Variable Interest Entities

9 Months Ended

Sep. 30, 2025

Variable Interest Entities [Abstract]

A variable interest in a VIE is an investment (e.g., debt or equity) or other interest (e.g., derivatives or loans and lending commitments) that will absorb portions of the VIE’s expected losses and/or receive portions of the VIE’s expected residual returns.

The firm’s variable interests in VIEs include senior and subordinated debt; loans and lending commitments; limited and general partnership interests; preferred and common equity; derivatives that may include foreign currency, equity and/or credit risk; guarantees; and certain of the fees the firm receives from investment funds. Certain interest rate, foreign currency and credit derivatives the firm enters into with VIEs are not variable interests because they create, rather than absorb, risk.

VIEs generally finance the purchase of assets by issuing debt and equity securities that are either collateralized by or indexed to the assets held by the VIE. The debt and equity securities issued by a VIE may include tranches of varying levels of subordination. The firm’s involvement with VIEs includes securitization of financial assets, as described in Note 16, and investments in and loans to other types of VIEs, as described below. See Note 3 for the firm’s consolidation policies, including the definition of a VIE.

VIE Consolidation Analysis

The enterprise with a controlling financial interest in a VIE is known as the primary beneficiary and consolidates the VIE. The firm determines whether it is the primary beneficiary of a VIE by performing an analysis that principally considers:

•Which variable interest holder has the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance;

•Which variable interest holder has the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE;

•The VIE’s purpose and design, including the risks the VIE was designed to create and pass through to its variable interest holders;

•The VIE’s capital structure;

•The terms between the VIE and its variable interest holders and other parties involved with the VIE; and

•Related-party relationships.

The firm reassesses its evaluation of whether an entity is a VIE when certain reconsideration events occur. The firm reassesses its determination of whether it is the primary beneficiary of a VIE on an ongoing basis based on current facts and circumstances.

VIE Activities

The firm is principally involved with VIEs through the following business activities:

Mortgage-Backed VIEs. The firm sells residential and commercial mortgage loans and securities to mortgage-backed VIEs and may retain beneficial interests in the assets sold to these VIEs. The firm purchases and sells beneficial interests issued by mortgage-backed VIEs in connection with market-making activities. In addition, the firm may enter into derivatives with certain of these VIEs, primarily interest rate swaps, which are typically not variable interests. The firm generally enters into derivatives with other counterparties to mitigate its risk.

Tax Credit and Other Investing VIEs. The firm makes equity investments in VIEs that invest in qualified affordable housing and renewable energy projects designed to generate a return through the realization of tax credits and related tax benefits. The firm also purchases equity and debt securities issued by and makes loans to VIEs that hold real estate, performing and nonperforming debt, distressed loans and equity securities. In addition, the firm makes equity investments in certain investment fund VIEs it manages and is entitled to receive fees from these VIEs. The firm generally does not sell assets to, or enter into derivatives with, these VIEs.

Corporate Debt and Other Asset-Backed VIEs. The firm structures VIEs that issue notes to clients, purchases and sells beneficial interests issued by corporate debt and other asset-backed VIEs in connection with market-making activities, and makes loans to VIEs that warehouse corporate debt. Certain of these VIEs synthetically create the exposure for the beneficial interests they issue by entering into credit derivatives with the firm, rather than purchasing the underlying assets. In addition, the firm may enter into derivatives, such as total return swaps, with certain corporate debt and other asset-backed VIEs, under which the firm pays the VIE a return due to the beneficial interest holders and receives the return on the collateral owned by the VIE. The collateral owned by these VIEs is primarily other asset-backed loans and securities. The firm may be removed as the total return swap counterparty and may enter into derivatives with other counterparties to mitigate its risk related to these swaps. The firm may sell assets to the corporate debt and other asset-backed VIEs it structures.

Principal-Protected Note VIEs. The firm structures VIEs that issue principal-protected notes to clients. These VIEs own portfolios of assets, principally with exposure to hedge funds. Substantially all of the principal protection on the notes issued by these VIEs is provided by the asset portfolio rebalancing that is required under the terms of the notes. The firm enters into total return swaps with these VIEs under which the firm pays the VIE the return due to the principal-protected note holders and receives the return on the assets owned by the VIE. The firm may enter into derivatives with other counterparties to mitigate its risk. The firm also obtains funding through these VIEs.

Nonconsolidated VIEs

The table below presents a summary of the nonconsolidated VIEs in which the firm holds variable interests.


	As of
	September		December
$ in millions	2025		2024
Total nonconsolidated VIEs
Assets in VIEs	$	248,127	$	206,500
Carrying value of variable interests — assets	$	17,611	$	16,710
Carrying value of variable interests — liabilities	$	2,448	$	2,754
Maximum exposure to loss:
Retained interests	$	7,240	$	5,848
Purchased interests	587		767
Commitments and guarantees	5,093		5,034
Derivatives	9,161		8,974
Debt and equity	6,362		6,878
Total	$	28,443	$	27,501

In the table above:

•The nature of the firm’s variable interests is described in the rows under maximum exposure to loss.

•The firm’s exposure to the obligations of VIEs is generally limited to its interests in these entities. In certain instances, the firm provides guarantees, including derivative guarantees, to VIEs or holders of variable interests in VIEs.

•The maximum exposure to loss excludes the benefit of offsetting financial instruments that are held to mitigate the risks associated with these variable interests.

•The maximum exposure to loss from retained interests, purchased interests, and debt and equity is the carrying value of these interests.

•The maximum exposure to loss from commitments and guarantees, and derivatives is the notional amount, which does not represent anticipated losses and has not been reduced by unrealized losses. As a result, the maximum exposure to loss exceeds liabilities recorded for commitments and guarantees, and derivatives.

The table below presents information, by principal business activity, for nonconsolidated VIEs included in the summary table above.


	As of
	September		December
$ in millions	2025		2024
Mortgage-backed
Assets in VIEs	$	161,154	$	128,378
Carrying value of variable interests — assets	$	6,862	$	5,618
Maximum exposure to loss:
Retained interests	$	6,740	$	5,355
Purchased interests	121		263

Derivatives	1		1
Total	$	6,862	$	5,619

Tax credit and other investing
Assets in VIEs	$	62,895	$	55,311
Carrying value of variable interests — assets	$	6,505	$	6,978
Carrying value of variable interests — liabilities	$	2,032	$	2,315
Maximum exposure to loss:

Commitments and guarantees	$	4,241	$	4,138
Debt and equity	4,539		4,831
Total	$	8,780	$	8,969

Corporate debt and other asset-backed
Assets in VIEs	$	24,078	$	22,811
Carrying value of variable interests — assets	$	4,244	$	4,114
Carrying value of variable interests — liabilities	$	416	$	439
Maximum exposure to loss:
Retained interests	$	500	$	493
Purchased interests	466		504
Commitments and guarantees	852		896
Derivatives	9,160		8,973
Debt and equity	1,823		2,047
Total	$	12,801	$	12,913

As of both September 2025 and December 2024, the carrying values of the firm’s variable interests in nonconsolidated VIEs are included in the consolidated balance sheets as follows:

•Mortgage-backed: Assets primarily included in trading assets and loans.

•Tax credit and other investing: Assets primarily included in investments and other assets, and liabilities included in trading liabilities and other liabilities.

•Corporate debt and other asset-backed: Assets included in loans and trading assets, and liabilities included in trading liabilities.

Tax Credit VIEs

The firm makes equity investments in nonconsolidated tax credit VIEs that invest in qualified affordable housing and renewable energy projects. These VIEs are generally organized as limited partnerships or similar entities and a third party is typically the general partner or the managing member. The firm invests in the entity as a limited partner and receives income tax credits and other income tax benefits for such investments. The firm has elected the proportional amortization method for qualified affordable housing and renewable energy projects that receive production tax credits. The investments that meet the criteria for the proportional amortization method of accounting are amortized in proportion to the income tax credits and other income tax benefits received on such investments. The amortization of investments and the related income tax credits and other income tax benefits are recorded as a component of the provision for taxes, and are included in other operating activities in the consolidated statements of cash flows.

The table below presents information about investments (included in miscellaneous receivables and other within other assets in the consolidated balance sheets) in qualified affordable housing and renewable energy projects that met the criteria of the proportional amortization method of accounting.


	As of
	September		December
$ in millions	2025		2024
Carrying value of investments	$	3,343	$	3,456

In the table above, investments included $1.96 billion as of September 2025 and $2.15 billion as of December 2024 of accrued unfunded commitments. As of September 2025, a majority of such accrued unfunded commitments were expected to be funded by year-end 2026.

The table below presents information about the amortization and income tax credits and other income tax benefits related to investments in qualified affordable housing and renewable energy projects that met the criteria of the proportional amortization method of accounting.



	Three Months Ended September				Nine Months Ended September
$ in millions	2025		2024		2025		2024
Amortization	$	89	$	96	$	348	$	315
Tax credits and other benefits	$	115	$	117	$	447	$	382

Investments in qualified affordable housing projects that did not meet the criteria for the proportional amortization method of accounting were not material as of both September 2025 and December 2024.

The firm’s existing investments in renewable energy projects that receive production tax credits were not eligible for transition to the proportional amortization method of accounting upon adoption of ASU No. 2023-02. Such investments were $1.23 billion as of September 2025 and $1.39 billion as of December 2024, were included in investments in the consolidated balance sheets and were accounted for at fair value under the fair value option.

Consolidated VIEs

The table below presents a summary of the carrying value and balance sheet classification of assets and liabilities in consolidated VIEs.


	As of
	September		December
$ in millions	2025		2024
Total consolidated VIEs
Assets
Cash and cash equivalents	$	28	$	172
Customer and other receivables	1		325
Trading assets	112		95
Investments	172		170
Loans	6		9
Other assets	71		69
Total	$	390	$	840

Liabilities
Other secured financings	$	597	$	661
Customer and other payables	9		7

Unsecured short-term borrowings	6		5
Unsecured long-term borrowings	15		15
Other liabilities	165		165
Total	$	792	$	853

In the table above:

•Assets and liabilities are presented net of intercompany eliminations and exclude the benefit of offsetting financial instruments that are held to mitigate the risks associated with the firm’s variable interests.

•VIEs in which the firm holds a majority voting interest are excluded if (i) the VIE meets the definition of a business and (ii) the VIE’s assets can be used for purposes other than the settlement of its obligations.

•Substantially all assets can only be used to settle obligations of the VIE.

The table below presents information, by principal business activity, for consolidated VIEs included in the summary table above.


	As of
	September		December
$ in millions	2025		2024
Real estate, credit-related and other investing
Assets
Cash and cash equivalents	$	18	$	17

Customer and other receivables	1		–
Trading assets	14		18
Investments	172		170
Loans	6		9
Other assets	71		69
Total	$	282	$	283

Liabilities
Other secured financings	$	2	$	4
Customer and other payables	9		7

Other liabilities	165		165
Total	$	176	$	176

Corporate debt and other asset-backed
Assets
Cash and cash equivalents	$	10	$	155

Total	$	10	$	155

Liabilities
Other secured financings	$	248	$	334
Total	$	248	$	334

Principal-protected notes
Assets
Customer and other receivables	$	–	$	325
Trading assets	98		77
Total	$	98	$	402

Liabilities
Other secured financings	$	347	$	323
Unsecured short-term borrowings	6		5
Unsecured long-term borrowings	15		15
Total	$	368	$	343

In the table above, creditors and beneficial interest holders of real estate, credit-related and other investing VIEs do not have recourse to the general credit of the firm.