF LLC exceeded the amount of TALF loans then 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 on February 6, 2013, TALF LLC repaid in full the outstanding principal and accrued interest on the Treasury loan. During the year ended
December 31, 2013, additional distributions were made to the Treasury and the Bank
as contingent interest in the amounts of $573 million and $64 million, respectively.
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 mortgage loans 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 II,
ML III, and TALF LLC at fair value.

FEDERAL RESERVE BANK OF NEW YORK
2013 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. 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 lack of observable pricing, some securities and investment loans that are carried at fair value are classified
within Level 3.
For the CDS 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).
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, 2013 (in millions, except for input values):
Principal

Fair
Valuation
Investment
Value Technique

Unobservable
Inputs

Commercial
Discounted Discount rate
mortgage loans $507 cash flows Property

capitalization

rate

Net operating

income growth

rate

Discounted Credit spreads2
CDS1
$152 cash flows

Discount rate

Constant prepayment

rate

Constant default rate

Loss severity

Range of
Input Values

Weighted
Average3

4%-13%

12%

3%-5%

2,259 bps8,870 bps
5%-25%

6,299 bps

0%-17%
0%-30%
40%-95%

3%
6%
54%

1Swap assets and liabilities are presented net for the purposes of this table.
2 Implied spread on closing market prices for index positions.

3 Weighted averages are calculated based on the fair value of the respective instruments.

15%

FEDERAL RESERVE BANK OF NEW YORK
2013 ANNUAL REPORT

The following table presents the valuation techniques and ranges of significant
unob servable 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
Investment
Value Technique

Unobservable
Inputs

Commercial
Discounted Discount rate
mortgage loans $466 cash flows Property

capitalization

rate

Net operating

income growth

rate

Discounted Credit spreads2
CDS1
$473 cash flows

Discount rate

Constant prepayment

rate

Constant default rate

Loss severity

Range of
Input Values

Weighted
Average3

6%-20%

14%

6%-10%

3%-7%

100 bps6,451 bps
0%-47%

4,995 bps

0%-20%
0%-34%
40%-80%

1%
7%
49%

15%

1Swap assets and liabilities are presented net for the purposes of this table.
2 Implied spread on closing market prices for index positions.

3 Weighted averages are calculated based on the fair value of the respective instruments.

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. Mortgage 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 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 tables present the financial instruments recorded in VIEs at fair value
as of December 31 by ASC 820 hierarchy (in millions):
2013

Total

Fair
Level 11 Level 21 Level 3 Netting2
Value
Assets:
Cash equivalents3
Short-term investments
Commercial mortgage loans
Swap contracts
Nonagency RMBS
Other investments
Total assets

$ 569
530
—
—
—
—
$1,099

Liabilities:
Beneficial interest in
consolidated VIEs
$
Swap contracts
Total liabilities
$

$ —
—
—
—
2
—
$ 2

$ —
—
507
345
6
2
$860

—
—
—
(187)
—
—
$ (187)

$ 569
530
507
158
8
2
$ 1,774

—
$ 116 $ —
$ — $ 116
—
— 193 (120) 73
—
$116
$193
$ (120) $ 189

1 There were no transfers between Level 1 and Level 2 during the year ended December 31, 2013.
2 Derivative receivables and payables and the related cash collateral received and paid are shown

net when a master netting agreement exists.

3 Cash equivalents consist primarily of money market funds.

FEDERAL RESERVE BANK OF NEW YORK
2013 ANNUAL REPORT

2012

Total

Fair
Level 11 Level 21 Level 3 Netting2
Value
Assets:
Cash equivalents3
Short-term investments
Commercial mortgage loans
Swap contracts
Nonagency RMBS
Other investments4
Total assets

$ 634
454
—
—
—
—
$1,088

Liabilities:
Beneficial interest in
consolidated VIEs
$
Swap contracts
Total liabilities
$

$ —
236
—
—
2
11
$249

—
—
466
816
—
55
$1,337

—
—
—
(408)
—
—
$ (408)

$ 634
690
466
408
2
66
$ 2,266

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

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

December 31, 2012.

2 Derivative receivables and payables and the related cash collateral received and paid are shown

net when a master netting agreement exists.

3 Cash equivalents consist primarily of money market funds and repurchase agreements.

4 Investments with a fair value of $1 million that were classified as a Level 2 instrument as

of December 31, 2012 were recategorized from “Federal agency and GSE MBS” to “Other
investments” to conform to the current year presentation.

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, 2013 (in millions). Unrealized gains and losses related to those assets
still held at December 31, 2013 are reported as a component of “Investments held
by consolidated variable interest entities, net” in the Consolidated Statements of
Condition.

2013

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
2012
Net
(Losses)
In1, 2
Out1, 2
2013
December 31, 2013
Assets:
Commercial
mortgage loans $466
$ (163)
$ 204
$—
$—
$ 507
$ 183
Nonagency RMBS —
4 — 2 — 6 —
CDOs
—
— — — — — (2)
Other investments 55 (73) 18 2 — 2 (2)
Total assets
Net swap contracts3

$521

$ (232)

$222

$ 4

$—

$515

$ 179

$473

$ (268)

$(53)

$—

$ 152

$(53)

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 and other investments, with December 31, 2012 fair values of $2 million and $2 million, respectively, were

transferred from Level 2 to Level 3 because they are valued at December 31, 2013 based on non-observable inputs (Level 3). These
investments were valued in the prior year based on quoted prices for identical or similar assets in non-active markets or model-based
techniques for which all significant inputs were observable (Level 2).

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

FEDERAL RESERVE BANK OF NEW YORK
2013 ANNUAL REPORT

The following table presents the gross components of purchases, sales, issuances,
and settlements, net, shown for the year ended December 31, 2013 (in millions):
2013

Purchases, Sales,

Issuances, and
Purchases
Sales
Issuances Settlements2 Settlements, Net
Assets:
Commercial mortgage loans $ —
$ (88)
$ — $ (75)
$(163)
Nonagency RMBS 4
—
—
—
4
CDOs 3 (5)
— 2 —
Other investments —
(74)
—
1
(73)
Total assets
Net swap contracts1

$ 7

$ (167)

$—

$ (72)

$ (232)

$—

$ (153)

$—

$(115)

$ (268)

1 Level 3 swap assets and liabilities are presented net for the purposes of this table.
2 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, 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 Statements 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:
Commercial
mortgage loans
$ 1,397
$ (1,187)
$ 256
$— $
Nonagency RMBS 5,410 (6,347) 937 —
Residential
mortgage loans
378
(374) (4) —
CDOs
17,687
(23,196)
5,509 —
Other investments 108
(65)
2 10
Total assets

$24,980

Net swap contracts3 $

839

Liabilities:
Beneficial interest in
consolidated VIEs $ 9,845

—
$ 466
$135
— — —
—
—
(1)
—
—
(2)
— 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, were transferred from Level 3 to

Level 2 because they are 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 non-observable 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
2013 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 Settlements2 Settlements, Net
Assets:
Commercial mortgage loans $ —
$ (1,119)
$—
$ (68)
$ (1,187)
Nonagency RMBS — (6,221)
—
(126) (6,347)
Residential mortgage loans —
(370)
—
(4)
(374)
CDOs — (22,206)
— (990) (23,196)
Other investments —
(66)
—
1
(65)
Total assets

$—

$(29,982)

$—

$ (1,187)

$ (31,169)

Net swap contracts1

$—

(147)

$—

$ (129)

Liabilities:
Beneficial interest in
consolidated VIEs

$ 45

—

$—

$ (1,430)

$ (1,385)

(276)

1 Level 3 swap assets and liabilities are presented net for the purposes of this table.

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 “Operating Expenses: Other” 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):
2013

2012

Bank premises and equipment:
Land and land improvements
$ 68
$ 68
Buildings

502 500
Building machinery and equipment 109
88
Construction in progress 6
6
Furniture and equipment 87 113
Subtotal 772 775
Accumulated depreciation (306) (304)
Bank premises and equipment, net
$ 466
$ 471
Depreciation expense, for the years
ended December 31
$ 33
$ 37

The Bank leases space to outside tenants with remaining lease terms ranging from
one to ten years. Rental income from such leases was $4.8 million and $5.8 million for
the years ended December 31, 2013 and 2012, respectively, and is reported as a component of “Non-interest 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, 2013, are as follows
(in millions):
2014
$ 5
2015 5
2016 4
2017 3
2018 3
Thereafter 12

Total $32
The Bank had capitalized software assets, net of amortization, of $108 million and
$57 million at December 31, 2013 and 2012, respectively. Amortization expense was
$22 million and $24 million for the years ended December 31, 2013 and 2012, 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.
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, 2013, the Bank was obligated under noncancelable leases for
premises and equipment with remaining terms ranging from two to approximately five
years. These leases provide for increased lease 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 for each of the years
ended December 31, 2013 and 2012.

FEDERAL RESERVE BANK OF NEW YORK
2013 ANNUAL REPORT

Future minimum lease payments under noncancelable operating leases, net of
sublease rentals, with remaining terms of one year or more, at December 31, 2013, are
as follows (in millions):
Operating Leases
2014
2015
2016
2017
2018
Future minimum lease payments

$3
3
1
1
1
$9

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, 2013 and 2012.
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 Bank had remaining
unfunded contractual commitments related to commercial mortgage loans in ML of
$40 million and $55 million at December 31, 2013 and 2012, respectively.
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 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. 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 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, 2013 and 2012, certain costs associated with the System
Plan were reimbursed by the Bureau.
Following is a reconciliation of the beginning and ending balances of the System
Plan benefit obligation (in millions):
2013

2012

Estimated actuarial present value of projected
benefit obligation at January 1
$ 11,468 $ 10,198
Service cost–benefits earned during the period 407 349
Interest cost on projected benefit obligation 472 473
Actuarial (gain) loss (1,527) 833
Contributions by plan participants
5 4
Special termination benefits
6 9
Benefits paid (355) (334)
Plan amendments
— (64)
Estimated actuarial present value of projected
benefit obligation at December 31 $10,476 $ 11,468
Following is a reconciliation showing the beginning and ending balance of the
System Plan assets, the funded status, and the accrued pension benefit costs (in millions):
2013 2012
Estimated plan assets at January 1 (of which $9,440
and $7,977 are measured at fair value as of
January 1, 2013 and 2012, respectively)
$ 9,566 $ 8,048
Actual return on plan assets
683 1,066
Contributions by the employer
909 782
Contributions by plan participants
5
4
Benefits paid (335) (334)
Estimated plan assets at December 31 (of which $10,687
and $9,440 are measured at fair value as of
December 31, 2013 and 2012, respectively)
$ 10,808 $ 9,566
Funded status and accrued pension benefit costs

332 $(1,902)

Amounts included in accumulated other comprehensive
loss are shown below:
Prior service cost
$ (456) $ (559)
Net actuarial loss (1,928) (3,784)
Total accumulated other comprehensive loss
$(2,384) $(4,343)

FEDERAL RESERVE BANK OF NEW YORK
2013 ANNUAL REPORT

The Bank, on behalf of the System, funded $900 million and $780 million during
the years ended December 31, 2013 and 2012, 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 2013 and 2012, the Bureau
funded contributions of $8.9 million and $1.6 million, respectively.
Accrued pension benefit costs are reported as a component of “Prepaid
pension benefit costs” and “Accrued benefit costs,” respectively, 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 $9,308 million and
$10,035 million at December 31, 2013 and 2012, 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

2013

2012

4.92%
4.50%

4.00%
4.50%

Net periodic benefit expenses for the years ended December 31, 2013 and 2012,
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:
2013
Discount rate
Expected asset return
Rate of compensation increase

2012

4.00% 4.50%
6.50% 7.25%
4.50% 5.00%

Beginning in 2013, the System Plan discount rate assumption setting convention changed from rounding the rate to the nearest 25 basis points to using an
unrounded rate.
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 and for various
asset classes; 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 fixed-income markets.
The components of net periodic pension benefit expense for the System Plan for
the years ended December 31 are shown below (in millions):
2013

2012

Service cost–benefits earned during the period $ 407
$ 349
Interest cost on projected benefit obligation 472 473
Amortization of prior service cost 103 116
Amortization of net loss 284 292
Expected return on plan assets (638) (599)
Net periodic pension benefit expense 628 631
Special termination benefits 6
9
Bureau of Consumer Financial Protection contributions (9) (2)
Total periodic pension benefit expense $ 625
$ 638
Estimated amounts that will be amortized from accumulated other comprehensive loss into net periodic pension benefit expense in 2014 are shown below:
Prior service cost
Net actuarial loss
Total

$100
87
$187

Following is a summary of expected benefit payments, excluding enhanced retirement benefits (in millions):
2014
2015
2016
2017
2018
2019-2023

Total

$ 406
429
455
483
512
2,982
$5,267

FEDERAL RESERVE BANK OF NEW YORK
2013 ANNUAL REPORT

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. At December 31, 2013, the System
Plan’s assets were held in nine investment vehicles: three actively managed longduration fixed-income portfolios, a passively managed long-duration fixed-income
portfolio, an indexed U.S. equity fund, an indexed non-U.S. developed markets equity
fund, an indexed emerging markets equity fund, a private equity limited partnership,
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 three actively managed
long-duration fixed-income portfolios are separate accounts benchmarked to a custom
benchmark of 55 percent Barclays Long Credit Index and 45 percent Citigroup 15+
years U.S. Treasury STRIPS Index. This custom benchmark was selected as a proxy to
match the liabilities of the Plan and the guidelines for these portfolios are designed to
limit portfolio deviations from the benchmark. The passively managed 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 non-U.S. developed markets equity fund is intended to track
the Morgan Stanley Capital International (MSCI) World ex-US Investible Markets
Index (IMI), which includes stocks from twenty-three markets deemed by MSCI to
be “developed markets.” The indexed emerging markets equity fund is intended to
track the MSCI Emerging Markets IMI Index, which includes stocks from twenty-one
markets deemed by MSCI to be “emerging markets.” The three indexed equity funds
include stocks from across the market capitalization spectrum (i.e., large-, mid-, and
small-cap stocks). The private equity limited partnership invests globally across various
private equity strategies. Finally, the money market fund, which invests in short-term
Treasury and Agency debt and repurchase agreements backed by Treasury and Agency
debt, 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 the passively managed long-duration fixed-income
portfolio) or the investment guidelines (for the remaining investments). 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, are as follows:

Actual Asset Allocations

U.S. equities
International equities
Emerging markets equities
Fixed income
Cash and cash equivalents
Total

Policy Weight

2013

2012

30.0%
18.0%
2.0%
50.0%
0.0%

29.7%
18.3%
1.9%
49.4%
0.7%

34.9%
13.6%
0.0%
50.4%
1.1%

100.0%

In June 2013, the CIP approved a change in the allocation and benchmarks for the
Plan’s public equity portfolio. The new benchmark is the MSCI All Country World
Investible Markets Index. This benchmark change will reduce the Plan’s holdings in
U.S. equities, increase the Plan’s holdings of developed markets international equities, and add an investment in emerging market equities when it is fully implemented
in mid-2014. The CIP approved a phased six-month implementation period for
these changes, commencing in September 2013 for developed market equities and
November 2013 for emerging market equities. The policy weight percentages shown
above reflect the target allocation as of December 2013 based on this implementation
strategy.
Employer contributions to the System Plan may be determined using different
assumptions than those required for financial reporting. The System Plan’s anticipated
funding level for 2014 is $480 million. In 2014, the Bank plans to make monthly
contributions of $40 million and will reevaluate the monthly contributions upon
completion of the 2014 actuarial valuation. The Bank’s projected benefit obligation,
funded status, and net pension expenses for the BEP and the SERP at December 31,
2013 and 2012, and for the years then ended, were not material.
Determination of Fair Value
The System Plan’s publicly available 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.

FEDERAL RESERVE BANK OF NEW YORK
2013 ANNUAL REPORT

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 tables present the financial instruments recorded at fair value as of
December 31 by ASC 820 hierarchy (in millions):

2013
Description
Level 11 Level 21 Level 3
Short-term investments2
$
14
$ 126 $
—
Treasury and federal agency securities
38
1,565
—
Corporate bonds
—
1,773
—
Other fixed-income securities
—
362
—
Commingled funds
—
6,795
—
Private equity —
—
14
Total
$
52 $10,621 $
14
1

There were no transfers between Level 1 and Level 2 during the year.

Short-term investments include cash equivalents of $78 million.

2012
Description
Level 11 Level 21
Level 3
Short-term investments
$ 23 $
25 $ —
Treasury and federal agency securities
141
1,746
—
Corporate bonds
—
1,947
—
Other fixed-income securities
—
352
—
Commingled funds
—
5,206
—
Total
$ 164 $ 9,276 $ —

Total
$ 140
1,603
1,773
362
6,795
14
$10,687

Total
$
48
1,887
1,947
352
5,206
$ 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 non-active markets (Level 2).
There were no other transfers between Level 1 and Level 2 during the year.

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, 2013 and 2012, a portion of short-term investments was available for futures trading. There were $8 million and $7 million of Treasury securities
pledged as collateral for the years ended December 31, 2013 and 2012, 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 six percent of employee contributions from the date of hire and provides an
automatic employer contribution of one percent of eligible pay. The Bank’s Thrift Plan
contributions totaled $26 million and $25 million for the years ended December 31,
2013 and 2012, respectively, and are reported as a component of “Operating expenses:
Salaries and benefits” in the Consolidated Statements of Income and Comprehensive
Income.
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):
2013

2012

Accumulated postretirement benefit obligation at January 1
$ 382
$ 319
Service cost–benefits earned during the period 16 13
Interest cost on accumulated benefit obligation 14 15
Net actuarial (gain) loss (53) 49
Special terminations benefits loss 1 —
Contributions by plan participants 3 2
Benefits paid (20) (17)
Medicare Part D subsidies 1 1
Plan amendments (1) —
Accumulated postretirement benefit
obligation at December 31
$ 343
$ 382

FEDERAL RESERVE BANK OF NEW YORK
2013 ANNUAL REPORT

At December 31, 2013 and 2012, the weighted-average discount rate assumptions used in developing the postretirement benefit obligation were 4.79 percent and
3.75 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. Beginning in
2013, the System Plan discount rate assumption setting convention changed from
rounding the rate to the nearest 25 basis points to using an unrounded rate.
Following is a reconciliation of the beginning and ending balance of the plan
assets, the unfunded postretirement benefit obligation, and the accrued postretirement
benefit costs (in millions):
2013

2012

Fair value of plan assets at January 1
$ —
$ —
Contributions by the employer
16
14
Contributions by plan participants
3
2
Benefits paid (20)
(17)
Medicare Part D subsidies
1
1
Fair value of plan assets at December 31

$ —

—

Unfunded obligation and accrued postretirement
benefit cost

$ 343

$ 382

Amounts included in accumulated other comprehensive
loss are shown below:
Prior service cost
$ 1 $ —
Net actuarial loss (69) (134)
Total accumulated other comprehensive loss

$(68)

$(134)

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
are 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

2013

2012

7.00%

5.00%
2019

5.00%
2018

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, 2013
(in millions):

Effect on aggregate of service and interest
cost components of net periodic
postretirement benefit costs
Effect on accumulated
postretirement benefit obligation

One PercentagePoint Increase
$ 6

One PercentagePoint Decrease
$ (5)

47 (39)

The following is a summary of the components of net periodic postretirement
benefit expense for the years ended December 31 (in millions):
2013
2012
Service cost–benefits earned during the period
$ 16
$13
Interest cost on accumulated benefit obligation 14 15
Amortization of net actuarial loss 12 9
Total periodic expense 42 37
Special termination benefits loss 1 —
Net periodic postretirement benefit expense
$ 43
$ 37
Estimated amounts that will be amortized from accumulated other comprehensive
loss into net periodic postretirement benefit expense in 2014 are shown below:
Prior service cost
$—
Net actuarial loss 4
Total

$ 4

Net postretirement benefit costs are actuarially determined using a January 1
measurement date. At January 1, 2013 and 2012, the weighted-average discount
rate assumptions used to determine net periodic postretirement benefit costs were
3.75 percent and 4.50 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.

FEDERAL RESERVE BANK OF NEW YORK
2013 ANNUAL REPORT

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 $0.8 million and $0.9 million in the
years ended December 31, 2013 and 2012, respectively. Expected receipts in 2014,
related to benefits paid in the years ended December 31, 2013 and 2012, are $0.8 million.
The following is a summary of expected postretirement benefit payments
(in millions):
Without Subsidy

With Subsidy

2014
$ 17
$ 16
2015 18 17
2016 19 17
2017 20 18
2018 20 19
2019-2023 118 109
Total
$ 212
$ 196
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 medical, dental, and vision insurance; survivor income; disability benefits;
and self-insured workers’ compensation expenses. The accrued postemployment benefit costs recognized by the Bank at December 31, 2013 and 2012, were $37 million
and $42 million, respectively. This cost is included as a component of “Accrued benefit
costs” in the Consolidated Statements of Condition. Net periodic postemployment
benefit expense (credit) included in 2013 and 2012 operating expenses were $2 million
and $7 million, respectively, and are recorded as a component of “Operating expenses:
Salaries and benefits” in the Consolidated Statements of Income and Comprehensive
Income.

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):
2013
2012
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
$ (4,343)
Change in funded
status of benefit
plans:
Prior service costs
arising during the
year
—
Amortization of
prior service cost
1031
Change in prior
service costs related
to benefit plans
103
Net actuarial gain (losses)
arising during the
year
1,572
Amortization of net
actuarial loss
2841
Change in actuarial
gain (losses) related to
benefit plans
1,856
Change in funded
status of benefit
plans–other
comprehensive
income (loss)
1,959
Balance at
December 31
$(2,384)

$(132)

$ (4,475)

$(4,449)

$ (92)

$(4,541)

—

—2

103

1161

—2

116

104

180

—

180

1,625

(366)

(49)

(415)

102

294

301

1,919

(74)

(40)

(114)

2,023

106

(40)

$(68)

$ (2,452)

$(4,343)

$(132)

$(4,475)

2921

1 Reclassification is reported as a component of “Operating Expenses: Net periodic pension expense” in the Consolidated Statements of Income

and Comprehensive Income.

2 Reclassification is reported as a component of “Operating Expenses: Salaries and benefits” in the Consolidated Statements of Income and

Comprehensive Income.

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

FEDERAL RESERVE BANK OF NEW YORK
2013 ANNUAL REPORT

12. BUSINESS RESTRUCTURING CHARGES
The Bank had no business restructuring charges in 2013 or 2012.
13. DISTRIBUTION OF COMPREHENSIVE INCOME
In accordance with Board 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 earnings remittances to Treasury. The following table presents the distribution of the Bank’s comprehensive income in accordance with the Board’s policy
for the years ended December 31 (in millions):
2013
Dividends on capital stock
Transfer to surplus–amount required to equate
surplus with capital paid-in
Earnings remittances to Treasury
Total distribution

526

100
45,941
$46,567

2012
$

523

68
51,023
$51,614

14. SUBSEQUENT EVENTS
There were no subsequent events that require adjustments to or disclosures in the
consolidated financial statements as of December 31, 2013. Subsequent events were
evaluated through March 14, 2014, which is the date that the consolidated financial
statements were available to be issued.

Directors of the
Federal Reserve Bank
of New York

FEDERAL RESERVE BANK OF NEW YORK
2013 ANNUAL REPORT

CHANGES IN DIRECTORS
2014
Member banks in this District have reelected
GERALD H. LIPKIN a class A director for
a three-year term beginning January 2014.
Mr. Lipkin, who is Chairman, President, and
Chief Executive Officer of Valley National Bank,
Wayne, N.J., has been serving as a class A director
since July 2013.
Member banks in this District have elected
DAVID M. COTE, Chairman and Chief
Executive Officer, Honeywell International Inc.,
Morristown, N.J., a class B director for the term
of office ending December 2016.
The Board of Governors has appointed MARC
TESSIER-LAVIGNE, President, The Rockefeller
University, New York, N.Y., a class C director
for a three-year term beginning January 2014.

Dr. Tessier-Lavigne succeeds Kathryn S. Wylde,
President and Chief Executive Officer, Partner
ship for New York City, New York, N.Y., who
served as a class C director since July 2009 and
Deputy Chair since January 2011.
The Board of Governors has redesignated
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 2014. Ms. Rafferty has been serving
as a class C director since January 2011.
The Board of Governors has also designated
SARA HOROWITZ, Executive Director, Free
lancers Union, Brooklyn, N.Y., as Deputy Chair
for the year 2014. Ms. Horowitz has been serving
as a class C director since January 2013.

101

FEDERAL RESERVE BANK OF NEW YORK
2013 ANNUAL REPORT

DIRECTORS OF THE FEDERAL RESERVE
BANK OF NEW YORK
DIRECTORS

TERM EXPIRES DEC. 31

CLASS

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

2015

GERALD H. LIPKIN
Chairman, President, and Chief Executive Officer
Valley National Bank., Wayne, N.J.

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.

2015

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

EMILY K. RAFFERTY, Chair and Federal Reserve Agent
President
The Metropolitan Museum of Art, New York, N.Y.

2014

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

2013

SARA HOROWITZ
Executive Director
Freelancers Union, Brooklyn, N.Y.

2015

103

Advisory
Groups

105

FEDERAL RESERVE BANK OF NEW YORK
2013 ANNUAL REPORT

ADVISORY GROUPS
ADVISORY COUNCIL ON
SMALL BUSINESS AND
AGRICULTURE

COMMUNITY DEPOSITORY INSTITUTIONS
ADVISORY COUNCIL

ALEJANDRO BALLESTER
President
Ballester Hermanos, Inc.
Cataño, P.R.

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

JAMES W. FULMER
Chairman, President,
and Chief Executive Officer
The Bank of Castile
Batavia, N.Y.

STEWART BRUNHOUSE
President
A&A Company, Inc.
South Plainfield, N.J.

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

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

WILLIAM M. BYRNE, JR.
Chairman of the Board
Byrne Dairy, Inc.
Weedsport, N.Y.

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

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

LISA M. CATHIE
President and Chief Executive Officer
Ulster Savings Bank
Kingston, N.Y.

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

MARTIN A. DIETRICH
President and Chief Executive Officer
NBT Bank, N.A., and NBT Bancorp, Inc.
Norwich, N.Y.

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

Chair

DAVID CAMPBELL
President and CEO
Ring’s End, Inc.
Darien, Conn.
GALE EPSTEIN
President and Creative Director
Hanky Panky
New York, N.Y.
KENNETH FRANASIAK
Chairman and Chief Executive Officer
Calamar
Wheatfield, N.Y.
MARGARET KRUMHOLZ
President
Disc Graphics Inc.
Hauppauge, N.Y.

JOSÉ RAFAEL FERNÁNDEZ
President, Chief Executive Officer,
and Vice Chairman
Oriental Bank and OFG Bancorp
San Juan, P.R.

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

PETER MAGLATHLIN
Chief Executive Officer
MBI, Inc.
Norwalk, Conn.
EDWARD TREGURTHA
President
Moran Towing Corporation
New Canaan, Conn.

107

ECONOMIC ADVISORY
PANEL
ROBERT BARRO
Harvard University
ALAN S. BLINDER
Princeton University
MARTIN FELDSTEIN
Harvard University
JEFFREY FRANKEL
Harvard University
DR. JACOB A. FRENKEL
JPMorgan Chase International
MARK GERTLER
New York University
MARVIN GOODFRIEND
Carnegie Mellon University
AUSTAN GOOLSBEE
University of Chicago
JAN HATZIUS
Goldman Sachs & Co.
PETER HOOPER
Deutsche Bank Securities, Inc.
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

108

FEDWIRE SECURITIES CUSTOMER ADVISORY GROUP
MICHAEL ALBANESE
Executive Director
JPMorgan Chase Bank, N.A.
JOHN AXELSON
Vice President
US Bank
BRENT BLAKE
Vice President
State Street Bank and Trust Company
TERRY BOUTHILET
Vice President
Wells Fargo
MICHAEL BROWN
Senior Vice President
Fannie Mae
KEVIN CAFFREY
Managing Director
The Bank of New York Mellon
CARL D’ANGELO
Cash Management Director
Freddie Mac
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
2013 ANNUAL REPORT

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

INVESTOR ADVISORY COMMITTEE ON FINANCIAL MARKETS
NICOLE ARNABOLDI
Vice Chairman, Asset Management
Credit Suisse Group
LOUIS BACON
Chairman, Chief Executive Officer,
and Founder
Moore Capital Management, LP
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
GARTH FRIESEN
Principal and Co-Chief Investment Officer
III Associates
JOSHUA HARRIS
Founder and Chief Investment Officer
Apollo Management
ALAN HOWARD
Founder
Brevan Howard

SCOTT MINERD
Global Chief Investment Officer
and Managing Partner
Guggenheim Partners
MICHAEL NOVOGRATZ
President and Director
Fortress Investment Group LLC
RICK RIEDER
Chief Investment Officer and Co-Head
of Americas Fixed Income
BlackRock, Inc.
LAWRENCE M. V. D. SCHLOSS
Chief Investment Officer
and Deputy Comptroller for Pensions
New York City Retirement Systems
JES STALEY
Managing Partner
BlueMountain Capital
Management, LLC
MORGAN STARK
Managing Member
Ramius LLC
DAVID TEPPER
Founder and President
Appaloosa Management L.P.

DEREK KAUFMAN
Head of Global Fixed Income
Citadel LLC

109

MONETARY POLICY
ADVISORY PANEL
MARKUS BRUNNERMEIER
Princeton University
MARK GERTLER
New York University
NOBUHIRO KIYOTAKI
Princeton University
FREDERICK MISHKIN
Columbia University
RICARDO REIS
Columbia University
CHRISTOPHER SIMS
Princeton University
MICHAEL WOODFORD
Columbia University

UPSTATE NEW YORK REGIONAL ADVISORY BOARD
TIMOTHY BUSCH
Executive Vice President
and Chief Operations Officer
Nexstar Broadcasting Group, Inc.
Rochester, N.Y.
BAL DIXIT
Chairman
Newtex Industries
Pittsford, 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.
JORDAN LEVY
New York Partner
Softbank Capital
Buffalo, N.Y.

110

MARTIN MUCCI
President and Chief Executive Officer
PayChex
Rochester, N.Y.
BRENT SAUNDERS
Chief Executive Officer
Bausch and Lomb Incorporated
Rochester, N.Y.
ROBERT L. STEVENSON
President
Eastman Machine Company
Buffalo, N.Y.
HAMDI ULUKAYA
President and Chief Executive Officer
Agro-Farma (Chobani)
Norwich, N.Y.
CARLOS UNANUE
President
Goya de Puerto Rico, Inc.
Bayamón, P.R.

FEDERAL RESERVE BANK OF NEW YORK
2013 ANNUAL REPORT

WHOLESALE CUSTOMER ADVISORY GROUP
MICHAEL BELLACOSA
Director
The Bank of New York Mellon

MIGUEL GUERRERO
Vice President
PNC Bank

ROSEANNE ROSENBERGER
Senior Product Manager
KeyBank

KEFEI CHANG
Director
Deutsche Bank

JAMES KENNY
Director
Bank of America

MARY KATE SAVINI
Assistant Vice President
State Street

MITCHELL CHRISTENSEN
Executive Vice President
Wells Fargo Bank

MICHAEL KNORR
Director
Citigroup

DEBBIE WISE
Group Vice President
SunTrust Bank

JEFFREY DUNN
Vice President
US Bank Corporation

VANESSA LIN
Senior Vice President
HSBC Bank, USA

STEVE FULLENKAMP
Vice President
JPMorgan Chase

MARIE-JUDE MAIGNAN
Director
UBS

111

Officers of the
Federal Reserve Bank
of New York

113

FEDERAL RESERVE BANK OF NEW YORK
2013 ANNUAL REPORT

OFFICERS OF THE FEDERAL RESERVE BANK
OF NEW YORK
As of December 31, 2013
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
Chief Information Officer
and Executive Vice President
Technology Services
SARAH J. DAHLGREN
Executive Vice President
Financial Institution Supervision
SANDRA C. KRIEGER
Executive Vice President
Risk

MICHAEL STRINE
Executive Vice President
Corporate
JOSEPH S. TRACY
Senior Advisor to the President
and Executive Vice President
Executive Office

SIMON M. POTTER
Executive Vice President
Markets
EDWARD C. SMITH
General Auditor
and Executive Vice President
Audit
ROSEANN STICHNOTH
Executive Vice President
Financial Services

115

AUDIT GROUP
EDWARD C. SMITH
General Auditor
and Executive Vice President
CLIVE W. BLACKWOOD
Deputy General Auditor
and Vice President
ISAAC SMITH, JR.
Assistant Vice President
AUDREY A. FOSTER
Audit Officer
DONNA M. GALLO
Audit Officer
RALPH W. HESSLER
Audit Officer
PADMA KUMAR
Audit Officer

COMMUNICATIONS
GROUP
JACK GUTT
Group Head and Vice President

MICHAEL STRINE
Executive Vice President
Business Process Excellence (BPE)

Digital and Multimedia
Communications
DONA M. WONG
Vice President
ANDREW GIANNELLI
Communications Officer
Economic Education
ANAND R. MARRI
Vice President
Internal Communication
NICHOLAS BALAMACI
Vice President
ED CHENEY
Communications Officer
NORA FITZPATRICK
Communications Officer

ZACHERY R. BRICE
Assistant Vice President
JOSEPH R. COVELLO
BPE Officer
Corporate Group Strategy
and Operations Staff (CGSO)
JEFFREY W. MEANEY
Vice President
THOMAS P. REILLY
Vice President
KENT BAIN
Assistant Vice President
JOSEPH D. J. DeMARTINI
Assistant Vice President
AILEEN R. GRIFFITH
Assistant Vice President

Media Relations

RICHARD L. PRISCO
Assistant Vice President

ANDREA R. PRIEST
Assistant Vice President

CHRISTIAN A. FACQ
CGSO Officer

JONATHAN A. FREED
Media Relations Officer

MARC S. LEMBERG
CGSO Officer

Regional and Community Outreach

RONALD J. LICARE
CGSO Officer

KAUSAR HAMDANI
Senior Vice President
RAE D. ROSEN
Vice President
CLAIRE KRAMER MILLS
Regional and Community
Outreach Officer

116

CORPORATE GROUP

JOHN D. MILUSICH
CGSO Officer
JOANNE R. RUBERTO
CGSO Officer
JOHN F. SEARS
CGSO Officer
MARK A. SLAGUS
CGSO Officer

FEDERAL RESERVE BANK OF NEW YORK
2013 ANNUAL REPORT

Corporate Staff

Financial Management

MARIA GRACE C. AMBROSIO
Senior Vice President

CHRISTINA X. MILLER
Vice President

SCOTT R. GURBA
Senior Vice President

TAMRA J. WHEELER
Vice President

CHRISTINA S. KITE
Senior Vice President

JOSEPH MEMMOLO
Assistant Vice President

ROBERT GALLETTA
Vice President

ROBERT M. POFSKY
Assistant Vice President

ANN M. HERON
Vice President

CHRISTOPHER GRANDICH
Financial Management Officer

GARY J. KAPLAN
Assistant Vice President

PAUL R. HAMATY
Financial Management Officer

JOSEPH J. MARRACCINO
Assistant Vice President

GEORGE P. PEREIRA
Financial Management Officer

Strategic Investment and Risk
Assessment Office
LOLA S. JUDGE
Senior Vice President
TAMARA S. DAUGHDRILL
Assistant Vice President

MARIA C. MASSEI-ROSATO
Assistant Vice President

117

EMERGING MARKETS
AND INTERNATIONAL
AFFAIRS GROUP

WILLIAM C. DUDLEY
President

TERRENCE J. CHECKI
Executive Vice President

CHRISTINE M. CUMMING
First Vice President

MICHAEL SCHETZEL
Vice President

Chief of Staff ’s Office

Development Studies
and Foreign Research

JOSEPH S. TRACY
Senior Advisor to the President
and Executive Vice President

JOHN J. CLARK, JR.
Senior Vice President

ZAHRA EL-MEKKAWY
Senior Vice President

IDANNA APPIO
Vice President

JAMES P. BERGIN
Chief of Staff and Vice President

MATTHEW D. HIGGINS
Vice President

NATASHA M. ZABKA
Deputy Chief of Staff for Operations
and Assistant Vice President

HUNTER L. CLARK
Assistant Vice President
SETH E. SEARLS
Officer
Financial Markets and Institutions

Equal Employment
Opportunity Office
TAMRA J. WHEELER
Vice President

B. GERARD DAGES
Senior Vice President

DONALD V. DAVIS
Assistant Vice President

JENNIFER S. CRYSTAL
Vice President

Financial Stability
and Regulatory Policy

TRICIA E. KISSINGER
Assistant Vice President

MARGARET M. McCONNELL
Director and Senior Vice President

International Affairs

SARAH BELL
Assistant Vice President

HOWARD J. HOWE
Assistant Vice President

118

EXECUTIVE OFFICE

SANDRA LEE
Assistant Vice President

Office of Diversity and Inclusion
DIANE T. ASHLEY
Chief Diversity Officer, Director
of the Office of Minority and Women
Inclusion, and Vice President
ANIKA D. PRATT
Diversity Officer
Wholesale Product Office
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
PEGGY AU
Wholesale Product Officer
LISA R. PACHECO
Wholesale Product Officer
GINA S. RUSSO
Wholesale Product Officer

FEDERAL RESERVE BANK OF NEW YORK
2013 ANNUAL REPORT

FINANCIAL INSTITUTION SUPERVISION GROUP
SARAH J. DAHLGREN
Executive Vice President

STEPHANIE J. CHALY
Assistant Vice President

MARK E. GLEASON
Examining Officer

Complex Financial Institutions

KEVIN COFFEY
Assistant Vice President

JUDITH J. GRUTTMAN
Examining Officer

LaVERNE CORNWELL
Assistant Vice President

JOHN A. HEINZE
Examining Officer

DANIEL E. ELDER
Assistant Vice President

CHRISTOPHER R. HUNTER
Examining Officer

HAMPTON FINER
Assistant Vice President

ANNA IACUCCI
Examining Officer

MAYRA GONZALEZ
Assistant Vice President

WILLIAM E. KELLY
Examining Officer

STEVEN A. MIRSKY
Assistant Vice President

JOHNATHON J. B. KIM
Examining Officer

WENDY NG
Assistant Vice President

THEONILLA LEE-CHAN
Examining Officer

R. SUSAN STIEHM
Assistant Vice President

JOHN J. LITTLE
Examining Officer

DANIEL SULLIVAN
Assistant Vice President

TAMARA MARCOPULOS
Examining Officer

KATHERINE L.
TILGHMAN HILL
Assistant Vice President

GLEN J. REPPY
Examining Officer

LUCINDA M. BRICKLER
Senior Vice President
WILLIAM J. BRODOWS
Senior Vice President
MARTHA CUMMINGS
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
BRUCE T. RICHARDS
Senior Vice President
ANDREW M. DANZIG
Vice President
DANA R. GREEN
Vice President
ALEJANDRO A. LATORRE
Vice President
JOHN RICKETTI
Vice President
VANDANA SHARMA
Vice President
JAMES B. WALL
Vice President
PAUL D. WHYNOTT
Vice President
ETHAN S. BUYON
Assistant Vice President

TODD M. WASZKELEWICZ
Assistant Vice President
BARBARA J. YELCICH
Assistant Vice President
SUKHPAL BHATTI
Examining Officer
PETER R. DRAKE
Examining Officer
AMY E. FLYNN
Examining Officer

H. CLAY SAYLOR III
Examining Officer
GLEN J. SNAJDER
Examining Officer
F. BARD STERMASI
Examining Officer
LILY THAM
Examining Officer
JANE WAKEFIELD
Examining Officer

119

Cross-Firm Perspective and Analytics

Financial Market Infrastructure

MICHAEL J. ALIX
Senior Vice President

JEANMARIE DAVIS
Senior Vice President

JOHN E. KAMBHU
Vice President

LISA M. JONIAUX
Vice President

RENATO J. SCINTO
Vice President

DENISE B. SCHMEDES
Vice President

MICHAEL E. HOLSCHER
Assistant Vice President

RONALD P. STROZ
Vice President

DINA M. MAHER
Assistant Vice President

WILLIAM J. CARLUCCI
Assistant Vice President

STACY L. MANUEL
Assistant Vice President

VIKEN CHAKRIAN
Assistant Vice President

AFSHIN TABER
Examining Officer

THOMAS FERLAZZO
Assistant Vice President

EMILY G. YANG
Examining Officer

KEITH PULSIFER
Assistant Vice President

Financial Institution Supervision
Executive Office
JAMES R. HENNESSY
Chief of Staff and Senior Vice President

JOHANNA M. SCHWAB
Examining Officer

HOMER C. HILL
Chief Operating Officer
and Senior Vice President

CHRISTOPHER T. TSUBOI
Examining Officer

CLAUDIA A. FRANCO
Financial Institution Supervision Officer
JACQUELINE M. McCORMACK
Financial Institution Supervision Officer
BARBARA L. TOMSEY
Financial Institution Supervision Officer

120

ROGER R. GRAHAM
Examining Officer

Group Operations

GRACE Y. SONE
Assistant Vice President
PAMELA W. YIP
Assistant Vice President
MARGARET E. BRUSH
Financial Institution Supervision Officer
ERNEST NIZHNER
Financial Institution Supervision Officer
MARK C. SCAPP
Examining Officer
Large International
Financial Institutions
PATRICIA T. MEADOW
Vice President
S. MICHAEL KOH
Assistant Vice President
JACQUELINE M. LOVISA
Assistant Vice President
PAUL A. GUIDER
Examining Officer
ANNE M. MacEWEN
Examining Officer
RALPH T. SANTASIERO
Examining Officer

JEFFREY C. BLYE
Vice President

SHIVAJI C. VOHRA
Examining Officer

JOONHO LEE
Vice President

Regional, Community,
and Foreign Institutions

DANNY BRANDO
Assistant Vice President

F. CHRISTOPHER CALABIA
Senior Vice President

PAUL R. COPPOLA
Assistant Vice President

JAN H. VOIGTS
Vice President

PETER MORREALE
Assistant Vice President

LAURENCE C. BONNEMERE
Assistant Vice President

FEDERAL RESERVE BANK OF NEW YORK
2013 ANNUAL REPORT

ERIC A. CABAN
Assistant Vice President

SARAH P. ADELSON
Assistant Vice President

IRENE C. KRAULAND
Examining Officer

BETTYANN L. GRIFFITH
Assistant Vice President

KAREN R. KAHRS
Assistant Vice President

JOHN J. O’SULLIVAN
Examining Officer

ROBERT G. GUTIERREZ
Assistant Vice President

MARTIN LORD
Assistant Vice President

LUCETTE PECORARO
Examining Officer

MARYANN CAMPBELL
Examining Officer

ANN E. MINER
Assistant Vice President

JOHN F. REYNOLDS
Examining Officer

WARREN HRUNG
Examining Officer

BRIAN O’HALLORAN
Assistant Vice President

DENNIS J. RYAN
Examining Officer

WILMA SABADO
Examining Officer

KAREN Y. SCHNECK
Assistant Vice President

DAVID A. SMITH
Examining Officer

MICHAEL WALSH
Assistant Vice President

KATHERYN A. N. VAN DER
CELEN
Examining Officer

Risk

STEVEN R. BLOCK
Examining Officer

ARTHUR G. ANGULO
Senior Vice President
RONALD CATHCART
Senior Vice President
DAVID A. DUTTENHOFER, JR.
Senior Vice President
JEFFREY INGBER
Senior Vice President
JAMES M. MAHONEY
Senior Vice President
JAINARYAN SOOKLAL
Senior Vice President
L. DARAU JOHNSON
Vice President
WING Y. OON
Vice President
IAN PRIOR
Vice President

YANHUI WANG
Examining Officer
Supervisory Policy

LOUIS E. BRAUNSTEIN
Examining Officer

DIANNE K. DOBBECK
Senior Vice President

COLLEEN A. BURKE
Examining Officer

LANCE W. AUER
Vice President

ARI R. COHEN
Examining Officer

STEIN E. BERRE
Vice President

MARY ELLEN CRAIG
Examining Officer

CHARLES C. GRAY
Vice President

JAMES DeFALCO
Examining Officer

KRISTIN H. MALCARNEY
Examining Officer

BRIAN E. EARLY
Examining Officer
BRIAN E. HEFFERLE
Examining Officer
BEVERLY J. JULES
Examining Officer

121

FINANCIAL SERVICES GROUP
ROSEANN STICHNOTH
Executive Vice President

ROBERT S. IMPALLI
Electronic Payments Officer

KEVIN D. KRUEGER
Assistant Vice President

SARAH L. WEAN
Electronic Payments Officer

Cash and Custody

BELINDA S. WILLIAMS
Electronic Payments Officer

HELEN E. MUCCIOLO
Senior Vice President

SUSAN W. MINK
Executive Vice President
GERALD L. STAGG, M.D.
Medical Director
and Senior Vice President

Government-Wide Accounting

LOUIS J. SCENTI, JR.
Vice President

MARGARET SAXENIAN
Vice President

DONNA J. CROUCH
Vice President

MATTHEW S. WAGNER
Vice President

CHRISTOPHER D. ARMSTRONG
Assistant Vice President

Group Support Services

JOHN ESPOSITO
Assistant Vice President

EILEEN M. GOODMAN
Assistant Vice President
LISA M. BASILE
Cash Officer
RONALD G. HENRY
Cash Officer
JOHN M. HILL
Cash Officer
Electronic Payments
GAIL R. ARMENDINGER
Vice President
CARL P. LUNDGREN
Vice President
ROBERT C. GALLO
Assistant Vice President
TRUPTI AMIN
Electronic Payments Officer

122

HUMAN RESOURCES
GROUP

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

SUSAN F. FALBE
Assistant Vice President
DANIELLE N. LEVITT
Assistant Vice President
KAREN P. LYNCH
Assistant Vice President
NICHOLAS C. MARLIN
Assistant Vice President
MARGARET M. MULLINS
Assistant Vice President
JENNIFER C. ROTH
Assistant Vice President
STEVEN E. WALKER
Assistant Vice President
DAN DIAZ
Human Resources Officer
TIMOTHY O’KEEFE
Human Resources Officer

FEDERAL RESERVE BANK OF NEW YORK
2013 ANNUAL REPORT

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

KENNETH H. JONES
Compliance Officer
TERRENCE I. SMITH
Compliance Officer

IVAN J. HURWITZ
Vice President

TINA M. STINSON-DaCRUZ
Compliance Officer

ROSALIE YEE
Assistant Vice President

Corporate Secretary’s Office

BRIAN S. STEFFEY
Bank Applications Officer
Compliance
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
ROBERT P. ALLER
Assistant Vice President
DAVID K. CLUNE
Compliance and Ethics Officer
and Assistant Vice President
AZISH E. FILABI
Ethics Officer
and Assistant Vice President
EDWARD E. SILVA
Assistant Vice President
AJAY BADYAL
Compliance Officer

MICHAEL A. HELD
Corporate Secretary, Deputy General
Counsel, and Senior Vice President
RONA B. STEIN
Assistant Corporate Secretary
and Vice President
ROSEMARY A. LAZENBY
Curating Officer
Federal Reserve Law
Enforcement Unit (LEU)
NICHOLAS L. PROTO
Chief Investigator
and Senior Vice President

STEPHANIE A. HELLER
Deputy General Counsel
and Senior Vice President
HAERAN KIM
Assistant General Counsel
and Senior Vice President
SHARI D. LEVENTHAL
Deputy 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

ROBERT N. SAMA
Vice President

YOON HI GREENE
Counsel and Vice President

WILLIAM N. SCHAEFER
LEU Officer

DAVID L. GROSS
Counsel and Vice President

Legal

CANDACE M. JONES
Counsel and Vice President

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

MICHELE H. KALSTEIN
Counsel and Vice President
SEAN O’MALLEY
Deputy Chief Investigator–Enforcement
and Vice President

NEIL BERSON
Compliance Officer

BRETT S. PHILLIPS
Counsel and Vice President

DAVID L. CARANGELO
Compliance Officer

MICHAEL SCHUSSLER
Counsel and Vice President

123

MARKETS GROUP
DEBRA F. STONE
Counsel and Vice President

MEGHANN E. DONAHUE
Counsel

SIMON M. POTTER
Executive Vice President

JANINE M. TRAMONTANA
Counsel and Vice President

MARK GOLD
Investigative Officer

MICHELE R. WALSH
Chief of Staff and Vice President

VALERIE S. WILDE
Counsel and Vice President

TODD R. GREENBERG
Contracts Officer

Business Technology

JENNIFER WOLGEMUTH
Counsel and Vice President

ERIN P. KELLY
Counsel

MICHAEL J. RECUPERO
Senior Vice President

ROBERTO G. AMENTA
Investigator and Assistant Vice President

KATHERINE S. LANDY
Counsel

MICHAEL J. BURK
Vice President

JORDAN AVNI
Legal Automation
Assistant Vice President

MEGHAN McCURDY
Counsel

PAUL R. KOWALENKO
Vice President

SHRILAXMI S.
SATYANARAYANA
Counsel

THOMAS I. PIDERIT
Vice President

MICHAEL V. CAMPBELL
Counsel and Assistant Vice President
MARY L. COLON
Legal Administrative Officer
and Assistant Vice President
CATHERINE KUNG
Counsel and Assistant Vice President
ROSEANN NOTARO
Counsel and Assistant Vice President
SHAWN E. PHILLIPS
Counsel and Assistant Vice President
SHAWEI WANG SO
Counsel and Assistant Vice President
JOSEPH H. SOMMER
Counsel and Assistant Vice President
SOPHIA R. VICKSMAN
Counsel and Assistant Vice President

124

NANCY L. SCHNABEL
Counsel
DAVID G. SEWELL
Counsel
JOSEPH R. TORREGROSSA
Counsel
Records Management
MARTIN C. GRANT
Chief Compliance and Ethics Officer
and Senior Vice President
ROSE PATRUNO
Assistant Vice President

OLEG KOZHUKHOV
Assistant Vice President
PETER J. SEIGEL
Assistant Vice President
DEBRA M. YOUNG
Assistant Vice President
LARISSA EZRA
Markets Officer
RYAN L. HIRSCHEY
Markets Officer
MAX HRABROV
Markets Officer
ANTHONY J. LIGUORI
Markets Officer
KEN R. RUFF
Markets Officer

FEDERAL RESERVE BANK OF NEW YORK
2013 ANNUAL REPORT

Central Bank and International
Account Services

SCOTT NEWMAN
Assistant Vice President

JANET S. RESELE-TIDEN
Vice President

TIMOTHY J. FOGARTY
Senior Vice President

THOMAS R. BREEN
Markets Officer

ZACHARY S. TAYLOR
Vice President

AMELIA R. MONCAYO
Assistant Vice President

JOSEPH M. BURKE
Markets Officer

NATHANIEL J. WUERFFEL
Vice President

ANNMARIE S. ROWE-STRAKER
Assistant Vice President

GERALD M. McCRINK
Markets Officer

PATRICIA A. ZOBEL
Vice President

ROSE M. UGARTE-GEE
Assistant Vice President

JOHN C. PARR
Markets Officer

KATHRYN B. CHEN
Assistant Vice President

ORSON F. KEEYS
Markets Officer

Market Operations Monitoring
and Analysis

CATHERINE LOMAX
Markets Officer

LORIE K. LOGAN
Senior Vice President

MICHELLE L. EZER
Assistant Vice President

MATTHEW NEMETH
Markets Officer

SUSAN E. McLAUGHLIN
Senior Policy Advisor
and Senior Vice President

OLIVER A. GIANNOTTI
Assistant Vice President

PETER ROETHEL
Markets Officer
Group Shared Services
ANNE F. BAUM
Senior Vice President
LEON W. TAUB
Senior Vice President
RANDALL B. BALDUCCI
Vice President
HOWARD B. FIELDS
Vice President
SUZANNE BENVENUTO
Assistant Vice President
ANNA CHANG
Assistant Vice President
DENLEY Y. S. CHEW
Assistant Vice President

KEVIN J. STIROH
Senior Vice President
CHRISTOPHER R. BURKE
Vice President
JOSHUA L. FROST
Vice President
CHERYL A. GLEASON
Vice President
KARIN J. KIMBROUGH
Vice President
ALLAN M. MALZ
Vice President
ANNA NORDSTROM
Vice President
ANGELA L. O’CONNOR
Vice President
JULIE A. REMACHE
Vice President

J. BENSON DURHAM
Assistant Vice President

FRANK M. KEANE
Assistant Vice President
DEBORAH L. LEONARD
Assistant Vice President
ROBERT H. LERMAN
Assistant Vice President
MATTHEW S. LIEBER
Assistant Vice President
DINA M. T. MARCHIONI
Assistant Vice President
JEFFREY M. MOORE
Assistant Vice President
MATTHEW D. RASKIN
Assistant Vice President
ROMAN SHIMONOV
Assistant Vice President
ELIZABETH CAVINESS
Markets Officer

125

RESEARCH AND STATISTICS GROUP

SAMUEL B. CHEUN
Markets Officer

JAMES J. McANDREWS
Director of Research
and Executive Vice President
Capital Markets

PATRICK O. DWYER
Markets Officer

TOBIAS ADRIAN
Vice President

JOHN R. FAULKNER
Markets Officer

MICHAEL J. FLEMING
Vice President

DAVID A. JONES
Markets Officer

ERNST SCHAUMBURG
Research Officer

AMANDA S. KIRBY
Markets Officer

Financial Intermediation

JOHN McGOWAN
Markets Officer
MICHAEL B. McMORROW
Markets Officer
ROBERT D. PATALANO
Markets Officer
RANIA C. PERRY
Markets Officer
SCOTT SHERMAN
Markets Officer
DEANNA SONG
Markets Officer
WENDY WONG
Markets Officer

BEVERLY J. HIRTLE
Senior Vice President
LINDA S. GOLDBERG
Vice President
JOÃO A. SANTOS
Vice President
NICOLA CETORELLI
Assistant Vice President
HAMID MEHRAN
Assistant Vice President
DONALD P. MORGAN
Assistant Vice President
STAVROS C. PERISTIANI
Assistant Vice President
ANNA R. KOVNER
Research Officer
TANJU YORULMAZER
Research Officer
International Research
THOMAS KLITGAARD
Vice President
MYNYRE AMITI
Assistant Vice President

126

JOHANNES J. J. GROEN
Research Officer

Macroeconomic and Monetary Studies
RICHARD W. PEACH
Senior Vice President
MARCO DEL NEGRO
Assistant Vice President
ROBERT W. RICH
Assistant Vice President
AYSEGUL SAHIN
Assistant Vice President
ARGIA M. SBORDONE
Assistant Vice President
STEFANIA ALBANESI
Research Officer
MARC P. GIANNONI
Research Officer
ANDREA TAMBALOTTI
Research Officer
Microeconomic Studies
HENDRIKUS W. VAN DER
KLAAUW
Senior Vice President
GIORGIO TOPA
Vice President
OLIVIER ARMANTIER
Assistant Vice President
STEFANO EUSEPI
Research Officer
Money and Payments Studies
KENNETH D. GARBADE
Senior Vice President
RODNEY J. GARRATT
Vice President
ANTOINE MARTIN
Vice President
ASANI SARKAR
Assistant Vice President

FEDERAL RESERVE BANK OF NEW YORK
2013 ANNUAL REPORT

RISK GROUP
Office of the Director

Statistics

ANDREW F. HAUGHWOUT
Vice President

KENNETH P. LAMAR
Senior Vice President

JONATHAN P. McCARTHY
Vice President

ANTHONY O. CIRILLO
Assistant Vice President

PAOLO A. PESENTI
Vice President

PATRICIA SELVAGGI
Assistant Vice President

Regional Analysis

SANDRA Y. GALVAN
Statistics Officer

JAMES A. ORR
Vice President
RICHARD M. DEITZ
Assistant Vice President
JASON BRAM
Research Officer
Research Services
WILLIAM G. SELICK
Assistant Vice President
MICHAEL A. De MOTT
Research Officer
JOSEPH P. HEANEY
Research Officer

WILLIAM D. HUNTER
Statistics Officer
RICHARD ROBERTS
Statistics Officer

SANDRA C. KRIEGER
Executive Vice President
Collateral Credit Risk Management
ADAM B. ASHCRAFT
Senior Vice President
ERIC L. PARSONS
Vice President
DONALD V. DAVIS
Assistant Vice President
STEVEN SCHOEN
Assistant Vice President
PATRICK J. COYNE
Risk Officer
RITA J. CSEJTEY
Risk Officer
Credit Risk Management
Technology Support
MELANIE L. HEINTZ
Vice President
JHANKHNA N. VARMA
Assistant Vice President

VALERIE D. LaPORTE
Research Officer

Operational Risk

MARC J. RABIN
Research Officer

DEBRA L. GRUBER
Vice President

127

TECHNOLOGY SERVICES GROUP
Payments Policy
LAWRENCE M. SWEET
Senior Vice President
MARSHA K. TAKAGI
Vice President
MARILYN ARBUTHNOTT
Assistant Vice President
BRIAN J. BEGALLE
Assistant Vice President
ALEXANDRA MERLE-HUET
Assistant Vice President
Risk Analytics

WILLIAM T. CHRISTIE
Chief Information Officer
and Executive Vice President
Application Development
LEE ALEXANDER
Senior Vice President
MICHAEL KANE
Senior Vice President
YUET-MING CHAN
Vice President
PANKAJ LUTHRA
Vice President

JOSHUA ROSENBERG
Senior Vice President

RICHARD A. WHITE
Vice President

NISSO BUCAY
Risk Officer

NAHLA S. ALY
Assistant Vice President

RACHEL LU
Risk Officer

DAVID ARZT
Assistant Vice President
TAMARA GOLDBURT
Assistant Vice President
ROBERT GOODMAN
Assistant Vice President
NADEEM A. KAYANI
Assistant Vice President
IRVING MYONES
Assistant Vice President
COLIN W. WYND
Assistant Vice President
DANIEL ZIEGLER
Assistant Vice President
ADRIAN I. HODOR
Technology Services Officer
MUKUND M. KULKARNI
Technology Services Officer

128

JOHN T. LINES
Technology Services Officer
SHARONA NOE
Technology Services Officer
Governance
ROBERT M. BEYER
Vice President
ANAT GOURJI
Vice President
IRA KAHNER
Vice President
JOHN J. MOSQUERA
Assistant Vice President
CHERISA L. BURKE
Technology Services Officer
DAVID CAPPS
Technology Services Officer
Information Security
ROY D. THETFORD, JR.
Information Security Officer
and Senior Vice President
JEFFREY KLEIN
Vice President
DAVID B. DROSSMAN
Assistant Vice President
JAMIE BERNSTEIN
Technology Services Officer
Program Management Office
RICHARD I. BARRETT
Vice President
JEAN M. STOLOFF
Vice President

FEDERAL RESERVE BANK OF NEW YORK
2013 ANNUAL REPORT

RONALD J. ZOLDY
Vice President

Technology Engineering
and Computing Services

NELL M. COTE
Assistant Vice President

SEAN G. MAHON
Senior Vice President

JAMES J. LEARY
Assistant Vice President

NICOLAE STANESCU
Vice President

SREEDEVI MANDALAPU
Assistant Vice President

JOSEPH D. LEONARD
Assistant Vice President

DIANE PILINKO
Assistant Vice President

PAUL R. SANS
Assistant Vice President

PERRY SANTACECILIA
Assistant Vice President

ANGELA JORDAN
Technology Services Officer

SALVATORE TIDONA
Assistant Vice President

RAFAEL KOSCIALKOWSKI
Technology Services Officer

JOHN G. BARRA
Technology Services Officer

RITA MILMEYSTER
Technology Services Officer

SUSIE Y. LEE
Technology Services Officer

SHLOMO ORBACH
Technology Services Officer

AMY C. LIU
Technology Services Officer

PETER SCHWAB
Technology Services Officer

KENNETH T. NORCROSS
Technology Services Officer

AMBROSE M. STAFYLERAS
Technology Services Officer

MICHAEL S. RUBIN
Technology Services Officer

JIA Y. YE
Technology Services Officer

Technology Strategy
JEFFREY P. WEINSTEIN
Senior Vice President
THOMAS KLEIN
Vice President
BENNY E. NISSAN
Vice President
ISAAC B. OBSTFELD
Vice President
JORGE L. VIDAL
Vice President
HARRY M. ZIMBALIST
Vice President
SUSAN R. CHASE
Assistant Vice President
JILL SASSO
Assistant Vice President
TRACEY A. TERRY
Assistant Vice President

129

Map of the Second
Federal Reserve District

131

FEDERAL RESERVE BANK OF NEW YORK
2013 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

133